Adam Jackson
Director of Policy, Innovate Finance
Bringing technology and finance together unlocks the system-change needed to save the planet. This is a huge opportunity and responsibility for fintech, where the UK is a leading player.
Everyone must make fundamental changes to tackle the climate crisis: consumers and investors; businesses large and small; and financial institutions. The money we all manage and spend needs to align with halving carbon emissions by 2030 and net zero by 2050. Money needs to be deployed on the basis of information and analysis. Technology enables this by collating and assessing data and providing services that make this easier.
Carbon footprint of products
Fourteen years ago, I led Tesco’s inaugural climate change programme, putting carbon labels on products. It took consultants months to map the carbon footprint of a carton of juice or a box of washing powder. Today, this happens almost instantly using artificial intelligence. Firms CoGo and Tink have collaborated to help banks like NatWest provide customers with carbon footprint data and advice about their spending, enabling real time decisions to reduce emissions.
Technology also enables people to take control of the environmental impact of their pension investments. Platforms like Clim8 Invest enable exclusive investment in companies combating the climate crisis. In the business market, Funding Options has developed an online platform linking green small businesses to green finance. Fintechs like Eigen are using natural language processing to validate companies’ claims and guard against greenwash.
The money we all manage and spend needs to align with halving carbon emissions by 2030 and net zero by 2050.
The next generation of regulations and services
As future regulations develop, banks increasingly need to know how their borrowers align with climate targets and whether assets they lend against (e.g. homes) are at risk from climate risks such as flooding. Another UK fintech company, OakNorth, already provides banks in the USA with cloud software which enables them to do so across their business lending.
The UK is well placed to be a global provider of net zero solutions. Recently, I had the privilege of judging applicants for the ‘sustainability sandbox’ run by the Financial Conduct Authority and City of London to support and test new fintech products. There was a huge number of high quality applicants, developing the next generation of services.
Realising the potential of fintech
In order to fully realise the potential of fintech, we need three things: first, fintechs themselves have to make their businesses net zero, including reducing data centre energy usage and acting across their value chain – from suppliers through to customers. This is already happening as firms join the TechZero pledge.
Second, organisations must stop treating data in a proprietary manner. Firms should identify what data they hold and offer collaborative, commercial terms to innovators to utilise it. Value will be created by connecting data, not hoarding it.
Third, collaboration is critical. Solutions will come from looking across sectors and technologies, rewiring the connections in our economy.Following the global financial crisis, fintechs met the needs of society and the economy, developing new approaches to financial services. Now, the fintech community is doing the same for the greatest challenge faced by humanity and we can all look to support their efforts to do much more, much faster.