Fintechs Paving the Way for Ethical Finance: Insights from Industry Leaders
In the ever-evolving landscape of financial technology, Fintech companies are playing a pivotal role in promoting ethical finance, writes Tom Bleach in The Fintech Times. The impact of these innovative companies on ethical finance is substantial, as they introduce new technology and self-service applications that make the process easier for consumers while reducing the environmental footprint. Jeremy Baber, CEO of payment card provider Lanistar, emphasized this trend, stating, «Fintechs are taking the lead in ethical finance and driving the environmental agenda through new technology and self-service applications – this makes the process easier for consumers while removing unnecessary environmental options.»
One of the significant contributions of Fintechs to ethical finance is empowering investors to align their investment choices with their values. Kevin McGuinn, senior product manager at CMC Invest, pointed out, «Fintechs can help make a case for ESG investing by giving investors the tools they need to align their holdings with their values.» He highlighted CMC Invest’s ESG preferences feature as an example, allowing investors to set filters for business area involvements they want to avoid and receive alerts when a stock does not align with their preferences. This level of information empowers investors to set their own ethical finance standards, bridging the gap left by the lack of universal ESG standards.
Monika Liikamaa, co-founder and co-CEO of payment processing solution provider Enfuce, shed light on various Fintech platforms contributing to ethical finance. Platforms like goHenry and Welcome Place focus on financial empowerment, particularly among younger generations and underprivileged communities, by promoting financial literacy and inclusion. Additionally, Fintechs like Lune and Deedster play a crucial role in raising awareness about climate impact and sustainability, providing solutions to mitigate environmental impact through carbon footprint analysis and eco-friendly practices.
Regulators are also stepping in to tighten requirements and oversight, fostering transparency and trust within the financial sector. Fintech companies like Enfuce are actively driving change through innovative financial solutions, adding hope for a more ethical financial landscape. However, the urgency of addressing pressing environmental and social challenges remains paramount, and collaborative, innovative, and swift action is essential for a sustainable and ethical financial future.
Matthieu Maurin, CEO and co-founder of Iceberg Data Lab, emphasized Fintechs’ role as enablers of ESG integration into capital allocation decisions. They contribute to reducing integration costs for financial institutions and enhancing the quality of service for end-users. Services provided by Fintechs along the value chain, such as portfolio management and analytics solutions, enable financial institutions to leverage ESG data effectively. Data providers offer structured data points that allow fund managers to make informed decisions, avoiding investments in undesirable activities and selecting companies with sustainable practices.
The impact of ESG integration can be seen in investment products available on the market, such as the Axa ACT Biodiversity thematic fund and the TNFD pilot report published by consulting firms. These examples demonstrate how Fintech companies like Iceberg Data Lab are pivotal in transforming the financial industry, making ethical finance more accessible and actionable.
The Fintech industry is driving the adoption of ethical finance through technological innovation and empowering investors to align their values with their financial choices. Collaborative efforts between Fintech companies, regulators, and data providers are paving the way for a more ethical and sustainable financial future.