The AltFi View on COP26: It’s time to banish ‘greenwashing’ from fintech

Weekly Leading Article

Vast fortunes will be made in the journey to net zero over the next few decades by innovators in a range of fields—including finance—who think up solutions that help mitigate or even avert the climate crisis. 

Unfortunately, others have and continue to also cash in, with more cynical intentions, by ‘greenwashing’. These unhelpful actors need the full ire of regulators, investors and consumers. Now.

Not limited to but very much including the boom of some using the ESG moniker, with little actual green credentials, greenwashing is easy to do and a quick way to make big bucks. 

Indeed, the fertile ground of ‘green’ fintech that we’ve written about before will attract huge investment and charlatans alike.

Meanwhile the Net-Zero Banking Alliance, which was launched in April by Mark Carney, has grown to now include 80 of the world’s largest banks, all pledging to reduce carbon in their $54 trillion investment portfolio by 2015.

There are many fintechs also leading the way, charting a genuine path to net zero.

Starling Bank today outlined its plan to offset its carbon emissions and those of its entire supply chain.

While all efforts such as the above are welcome, questions remain about how to really nudge businesses and consumers to a lower carbon future. Starling, for example, is excluding its loan portfolio and investments for now from its net zero effort. 

Triodos Bank last week said it would beat the generally accepted 2050 deadline to eliminate carbon emissions, planning to transition its business to net zero instead by 2035.

Not just that, Triodos also plans to transition its loan book to net zero as well, a far more ambitious challenge.

Legitimate initiatives, however, will falter unless the greenwashers can be exposed and shamed into action.

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