Singapore and Hong Kong lead green Fintech development among the five APEC economies

Today, GoImpact, an ESG and sustainability education firm, together with The Chinese University of Hong Kong’s Business School (“CUHK Business School”) released the findings of their working paper, Exploring the Green Fintech Ecosystem in Asia: Insights from Five APEC Economies. This study finds that government support plays an important and essential role in facilitating green fintech development, while a lack of talent is a common concern in the five economies of the region.

Derived from three elements – environment, finance and technology – the industry report defines green fintech as financial activities that use green technologies that provide better environmental results.

Industry experts from five APEC economies, namely Hong Kong SAR, China (“Hong Kong”), Indonesia, the Republic of Korea (“Korea”), Singapore and Thailand, have urged policymakers to establish an environment for green fintech to flourish. According to them, governments can help by offering incentive schemes for startups to develop in this area and spearhead the change by setting sustainable regulatory frameworks and imposing disclosures, reporting and thresholds.

The study also suggests that financial institutions should embrace the sustainable agenda to achieve the triple bottom line: profit, people and the planet. Given today’s competitive banking environment and the global shortage of green talent, financial institutions should leverage their unique positions in the business ecosystem to develop more in-house sustainability talent to advance the sustainability agenda, the report further explains.

Key findings from the study include the following:

1. Green fintech startups in Asia have already delivered many different types of green fintech, such as green digital payment, green digital investment solutions, green digital analytics, green crowdfunding, green risk analytics, green digital lending, green digital asset solutions and green regtech.
2. ESG disclosure regulations play an important role in promoting the green fintech ecosystem. Supporting evidence comes from case examples in Hong Kong SAR which suggest green reporting startups grew at a faster pace since the ESG reporting requirement for all listed companies came into effect in 2020.
3. As the Green FinTech ecosystem develops, collaboration and partnerships will become more mainstream. There are already several successful collaborations in Asia, including Project Genesis in Hong Kong SAR, Climate Impact X and Project Greenprint in Singapore, and a carbon offset program by Gojek and Jejak.in in Indonesia.
4. Authorities in Asia are aware of the importance of a green economy and have set roadmaps and initiatives to help the economy transition to a more sustainable economy: for example, the Republic of Korea’s Green New Deal and Thailand’s Sustainable Finance Initiatives.
5. Financial institutions have already provided several green fintech services, including biodiversity-controlled stock indices, tokenized carbon credit trading platforms, robotic platforms for ESG investments, green certificates and ESG credit rating systems.
6. Sustainability-related education is essential to building a mature green FinTech ecosystem. It will raise awareness, push demand for green finance, and cultivate the talent needed for green FinTech development in Asia.
7. The four-pronged approach required to build a well-functioning green FinTech ecosystem is: increase demand for green services; increase the supply of green services; mobilize resources; and strengthen the policy.

The study examined policies, markets and opportunities regarding fintech’s role in driving green finance in the five selected APEC economies through desk surveys, interviews, as well as focus group discussions involving green fintech startups, governments and quasi-governmental organizations, green fintech-related associations and financial institutions , and found that both Hong Kong and Singapore are in the stage of scaling up and accelerating to mature levels in terms of green fintech development compared to the past two years.

Prof. Kalok Chan, Wei Lun Professor of Finance at CUHK Business School, said: “It is our great pleasure to partner with GoImpact to explore the Green Fintech Ecosystem in Asia. This research paper provides a glimpse of trends and insights for the five Asian economies in terms of Green Fintech Ecosystem health, government initiatives and supporting institutions . As one of the leading business schools in Asia, we will also continue to cultivate talent with a socially responsible mindset and equip them with the skills and knowledge to positively impact the improvement of the Green Fintech industry.”

Helene Li, CEO and co-founder of GoImpactsaid, “The intersection of capital and technology is the sweet spot that drives the adaptation of sustainability. We are proud to partner with CUHK Business School on this study which aims to provide a better understanding of the diverse landscape of Asia and a more collaborative lens in collaborating on this timely agenda.”

Li will speak on adopting an active ESG approach for inclusive and green finance at Hong Kong Fintech Week 2022 on 31 October 2022 to share more insights on the global fintech industry.