Top 7 Sustainable Fintech Trends in 2024

Finance and technology integration has brought about several sustainable fintech trends in the finance industry. With increased environmental, social, and governance (ESG) considerations, fintech companies continuously address pressing global challenges while driving economic growth. From green investing platforms to blockchain-enabled supply chain transparency, these companies seek to build a more sustainable and equitable future.

85% of individual investors are interested in sustainable investing, desiring more product choices that match their interests and impact measurement capabilities. As investors increasingly focus on their investments’ environmental and social impact, fintech companies must offer innovative solutions to meet this growing demand. Sustainable investing assets reached $35.3 trillion globally in 2020 and may surpass $40 trillion in 2030.

Whether you’re a finance professional, technology enthusiast, sustainability advocate, or seeking to gain knowledge about the finance industry, this article is for you. Read on to discover the top seven sustainable fintech trends.

Top 7 Sustainable Fintech Trends

Here are seven sustainable fintech trends that are taking the industry by storm: 

1. Green investment platform

Investors seek to align their investment portfolios with environmental, social, and governance (ESG) criteria. With green investment platforms, clients can invest in companies, projects, and assets that promote sustainability, mitigate climate change, and contribute to positive social impact. Here are critical aspects of this trend:

• ESG screening and analysis: Investment platforms offer screening tools to assess the ESG performance of companies and investment opportunities. They may utilise data analytics, machine learning, and other technologies to evaluate factors such as carbon footprint, diversity, ethical business conduct, and inclusion practices.
• Customised portfolios: Investors can create them based on their sustainability preferences and financial goals. They can choose from thematic investments, including renewable energy, clean technology, social impact initiatives, and sustainable agriculture.
• Access to sustainable funds and ETFs: Several green investing platforms screen and offer access to various sustainable investment funds, exchange-traded funds (ETFs), and other financial products based on ESG criteria. These funds typically focus on specific sustainability themes across different asset classes.

2. Carbon offsetting solutions

Fintech companies steadily develop innovative solutions for carbon offsetting, enabling businesses to calculate, track, and offset their carbon footprint through financial transactions. These solutions compensate for carbon dioxide (CO2) emissions individuals and other entities generate by funding projects that reduce substantial amounts of CO2 from the atmosphere. Here are popular carbon offsetting fintech solutions:

• Carbon offset:  Projects include reforestation and afforestation initiatives, solar installations, wind farms, and methane capture from landfills. Other projects, such as energy efficiency improvements in buildings and investments in carbon capture and storage (CCS) technologies, also foster carbon offsetting.
• Carbon credits: Fintech companies quantify carbon offsets as carbon credits, each representing one metric ton of CO2 equivalent to the amount removed from the atmosphere. They can trade these credits on the carbon markets or through specialised platforms, enabling buyers to purchase carbon credits to compensate for their emissions.
• Additionality: A principle in carbon offsetting is additionality, which ensures offset projects result in emission reductions that wouldn’t occur without financial support from offset buyers. Fintech companies assess additionality through methodologies that compare the project’s emissions scenario against a baseline scenario representing regulatory requirements.

3. Impactful banking services

Impactful or sustainable banking services refer to financial institutions prioritising positive ESG outcomes and economic returns. These services address sustainability challenges, promote ethical business practices, and contribute to the well-being of communities and the planet. Key aspects of impactful banking services include:

• Environmental risk management: Sustainable banks integrate ecological risk assessment and management practices into their lending and investment decisions. They evaluate the environmental impact of potential borrowers and investments, assess climate-related risks, and incorporate sustainability criteria into credit underwriting processes to mitigate environmental risks.
• Community development finance: Sustainable fintech banks prioritise investments in underserved communities and marginalised populations to foster economic empowerment, financial inclusion, and social equity. They may tailor financial products and services, such as microfinance and community development loans, to the needs of low-income individuals, small businesses, and social enterprises.
• Stakeholder engagement and collaboration: Following recent fintech trends, banks actively engage with stakeholders, including customers, employees, and regulators, to gather feedback and collaborate on sustainability initiatives. They participate in industry partnerships to drive positive change and advance sustainable finance practices.

4. Sustainable payment solutions

Sustainable payment solutions are fintech innovations that reduce the environmental impact of payment transactions while promoting responsible consumption. These initiatives address several aspects of sustainability, including carbon emissions, resource conservation, and resource conservation. Here are features and examples of sustainable payment solutions:

• Eco-friendly payment cards: Fintech companies and banks are developing payment cards made from sustainable materials, such as recycled plastic, biodegradable polymers, or wood-based composites. These eco-friendly cards reduce the reliance on non-renewable resources and contribute to waste reduction efforts in the financial industry.
• Digital wallets and mobile payments: Users can get sustainable alternatives to traditional cash and card payments by enabling electronic transactions that reduce the need for physical currency and paper receipts. Digital wallets and mobile payments promote resource efficiency, convenience, and contactless transactions.
• Donation matching: Sustainable payment solutions incorporate features that enable donation matching, where financial institutions match a portion of consumer transactions with charitable contributions to environmental causes. This encourages customers to support nonprofits and philanthropic initiatives while making everyday purchases.

5. Blockchain for supply chain transparency

Fintech companies leverage blockchain technology to enhance transparency and traceability in the supply chain, particularly for industries with significant environmental and social impact. These industries include agriculture and fashion. Here are aspects where blockchain-based solutions help verify the authenticity of sustainable practices throughout the supply chain:

• End-to-end visibility: Using blockchain, companies offer end-to-end visibility into the supply chain, allowing stakeholders to track products’ journeys from the point of origin to the end consumer. This transparency enables stakeholders to identify inefficiencies, mitigate risks, and ensure sustainability standards and regulations compliance.
• Authentication of sustainable practices: Blockchain-based solutions enable the authentication and certification of sustainable practices throughout the supply chain. For example, in agriculture, blockchain can verify organic farming practices, fair trade certifications, and adherence to environmental standards like water conservation and soil health.
• Consumer empowerment: Thanks to blockchain-based supply chain transparency, consumers can make informed purchasing decisions based on their values and preferences. By scanning a product’s QR code or RFID tag, consumers can access detailed information about its production process, including sustainability credentials and ethical sourcing practices.

6. Sustainable insurance solutions

Sustainable insurance solutions promote environmental and social responsibility within the insurance industry while addressing sustainability challenges. These solutions integrate ESG criteria into insurance products, underwriting practices, investment strategies, and corporate operations. Examples of sustainable insurance solutions include the following:

• Climate resilience and risk mitigation: Fintech insurance solutions help individuals and businesses build resilience against climate-related risks and natural disasters. They offer innovative products, such as parametric insurance, which provides predefined payouts based on specific triggers, helping policyholders recover quickly from climate-related losses.
• Eco-friendly insurance products: Insurance companies develop eco-friendly products that incentivise sustainable behaviour and reward users for adopting environmentally friendly practices. For example, car insurance companies may reward drivers of electric vehicles, while home insurance companies may offer discounts for energy-efficient homes with green certifications.
• Investment in sustainable assets: Sustainable insurers allocate their investment portfolios toward environmentally and socially responsible assets, such as green bonds, renewable energy projects, and impact funds. Integrating ESG considerations into investment decisions allows companies to support transitioning to a low-carbon economy while seeking attractive financial returns.

7. Regulatory technology for ESG compliance

Regulatory technology (RegTech) solutions for ESG compliance are essential tools for financial institutions to manage the complexities of ESG regulations, requirements, and standards. RegTech platforms leverage technology, data analytics, and automation to streamline ESG compliance processes, enhance transparency, and ensure adherence to regulatory obligations. Here are vital aspects of RegTech for ESG compliance:

• Data aggregation and management: RegTech solutions help organisations aggregate, normalise, and manage big ESG-related data from various internal and external sources. This includes financial data, sustainability metrics, environmental performance indicators, social impact data, and governance disclosure.
• Regulatory intelligence and monitoring: RegTech platforms provide regulatory intelligence and monitoring capabilities to keep organisations informed about evolving ESG regulations, guidelines, and reporting frameworks. These platforms leverage artificial intelligence, natural language processing (NLP), and machine learning algorithms to scan, analyse, and interpret regulatory documents related to ESG compliance.
• Automated reporting and disclosure: With RegTech solutions, it’s easier to automate the process of generating ESG reports, disclosures, and filings stakeholders may require. These platforms facilitate the preparation of standardised reports, such as sustainability reports, ESG disclosures, and integrated annual reports.

Wrapping up

Sustainable fintech solutions are reshaping how we invest, transact, and manage financial risks while driving positive environmental and social outcomes. Leveraging the power of technology, data analytics, and collaboration, fintech companies are paving the way for a more inclusive, resilient, and sustainable economy. With trillions of dollars flowing into sustainable investments globally, the opportunity for growth is vast.Join the TechWriteable community for the latest news on your favourite topics and technology concepts. Get information to aid your real estate profession, including the best enterprise asset management software, top customer engagement tools, and many more. You can also get reviews on your favourite SaaS tools, including Aiden, Safari AI, and more. Subscribe to our newsletter and follow us on our social media channels to stay updated.