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Fintech Q4 2021

Unlocking green finance through innovative technologies

iStock / Getty Images Plus / Tippapatt

Julian David

CEO, techUK

Emerging technologies are essential to delivering green finance, enabling us to move towards net zero by 2050 and meet the USD 100 billion a year global commitment of climate finance.

At COP26, industry and governments from across the globe discussed the way forward to boost climate finance – and indeed many positive statements were made. 

techUK welcomed the ambitious announcement from the Chancellor setting out the UK’s plans to become the world’s first net zero-aligned financial centre. Several other historic climate commitments from private companies covering USD 130 trillion of financial assets were also published. 

COP26 was a key step in setting out new strategies and renewing commitments from both the private and public sectors. Crucially, public and private finance will need to be mobilised at scale to aid net zero and climate resilient growth and support emerging markets and developing economies. 

Now, in order to move some of the new plans forward, government and industry need to collaborate and harness technology to deliver green finance for all.

The overall objective of regtech is to improve transparency as well as consistency of regulatory processes.

Encouraging investment in digital technologies

Harnessing digital technologies will be key in empowering firms and public authorities to create new services, strategies and models that work to create projects focused on green finance. Innovation in financial services could accelerate the reassignment of capital to carbon-efficient assets, as well as unblocking new sources of climate finance, while also ensuring effective reporting under the new upcoming requirements.

To ensure the United Kingdom is at the forefront of these new developments and achieves the ambition set out by the Chancellor, new investment in technology should be encouraged through direct investment. It should also be encouraged via the integration of sustainability elements into the existing vibrant fintech ecosystem. This can be achieved in various ways, such as by launching competitions, hackathons, incubators and accelerators that focus specifically on financing solutions related to sustainable business models.

Regtech: an area to explore

Regtech can, and should, also be part of our investment strategy to develop green finance. The overall objective of regtech is to improve transparency as well as consistency of regulatory processes. It is precisely this need for transparency and consistency that is driving both regulators and industry to adopt more comprehensive policies around ESG and climate-related risks to encourage companies to consider how they can better serve environmental and social well-being. Effective regulation and governance are essential to driving these changes; however, it can be challenging for the firms themselves to implement them given the lack of consistency across jurisdictions and current gaps in data for assessment, monitoring and rating of ESG and climate risk. This is where regtech can help companies and public authorities stay agile and meet new climate and ESG related obligations.

As the digital world continues to evolve to protect the planet, techUK is committed to doing its part and supporting members in the journey to net zero. If you are using digital innovation to fight the climate crisis, join techUK’s members to help deliver a better future for our planet.

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