By Tyler Smith

Today marks 50 years since the United Nations designated 5 June as World Environment Day, which advocates sustainability and environmental moderation within every facet of life. Under this year’s theme ‘Only One Earth’, the same title used in the original 1972 Stockholm Conference on the Human Environment from which the event was derived, today we examine how the fintech industry around the world has embraced the need for change.

The world has changed drastically since that original Stockholm conference, and so too has public consciousness around the topic. Concern for the environment has become an all-available trait, because, as this year’s theme emphasises, there is only one earth.

Good fintechs that do good listen to what their customers want, and failure to adhere to this immutable cry for higher standards has the ability to flick the kill switch on any industry player.

The majority of knowledge workers that were recently surveyed by Cloudera believed that the data their business uses on a day-to-day basis should be focused on doing good for the communities it serves. This is a sentiment 66 per cent of business decision-makers agree with; a clear indication that profit and environmental, social and governance (ESG) are no longer mutually exclusive pursuits.

Its report also shows how workers are prepared to abandon their company if they do not support ESG initiatives, like those set out by World Environment Day for example.

This industry appetite for deeds over words was underlined by a recent study from the behavioural finance experts Oxford Risk, which uncovered how 50 per cent of investors are intending to move some of their funds, including pensions, into ESG this year; with one in seven planning to move 60 per cent or more.

Likewise, Workiva Inc. reported last year that 72 per cent of the 18 to 34-year-olds it surveyed wanted to know whether a company lives up to its social and moral beliefs before they invest in it.

There is a lot going on in fintech’s circles of thought around ESG, and it is definitely something that everyone is at least aware of.

Last month’s findings of the London-based financial service innovation platform TISAtech and its partner The Disruption House really brought this to light, stating that three in four finance firms in the UK plan to bring in a permanent in-house hire this year to handle and maintain ESG efforts.

“The UK has long been at the cutting edge of financial services. However, this is a time of unprecedented technological and operational change, causing institutions across the sector to re-examine how and why they do what they do,” said Gary Bond, CEO of TISAtech.

CEO of The Disruption House, Rupert Bull added: “Preparedness for ESG is no longer negotiable in financial services, and this is evidenced by our research. But businesses can still go further.

“If we look at the pace of change in sectors like retail, it’s clear that the financial services sector still has the potential to improve, and that regulation can and will go further.”

And the regulation is going further. In the UK specifically, regulations like sustainability disclosure requirements (SDR), which are due to come into force sometime in 2023, set out a framework that would require finance firms to disclose the percentage of their capital spending and turnover that’s associated with taxonomy-aligned activities.

Additionally, SDR requires firms to report on the Taskforce on Climate-related Financial Disclosures (TCFD) and the standards developed by the IFRS Foundation’s International Sustainability Standards Board (ISSB); launched in conjunction with Glasgow’s COP26 last year.

However, as Avanade and Efma have previously stated, a variety of banks are way off-track to achieving their ESG standards. According to the data, only 53 per cent of banks will be ready for regulatory reporting in the next six months, whereas almost one in five are still unclear as to what the requirements are.

This fact has been sorrily underlined by recent studies from both the British Business Bank and Tandem Bank, which solidified the level of both business and consumer unpreparedness for net-zero, and how many continue to feel overwhelmed by all the complex jargon that surrounds the topic.

Chief impact officer for British Business Bank, Shanika Amarasekara said: “Smaller businesses are far too often put off by the over-complex ‘carbon jargon’ that comes with reducing emissions. This will become an increasingly important business requirement.

“Given that many consumers now consider sustainability when they make a purchase, by becoming greener, smaller businesses can enhance their competitive edge and expand their customer base.”

Adding to this, Tandem Bank’s CEO, Susie Aliker, said: “This research shows conclusively the scale of the challenge for Brits to meet net-zero commitments by 2050. Whilst greening homes is at the heart of the UK’s plans, it’s clear we need increased awareness and support to equip them to tackle this important challenge.

Despite struggling to put its best foot forward at times, the fintech sector remains adamant to show its best front for the sake of the environment. So what’s taking place in the world of ESG fintech today?