The AltFi view on ‘green’ fintech: An unexploited opportunity

Weekly Leading Article

With an uncertain global economy, to put it mildly, one area of absolute certainty is that there are vast sums of cash coming to solve climate change that will dwarf Covid stimuli over the coming decades. 

Yes, the clean, green energy revolution, a key tenet of managing carbon emissions, has arrived also and investors are all over it. 

The iShares Clean Energy ETF was among the best performing funds in 2020 with a more than 100 per cent return, for example. Yes, it does look like a bit of a bubble, at least in the short term, but the outperformance shows investors excitement at the long term story.

So why has fintech only shown muted efforts to capitalise on the trend? 

Yes, we’ve had a number of fintech challengers embrace a environmentally-aware strategy. 

For example Tandem Bank acquired green lender Allium last year, Bunq has long used its tree-planting to appeal to climate-conscious consumers and Treecard’s launch of wooden debit cards also. News out last week too saw Starling embrace recycled plastic for its cards that are green in more than one way now.

Take a look too at the research and results that came out of Triodos Bank last week, a leading lender and investor in the sustainable financing space.

Nearly all the younger investors it surveyed (94 per cent of 18-34s) said they’ve moved, or are looking to move, their ISA holdings to an ethical provider.

As this translates into real wealth in the coming decades, it’ll bring about a seachange in the investment landscape.

Triodos is already starting to benefit from that shift, poaching 73,000 UK customers from traditional financial institutions and turning an impressive profit of £5.6m in 2020 by lending to sustainable projects, even as the economic environment suffered.

But these small handful of examples pale in comparison to the size of the problem, and opportunities ahead.

For lenders, investors, savers and spenders, the clean, green energy revolution is fertile ground for growth. It’s time fintech entrepreneurs took advantage of it. There’s money to be made and a planet to save.

The AltFi Leader is a new weekly view for 2021 from our editorial team. We’d love to hear your ideas, thoughts, feedback and constructive criticism: editorial@altfi.com