In a recent report, GoImpact, in collaboration with The Chinese University of Hong Kong Business School and Ant Group, uncovered the key challenges faced by the green fintech industry.
Despite the ongoing ‘funding winter’ experienced by startups worldwide, the development of green fintech has displayed strong momentum, as stated in the report. However, four main challenges continue to persist:
1. The lack of a unified global standard, despite the progress made by global frameworks like the International Sustainability Standards Board (ISSB).
2. The risk of greenwashing due to the absence of universally agreed standards and metrics, which threatens the credibility of the sector.
3. The absence of interoperability of protocols among different platforms, crucial for integrating ESG data in green fintech solutions.
4. A significant talent gap, with a shortage of skilled sustainability practitioners, particularly in Asia, due to the lack of education and awareness in the sector.
Also Read: What stands in the way of fintech growth in Asia?
“Given the complexity of balancing Net-Zero targets with economic growth and varying levels of ESG adoption, collaborations between public and private sectors are essential,” the report emphasized.
The report further elaborated on the various types of green fintech available in the Asia Pacific market, categorized into Climate solutions, Carbon management, ESG reporting & disclosure tools, ESG risk solutions, and Green insurance.
“The rise of Voluntary Carbon Markets (VCMs) in the APEC jurisdictions is closely linked to the benefits of green fintech, aligning with the efforts of nations and corporations to combat climate change,” the report mentioned.
Also Read: Fintech VC Flourish Ventures banks US$350M to double down on emerging markets
Regarding its role in promoting ESG and sustainability principles in the region, the report highlighted that green fintech presents a significant opportunity to support SMEs on this journey.
“SMEs, lacking resources compared to large corporations, can utilize green fintech solutions to kickstart sustainability initiatives more efficiently. Similarly, green fintech companies can help SMEs operate in a more environmentally friendly manner, enhancing their creditworthiness,” the report added.
Image Credit: RunwayML
This article was originally published on December 21, 2023
The post Unlocking green fintech prosperity in Asia: Navigating the top 4 challenges appeared first on e27.