DECEMBER 16, 2022
10 min read
What Does Financial Sustainability Mean?
It may seem, at first view, that finances and climate change aren’t related. However, the biggest fintech firms prove otherwise. Every day, fintech news is overflowing with information on innovative green alternatives designed to tackle environmental problems. No wonder all global organizations, including the United Nations, are emphasizing the importance of protecting the planet from degradation. Therefore, embracing sustainability has become one of the priorities for many fintech companies today. How do green finance companies make the planet a cleaner and safer place to live in?
In fact, they do a lot. From helping customers to contribute towards carbon emissions, planting trees, and launching wooden cards, to assisting in investing in a sustainable future of fintech. Remarkably, but the interrelation is now undeniable, even though the situation was very different some time ago. Until recently, financial institutions used to concentrate on profit mainly and sustainability in financial services wasn’t mainstream.
What has changed? What was the trigger for brands to become sustainable fintech companies? Why do more and more businesses become involved in environmental projects and implement components of financial sustainability? And what are the top 10 fintech companies leading the way to green finance today? Let’s get to the point and make it all clear for you!
Why Making Steps Towards Sustainability Is Vital for Modern Fintech Businesses?
What does it mean to be a top fintech company? These are firms that attempt to develop and automate the distribution and use of financial services. In short, their main aim is to help businesses and consumers better manage their financial processes. How do they combine fintech and sustainable development? And why should those, who haven’t gone green yet, join the fight? Here are the key 4 reasons:
- Sustainability has gone mainstream. Well, it seems like nowadays, it’s just impossible to stay indifferent to the upcoming climate catastrophe. More and more people become conscious consumers and start living in a more eco-friendly way. They want their green finance company to align with their values. Whether or no, if the top fintech companies want to stay the course, they have to cover the demand.
- Eco-conscious companies outperform their non-sustainable competitors. A study shows that about two-thirds of clients expect their challenger bank to move towards eco-friendliness. Half of them are ready to change the bank if they don’t see any progress. All because the choice of service providers is huge today. Customers choose socially responsible businesses. Those who ignore this fact find themselves left out in the cold.
- Supervisory expectations. Another solid reason fintech companies should start adopting financially sustainable policies is the regulations and supervision conducted by the authorities. For instance, all European banks are required to have ESG (environmental, social, and governance) analytics. This is done to reduce greenwashing — conveying a false impression about how a company’s products are more ecological.
- The future. Let’s just accept this — global warming, pollution, loss of biodiversity, ozone layer depletion — it all goes beyond business and making money. Luckily, many companies understand that and voluntarily contribute to the climate change fight making sustainability in the financial sector the biggest of trends. Because they just care about modern and future generations. One of Wall Street’s most influential market commentators, Jim Cramer, perfectly summarized this position in his podcast. He said: “As many executives told me: We’ve got children.”
10 Best Green Fintech Companies And Their Sustainable Financial Solutions
Here’s just a small portion of all the green fintech companies to watch that have embraced transparent and environmentally-safe approaches to doing business. Satisfy your curiosity!
A challenger US bank Aspiration is a great illustration of how cool environmental companies can do lots of good to make the world a better place. Its 2 core values are to fund money in green projects intended to save the environment and to avoid oil corporations that destroy the climate. Furthermore, they believe that small actions add up to big change. Every time their customer swipes a card to make a purchase, Aspiration automatically rounds up every dollar and plants a tree with the spare change. This green finance project is aimed to plant 100 trees and remove millions of pounds of carbon dioxide from the air.
TreeCard is a fintech startup focused on European clients. Its name speaks for itself — the company strives to reduce plastic and to reforest the Earth. They make cards out of a heap of recycled plastic bottles and sustainably sourced cherry wood. Also, 80% of its profits are paid to reforestation projects. TreeCard highlights the significance of each customer’s small effort. The impact they make together is truly great. Apart from planting tens of thousands of trees around the world, they’re coping with the damage done by the palm oil industry in Indonesia, fighting malnutrition in Senegal, restoring watersheds in Ethiopia, and many more!
3. Starling Bank
According to the independent service quality survey, Starling Bank is one of the examples of fintech companies who lead the US market. Their eagerness to go green and choose more planet-friendly options attracts so many customers to their services. The bank is branchless, paperless, and operating on renewable energy. It was also the first in the country to launch debit cards made from recycled plastic. Additionally, together with other top fintech companies, Starling joined the Tech Zero taskforce to help to cut carbon emissions. Along with that all, they plant trees to reduce and prevent deforestation. Impressively, right?
4. Triodos Bank
Luckily, Starling isn’t the only bank promoting sustainability in the country. Triodos is also among green fintech startups in the UK that strive to make the banking sector greener and more resource-efficient. The thing is people as never before are focused on the environmental impact they make. Moreover, the research conducted by Triodos shows that ethical options also belong to their investors’ key demands. That’s why the bank finances only green economy enterprises and publishes the info of all businesses they cooperate with, in such a way demonstrating one of their fundamental values — transparency. Hence, all stakeholders can see how their money helps to stop the climate catastrophe.
Stripe is online payment processing for internet companies. They launched Stripe Climate to let all ambitious businesses do their part in making the planet more climate neutral which boosts fintech sustainability and financial inclusion. How is that? In just a few clicks, companies can contribute a fraction of their revenue to technologies aimed to remove carbon that’s already in the air. Those firms, in return, get a green badge that illustrates clients their involvement in numerous green projects and, consequently, their core values. Except for that, Stripe itself regularly donates money to carbon removal companies. All for the good cause — to prevent catastrophic consequences of climate change by decreasing global temperature rise.
Almond is one of the green startups in the UK. One of its tasks is to empower businesses in expanding sales and creating deeper bonds with their customers. However, there’s another environment-oriented mission they aim to accomplish — encouraging and supporting users in reaching a carbon-balanced lifestyle. That’s why Almond developed a free app for both iOS and Android users that helps live a greener life. For instance, users can look for eco-friendly alternatives, avoid unsustainable products and services, or calculate their carbon footprint. Moreover, when shopping with participating brands, they receive offsetting rewards which are spent on planting trees and protecting the rainforest.
Tred managed to launch the first green debit card in the country, becoming one of the most sustainability in the financial sector companies in the UK. The card you get (which is, by the way, made of recycled plastic) can track your carbon footprint and show it in the app. It literally counts the amount of carbon dioxide emissions every time you get your coffee, refuel your car, or even pay for your gym membership. This financial technology company helps so you can see all possible steps personally you can take to reduce your impact. Another great Tred’s initiative — you buy things, and they use profits to plant trees. No matter what you pay for, they capture your carbon.
Clim8 is in the fintech companies list that manifests that they invest in renewables and a sustainable future. It assists fund clients in both growing their savings and protecting the environment (charging a fee as a percentage of assets under management for that). What can you invest in? Actually, there’s a big number of environmental projects aiming to tackle climate change that Clim8 is cooperating with. Plough into clean water, energy, technology, sustainable food, smart mobility, or circular economy. It all helps to reach the climate goals set by the UN Paris Climate Agreement. By the by, you can start funding from £25.
Similar to Clim8, Trine is one of the leading fintech companies, based in Sweden, offering its customers to earn a profit while making a social and environmental impact. The main focus is made on solar energy and the results are impressive. Over 2,5 million people now have access to electricity because of the money put by 12 thousand Trine investors. How does it work? You set an account, choose a loan, and decide how much you’re ready to give — not less than £25. Once the loan is fully funded and solar products are distributed, you get back your investment with interest. Trine’s aim is to help clients get three times as much as they invest.
PensionBee is one of the finance software companies which helps to take control of your retirement. Well, maybe it doesn’t come to your mind first when thinking of top fintech global market companies, but one of its projects definitely deserves your attention. Back in 2020, PensionBee launched its fossil fuel free investment plan. It’s intended to cease financing oil, gas, coal, fossil fuels, and tobacco businesses and manufacturers of weapons. Additionally, its clients can make socially responsible investments by just paying an annual fee of 0.75%. In such a way, your money is put in companies whose values are aligned with the Paris Agreement. Help to save the planet!
3 Challenges Still to Be Overcome by Fintechs
Even though big and small fintech companies are making great progress in implementing sustainable approaches in doing business, there’s still a lot to do further. This especially concerns Third World countries that have to deal with poverty, underpayment, financial crises, and scarce resources for fighting global warming and other environmental problems. So here are the main barriers still to watch out:
- Involvement. Fintech is a powerful force, but it can’t achieve the goals stated in the UN 2030 Agenda for Sustainable Development** alone. International cooperation and the involvement of public authorities are required to share information, transfer technologies, and learn from successful experiences. However, not everyone is ready to start making steps towards non-polluting living so fast.
- Greenwashing. This is a tactic used by businesses to deceive consumers into believing that a company is one of the eco startups. For example, they may declare that their products are made of recycled materials. In short, this is an attempt to capitalize on the growing demand for environmentally sound products. As a result, customers become disillusioned and stop trusting other green brands. Companies lose credibility and, hence, lose clients.
- Financing. There are many popular fintech companies aiming to fight environmental issues today. However, only a few get funds to be able to realize their projects and significantly influence the problem of climate change. This, again, all comes to worldwide involvement and support of newcomers who want to make a difference.
Green Fintech For Green Future: Is the Aim Achievable?
In finance, being green may take several forms. Top fintech companies USA aggressively support good customer behavior change to reduce wasted expenditure and, by extension, carbon emissions. Companies focusing on environmental projects may apply for green loans and investments. By definition, microfinance organizations and money transfer services help to relieve poverty and socioeconomic inequality. There are also other initiatives, such as converting to biodegradable cards.
As you see, fintech meaning is tightly interrelated with sustainability today. The importance of fintechs going green has touched everyone, and fintech is no exception. It fights climate emergencies with all its might and has managed to do so much! Nevertheless, there’s a lot to be done yet. Support and responsibility are required as never before. There should be more top fintech companies in USA involved in the problem of the upcoming environmental collapse.
However, given the status of the globe, this is certainly inadequate. Blockchain, cloud computing, big data, and other related discoveries have enormous potential for causing a fundamental change in the financial industry toward more fair and ecologically responsible development. Even though the demand for eco-consumption is still in its infancy, top environmental startups in this sector should be guided by mindful production principles. Maybe your fintech company will be among those offering a helping hand to our planet?
What is the difference between green finance and sustainable finance?
Climate finance is included in green finance, but social and economic factors are not. “Climate finance” is a subcategory of “green” or “environmental” funding. As a result, the most general term is “sustainable finance,” which refers to financing that contributes to long-term development.
What is sustainability fintech?
A sustainable fintech business, sometimes known as a “green firm”, is one that works in such a manner that its impact on the natural environment, the local community, or the economy is minimal. The objective of the firm is to make three times its original investment. Sustainable fintech firms often take liberal positions on topics such as environmental preservation and labor rights.
Who is leading in green finance?
In terms of the “depth index,” Amsterdam remains ahead of all, while London remains number one in terms of quality.