Please note that nothing in this article is financial advice.
Environment preservation and the different options to address this concerning issue cannot be carried out and sustained leaving economy aside, since climate change and economy are closely linked in many aspects.
Moreover, companies are becoming increasingly aware that green damage does not match with the concept and policies of investmentfrom institutional and particular investors. The efforts to approach environmental remediation through proactive and ad-honorem actions were not enough, so companies started to adopt different policies regarding environmental impact.
“Most people are engaged with different economic activities and, externally, they make an action, where there is a lot of eco-branding, to say that they are environmentally friendly, but environment restoration is not in their core business. Ecofintechs are completely different since they are devoted to environmental remediation through inclusive and democratic resources seeking, at the same time, economic benefits to ensure sustainability over the time.” This statement was reported by Alejandro Carrano, Marketing Manager at GreenBondMeter (GBM), the global consortium based at Estonia and Uruguay that is behind GBM coin, the first cryptocurrency which token (1 GBM coin) is backed by one-square meter of preserved forest.
The concept of Ecofintech fits right to GreenBondMeter that, together with a team of Argentine entrepreneurs, strive to apply finance and technology, such as cryptocurrencies, to processes that generate ecological benefits. This project has been proposed for a global debate. In this case, the idea is to preserve 300 million Hectares of biosphere at risk (flora, fauna and land) during 100 years through the creation of a web 3 technological ecosystem combining Blockchain, GIS and IA.
In Argentina, the project has already started through the integral restructuring process of a245,000,000 m2 area in Misiones able to absorb 300,000 carbon tons, which is equivalent to removing the GH gases released by 75,000 cars per year approx.
FinTech “green revolution” aims to be shaped in global projects such as the Green Digital Finance Alliance through an innovative activity aiming to benefit from digital technology to attract financing that meets global environmental challenges.
The Green Digital Finance Alliance was launched in 2017 by Ant Financial Services Group (Ant Financial), the leader supplier of on line and mobile financial services in China and by the United Nations Environmental Program at the World Economic Forum in Davos, Switzerland. Its members are innovative financial institutions engaged with digital technology to promote green finance in loans, investments and insurance.
The Cooler Future startup recently raised Euros 1.4M to continue the development of the first climate-impact investment app in Europe, allowing users to trace the environmental impact of each invested euro.
The app offers a portfolio of ecological assets where investors can trace the CO2 impact of their investments together with the financial return. In the near future, the app will offer a diversified global fund available only to those companies and sustainable projects engaged with emissions decrease.
PensionBee is another example: it is a fintech that offers retirement plans by investing in friendly environmental projects. In November 2020, the company launched a new product, the Fossil Fuel Free Plan. It was purported to create a 100M British pounds fund excluding from their investment options those companies engaged with or promoting the exploitation of oil, gas and coal. It was a successful product that raised the total of the required capital in only 34 days.
We’d like to mention as well the G17 Eco, a global marketplace based at the United Kingdom. This platform helps any organization, nation and NGO to map, monitor, measure, manage and market their SDGs and sustainability impact.
Sooner or later, this emerging financial trend was likely to impact on the capital market. In line with this fact, an agreement was made between the New York Stock Exchange (NYSE) and the Intrinsic Exchange Group (IEG) –which founders are the BID and the Rockefeller Foundation- for the joint development of a new class of assets called “Natural Asset Companies” or NAC for its acronym in English.
NACs are those companies that assign value to those services inherent to nature, such as to store carbon in the forest instead of extracting natural resources such as deforestation.
Carbon Credits
Currently the 80% of global emissions remain unpriced and, according to the IMF, the global average carbon emissions price is only USD 3.- per ton (2021). Such low price is not enough to boost energy efficiency and to re-direct innovation towards green technologies. According to the same report, the price per ton in a country like Argentina should be of USD 25.- per ton approximately. Here we have an opportunity.
As reported by Carrano, “The world has been moving towards digitalization for years and decarbonization now joined this trend. This process is transversal to all economic activities. From GBM we assumed that the Blockchain could not be excluded from this transformation and, even more, we aim to raise awareness that the Blockchain technology offers a promising solution to climate concerns regarding biospheres at risk.”
GBM measures the additionality generated by carbon sequestration annually and, for this positive difference, high-standard CCB carbon credits certificates are issued. This type of carbon credits is being increasingly required in the market by those companies based in countries adopting the Kyoto Protocol, the Paris Agreement and, more recently, the COP26 Health Program or by those companies seeking to trade in those markets that require zero-carbon footprint.
To conclude, green finance democratization, circular economy and environmental preservation are some of the goals set by the Ecofintechs, helping companies to monitor and reduce their environmental impact and leading investors towards sustainable and natural assets.
Alejandro Carrano
Marketing Manager at GreenBondMeter (GBM)
