Study finds government support and talent development are crucial in driving the growth of green fintech.
GoImpact, an ESG and Sustainability education firm, together with The Chinese University of Hong Kong's Business School have released the findings from their working paper, Exploring the Green Fintech Ecosystem in Asia: Insights from Five Economies in APEC. This study finds that government support plays a vital and essential role in facilitating green fintech development, while talent shortage is a common concern in the five economies in the region.
Derived from three elements — environment, finance, and technology — the industry report defines green fintech as financial activities that utilize green technologies that bring better environmental outcomes.
We are at a tipping point of changing climate in a changing world. Extreme weather with the ensuing natural disasters is happening at such a scale and frequency that there is a clear and present danger in the risks we will be facing if we fail to take adequate action urgently.
To keep global warming below 2°C above pre-industrial levels, the world will have to come together to slash global emissions by a quarter by 2030. This is the upper limit for warming set by the United Nations to avoid escalating climate risks and triggering climate ‘tipping’ points that have huge repercussions across the global economy and society. Are we on track to take the necessary actions that can turn net-zero pledges into measurable actions?
Faced with this new paradigm, it is clear that Capital and Technology are the twin engines to work in tandem to deliver tangible actions. Green FinTechs are at the forefront of a wave of innovations delivering rippling effects across the world. This Working Paper aims at offering a glimpse of trends and momentum for a selection of 5 locations among the APEC members with a particular focus on the:
Overall state of the Green FinTech Ecosystem
Governmental & regulatory initiatives
The 5 locations, Hong Kong SAR (China), Indonesia, the Republic of Korea, Singapore, and Thailand, delineate a representative Asian spectrum of different stages of development in this space. The aim is to learn from each other and understand the best practices in different socio-economic contexts, with a forward-looking and collaborative lens.
Industry experts from five APEC economies, namely Hong Kong SAR, China ("Hong Kong"), Indonesia, the Republic of Korea ("Korea"), Singapore and Thailand, have urged policymakers to establish a conducive environment for green fintech to flourish. According to them, governments can help through offering incentive schemes for startups to develop in this area and spearhead the change by setting sustainable regulatory frameworks and mandating disclosures, reporting, and thresholds.
The study also suggests that financial institutions should embrace the sustainable agenda to achieve the triple bottom line: profit, people, and the planet. Given the current competitive banking environment and the global shortage of green talent, financial institutions should utilise their unique positions in the business ecosystem to develop more in-house sustainability talent to promote the sustainability agenda, the report further explains.
Key findings from the study include the following:
Green fintech startups in Asia have already provided many different types of green fintech, such as green digital payment, green digital investment solutions, digital green analytics, green crowdfunding, green risk analysis, green digital lending, green digital asset solutions, and green regtech.
Regulations on ESG disclosure play an important role in advancing the green fintech ecosystem. Supporting evidence comes from case examples in Hong Kong SAR that suggest that green reporting startups grew at a faster pace since the requirement of ESG reporting for all listed companies came into effect in 2020.
As the Green FinTech ecosystem develops, cooperation and partnerships will become more mainstream. There are already several successful collaborations in Asia, including Project Genesis in Hong Kong SAR, Climate Impact X and Project Greenprint in Singapore, and a carbon offsetting program by Gojek and Jejak.in in Indonesia.
Governments in Asia are aware of the importance of a green economy and have set roadmaps and initiatives to help the economy transition into a more sustainable one: for example, The Republic of Korea's Green New Deal and Thailand's Sustainable Finance Initiatives.
Financial institutions have already provided several green fintech services, including biodiversity-screened equity indices, tokenized carbon credits trading platforms, robotic platforms for ESG investment, green certificates, and ESG credit rating systems.
Sustainability-related education is imperative to building a mature green FinTech ecosystem. It will raise awareness, push the demand for green finance, and cultivate the talent needed for green FinTech Development in Asia.
The four-pronged approach required to build a well-functioning green FinTech ecosystem is: boost demand for green services; increase supply of green services; mobolize resources; and strengthen policies.
The study examined policies, markets, and opportunities regarding fintech's role in driving green finance in the five selected APEC economies through desk research, interviews, as well as focus group discussions involving green fintech startups, government and quasi-government organisations, green fintech-related associations, and financial institutions, and found that both Hong Kong and Singapore are in the stage of scaling up and accelerating to mature levels in terms of green fintech development compared to the past two years.
Bridging the great divide between the talk and action, accelerating the Sustainable Development agenda from intention to implementation – GoImpact means impact made easy and actionable.
GoImpact is an ecosystem developed to connect the dots and provide action enablers built around 3 key pillars – GoLearn (education); GoNetwork (structured advocacy); GoInvest (deal flow platform for sustainable investments).
Through our integrated learning platform in partnership with top tier education institutions and accreditation channels, we seek to establish a common baseline of Sustainability learning, made easy, for many.
About CUHK Business School
CUHK Business School comprises two schools – Accountancy, and Hotel and Tourism Management – and four departments – Decision Sciences and Managerial Economics, Finance, Management, and Marketing. Established in Hong Kong in 1963, it was the first business school to offer BBA, MBA and Executive MBA programmes in the region. Today, CUHK Business School offers 10 undergraduate programmes and 20 graduate programmes including MBA, EMBA, Master, MSc, MPhil, DBA and Ph.D. The School currently has over 4,600 undergraduate and postgraduate students from over 20 countries/regions.
In the Financial Times Executive MBA Ranking 2022, CUHK EMBA was ranked 24th in the world. In Financial Times Global MBA Ranking 2022, CUHK MBA was ranked 50th. CUHK Business School has the largest number of business alumni (over 40,000) among universities/business schools in Hong Kong – many of whom are key business leaders.