Are net zero targets being sidelined amidst rising inflation and some economic headwinds? The Fintech Talents Festival 2022 held in London explored this topic in its opening debate on November 15.
The ‘net zero-the pressure is off’ panel debate was moderated by Christophe Langlois, global marketing lead, fintech and developer ecosystem, Finastra.
According to panellist Martin Sladecek, director of digital strategic studies, Societe Generale, “Every action matters.” Proper interpretation of data helps banks leverage transaction histories to evaluate customer buying and living behaviour.
“Banks have the power to offer incentives to customers to behave better. This can be achieved through everyday interactions, D2D banking in green, Usual banking products and the open ecosystem," remarked Sladecek, adding that incentives and user satisfaction lay the foundations for creating more environmentally aware people.
Sladecek also cited examples of banks offering sustainable products, discounts, eco-friendly payment cards and personal finance management services to analyse spending behaviour to help create carbon-conscious customers. “Modern digital banking apps and innovative offerings of open banking systems motivating customers to improve daily sustainable behaviour are the true raindrops becoming the ocean for climate change,” commented Sladecek.
When the topic is net zero, it is not a question of ‘if’ but ‘when’, emphasised Matt Bullivant, director of ESG Strategy, OakNorth Bank, lauding the role data plays in promoting sustainable behaviour.
“The challenge is to ensure the long-term viability of business models in five, 10 or 20 years, which can only happen with assimilation of different viewpoints from the ecosystem".
However, adopting a forward-looking view and leveraging data sets can help mitigate climate challenges, Bullivant commented.
“The power of fintech lies in its ability to pull in all datasets to help create a toolkit for banks and financial services,” affirmed Bullivant. Utility companies and banks with transactional data can make it easier for SMEs by supplying them with data critical to studying customer behaviour.
Theodor Cojoianu, associate professor in sustainable finance, the University of Edinburgh, emphasised the need for coherence in a financial institution’s overall strategy. “It should not be conflicting. While Europe has much legislation on green finance in place, the focus should be not just investment but on proving impact on sustainability,” pointed out Cojoianu.
UK housings contribute to approximately 16% to 20% of total carbon emissions, cited Claire Tracey, chief strategy and sustainability officer, Nationwide Building Society. “While factors beyond control exist, the right approach is to ride the wave with regulatory push, building energy efficient houses and maintaining clarity in disclosure,” explained Tracey.
However, insufficient data on energy efficiency pose problems, with EPC (energy performance certificate) being an approximation. “Most people do not know where to begin for getting their properties retrofitted. Besides, there is a skill shortage and hardly any access to good data,” Tracey remarked on issues plaguing the end-to-end supply chain.
“Different industries in the ecosystem must work seamlessly to deliver optimal results, and fintech is the glue that binds them together,” she highlighted, adding that fintech alone can help enhance public awareness by providing information at their fingertips.
Eco-friendly steps such as end-to-end digitalisation of the mortgaging process could help us reach climate goals without compromising profitability, Sladecek pointed out. Driving a positive change also begins with sharing information about sustainable products and alternatives available in the market with people, Bullivant added.
Green financing should be implemented across products offered by banks and financial institutions; otherwise, “you’re on a road to nowhere", he observed.
As per Cojoianu, there is a need for investment in green infrastructure, and banks injecting capital into the economy can help them “rewrite the rules of the game”. According to Tracey, managing internal politics concerning profitability and sustainability objectives also goes a long way in filling the gaps in the process.
The debate concluded with Langlois quoting a Maldivian minister at the COP27 United Nations climate summit in Egypt: “Climate change is remaking the world. It's our responsibility and why we have gathered here to ensure that the remade world is equitable, just and allows all of us to live well."
Tools and technologies can help businesses measure the outcomes needed to promote sustainable finance through digital innovations, concluded the experts.
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