In the first quarter of 2024, European ESG FinTech deal activity saw a decline, totalling 20 transactions, which marks a 29 per cent decrease compared to the same period last year. European ESG FinTech companies experienced a notable decrease in funding, raising a combined US$73m, reflecting a 56 per cent reduction year-over-year.
Greenly, a carbon management provider, had the largest European ESG FinTech deal in Q1 2204 after raising US$52.5m in their latest Series B funding round, led by Fidelity International Strategic Ventures. The recent injection is set to catalyze Greenly’s expansion plans significantly. With ambitions to broaden their global presence, particularly in the United States and Europe, Greenly is poised to refine and enhance their suite of carbon management tools. This funding will facilitate a transition from traditional, manual carbon accounting methods to a more streamlined, technology-driven approach, ensuring businesses can easily navigate their sustainability journeys.
The UK was home to the highest number of European ESG FinTech deals with seven transactions, a 35 per cent share of deals. Germany was the second most active country with four deals, a 20 per cent share and France was third with three deals, a 15 per cent share of all funding rounds.
On Feb 2024, the EU Council and European Parliament reached a provisional agreement on a regulation aimed at enhancing investor confidence in sustainable products through environmental, social, and governance (ESG) rating activities. Belgian Minister of Finance, Vincent Van Peteghem welcomes the agreement, emphasizing its potential to drive a transition towards a socially responsible and sustainable future.
The agreement focuses on improving the reliability and comparability of ESG ratings by enhancing transparency and integrity, requiring authorization and supervision by the European Securities and Markets Authority (ESMA), and ensuring compliance with transparency requirements. Key elements include clarification on the scope and exclusions of ESG ratings, disclosure requirements for financial market participants, and provisions for small ESG rating providers. Additionally, the agreement emphasizes the separation of business and activities to mitigate potential conflicts of interest, with exceptions for certain activities.
