Climate Fintech Report: An Emerging Ecosystem of Climate Capital Catalysts
December 8, 2020
New Energy Nexus report is one of the first to showcase the specific intersection of digital financial technology and decarbonization, known as Climate Fintech.
Oakland, California – New Energy Nexus is thrilled to launch the inaugural “Climate Fintech Report: An Emerging Ecosystem of Climate Capital Catalysts.” Climate Fintech is defined as digital financial technology which catalyzes decarbonization. This report breaks down the financial system, showcases where viable business models of Climate Fintech exist, and explores how technologies such as Artificial Intelligence and Blockchain can help intermediaries mobilize capital towards decarbonization. The report is a distillation of over 100 interviews from 2020 with financial institutions, Open Banking experts, climate scientists, blockchain advocates, cleantech VCs, and climate fintech startups, among others. This is the first of what will be many endeavors to better understand where areas of opportunities exist, and how to best bring them to scale.
Fintech has already demonstrated its ability as a highly-scalable disruptor to the financial industry – Climate Fintech is simply the application of Fintech with the primary goal of reducing GHG emissions. The benefits of Climate Fintech are wide-ranging, with both downstream impacts to the average citizen in emerging economies and upstream impacts to C-Suite decision makers and asset owners. These digital tools can improve the financial decisions of citizens and institutions alike; helping all of us to save, spend, and invest in ways which put the planet first.
“The tides of decarbonization have reached our shores – now we must build the best surfboards we can, and paddle out to ride these waves,” explained Danny Kennedy, CEO of New Energy Nexus.
In the last year, green neobanks like Aspiration have seen their highest rates of customer growth, while investment platforms like OpenInvest have captured the record-breaking investment flows into sustainability and ESG products. Climate risk analysis firms like Carbon Delta and Four Twenty Seven have been acquired by Moody’s and Morningstar, further validating this space. Climate Fintech can help to make customers more conscious when shopping for clothing and travel, assist asset managers in building more climate-aligned portfolios for their clients, allow insurance firms to better analyze weather perils, and gives regulators better tools to monitor and measure carbon emission data from the largest corporations – holding them accountable to new policies and international initiatives.
The goal of the report is to illustrate a vast ecosystem, and cast a wide net – in part to uncover as many digital financial solutions facilitating decarbonization investment, clean energy finance, and sustainable consumer habits as possible. The report is broken into 8 financial categories, each with their own chapter highlighting viable Climate Fintech business models. The eight financial categories include Payments, Banking, Lending, Investing, Trading, Risk Analysis, Insurtech and Regtech and are explored in detail with accompanying case studies.
“Solving climate change requires creating a new inertia. Since the industrial revolution, large economies have been driven by carbon-emitting energy and industrial systems. The invisible engine underlying it all has been finance; and at last, finance is facing disruption. This report lays the foundation for why it’s so important to leverage this disruption for the benefit of people and the planet,” explains Marilyn Waite, Climate & Clean Energy Finance Program Officer William and Flora Hewlett Foundation.
The report also touches upon the geopolitical nuances of three major carbon-emitting regions – Europe, the United States and China to best understand what business models and technologies thrive in each market. In China, top-level design and regulation from the government plays an instrumental role in the deployment of green bonds, insurance, lending and other green financial products. Europe is leading climate action, sustainable finance and climate fintech ecosystems across the board, largely attributed to recent synchronized policy such as the EU taxonomy and the European Green Deal. And in the United States, sustainable investing has become mainstream due to the superior economics of renewables over coal, a heightened investor concern over social and environmental issues – all while a Biden’s presidency promises to usher in a “decarbonization renaissance”.
The Climate Fintech Report free digital copy can be downloaded here.
New Energy Nexus
New Energy Nexus (newenergynexus.com) is a non-profit international organization that strives towards an abundant world with a 100% clean energy economy for 100% of the population in the shortest time possible. To achieve this goal, we support diverse clean energy entrepreneurs with funds, accelerators, and networks. We started in California and now operate programs in New York, China, India, Southeast Asia and East Africa.
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