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- 🧭 AI and sustainability meet $789B SME green finance
🧭 AI and sustainability meet $789B SME green finance
Discover IBM’s AI sustainability insights, Spain’s €3.3B impact investment growth, and SMEs’ $789B green finance opportunity.
Bhuva Shakti
December 19, 2024 • Estimated Reading Time: 13 minutes
Hey there! 👋
Last week, we spotlighted CaixaBank’s €100 billion green finance pledge, Bolivia’s carbon credit strategy, and the transformative power of EU’s CS3D regulation. This week, we explore IBM’s findings on AI-driven sustainability in India, Spain’s booming €3.3 billion impact investment market, and the $789 billion green finance opportunity for SMEs.
At the BIG Risk Navigator, we equip you with the latest on sustainability, climate finance, and tech innovation to navigate emerging risks and scale your business.
Let’s dive into the updates.
India leading in AI-Driven sustainability, says IBM Report: The report suggests ways to confront sustainability challenges.
responsAbility and Phlomis Finance Combine Blockchain and Impact Investing: The collaboration aims to bring the concept of impact investing to more people by using blockchain for transparency and efficiency.
Normative acquires Eivee to strengthen carbon accounting: The company is a leading provider of carbon accounting services in the Nordic region, the EU, and the UK.
Spain's impact investment market hits €3.34bn in 2023: Spain's impact investing has witnessed a 135% growth since 2020.
Over half of European companies invest in climate action: EIB survey says that EU firms have weathered climate challenges relatively well.
Before getting deep into the news, take a look at how you can engage more in my community.
🌏 Join my community connecting climate fintech startups with investors.
📰 Share this newsletter with a friend and start to stand out in the executive meetings.
🖇️ Connect with me on LinkedIn for daily insights on expanding into the US market.
🤝 Need a board director? Reach out to me today.
🎯 UK’s digital information and smart data bill will impact open finance
The UK's Digital Information and Smart Data (DISD) Bill, currently making its way through Parliament, promises to reshape the digital landscape and accelerate the adoption of open finance. This ambitious legislation aims to bolster data sharing, improve digital identity, and streamline public services.
By empowering individuals to control their data and facilitating secure data exchange, the DISD Bill has the potential to unlock significant economic and social benefits.
Why it matters for climate fintech: The DISD Bill's focus on data sharing and interoperability aligns with the goals of climate fintech. By enabling seamless data exchange between financial institutions, fintech companies, and other relevant stakeholders, the legislation can facilitate the development of innovative solutions to address climate-related challenges.
For instance, the sharing of granular data on energy consumption patterns, carbon footprints, and renewable energy investments can empower consumers to make informed decisions and drive sustainable behavior. Additionally, the Bill's emphasis on digital identity can streamline the onboarding process for climate fintech startups, allowing them to scale their operations more efficiently.
Key implications for startups: The DISD Bill offers several opportunities for climate fintech startups:
Data-driven innovation: The increased availability of data can fuel the development of innovative products and services, such as personalized carbon footprint tracking tools and AI-powered investment platforms.
Enhanced customer experience: By leveraging open finance capabilities, startups can offer seamless and personalized financial solutions that cater to the specific needs of their customers.
Strategic partnerships: Collaborating with traditional financial institutions and other industry players can help startups accelerate growth and scale their operations.
Regulatory compliance: Adhering to the data protection and privacy provisions of the DISD Bill is crucial for startups to build trust with customers and regulators.
The insurance industry is undergoing a seismic shift, driven by the dual forces of climate change and digital disruption. As carriers, brokers, and MGAs grapple with increasing climate risks and evolving customer expectations, they are turning to technology and innovative strategies to stay competitive. Jeff Heine, CRO at Novidea, sheds light on the key trends shaping the future of insurance distribution.
Why it matters for climate fintech: The insurance industry's focus on climate risk management presents significant opportunities for climate fintech startups. As insurers seek to quantify and mitigate climate-related risks, innovative solutions that leverage AI, machine learning, and advanced data analytics can provide valuable insights. Additionally, the industry's growing reliance on digital technologies opens doors for fintech firms specializing in areas such as insurtech, digital insurance platforms, and climate risk modeling.
Key implications for startups:
Climate risk modeling and analytics: Startups offering advanced climate risk modeling and analytics tools can capitalize on the increasing demand for accurate and timely risk assessments.
Digital insurance platforms: Developing user-friendly digital platforms that streamline insurance processes and improve customer experience can attract a broader customer base.
Insurtech solutions: Innovative insurtech solutions that address specific pain points within the insurance value chain, such as claims processing, underwriting, and fraud detection, can gain traction.
🎯 $789bn green finance opportunity for SMEs revealed by Sage report
Small and medium-sized enterprises (SMEs) are poised to play a pivotal role in the global transition to a sustainable future. However, a significant gap exists between their sustainability ambitions and their ability to access the necessary financing. A new report by Sage, in partnership with the International Chamber of Commerce (ICC), has highlighted this opportunity, estimating a $789 billion potential market for green finance aimed at SMEs.
The report underscores the strong desire of SMEs to embrace sustainability. An overwhelming 86% of respondents view sustainability as a priority. Yet, only a small fraction (9.1%) formally report on their environmental impact. This disconnect is largely attributed to complex reporting standards, which 74% of SMEs identified as a major hurdle.
Why it matters for climate fintech: The SME segment presents a significant opportunity for climate fintech startups. As SMEs seek to improve their sustainability performance and access green finance, innovative fintech solutions can provide the tools and insights needed to navigate the complexities of sustainability reporting and financing. Climate fintech startups can develop user-friendly platforms for carbon accounting, ESG reporting, and green loan origination. Additionally, they can offer data-driven insights to help SMEs identify and implement cost-effective sustainability measures.
Key implications for startups:
Climate tech solutions: Startups developing climate tech solutions, such as carbon accounting software, renewable energy financing platforms, and energy efficiency optimization tools, can target SMEs as a key market segment.
ESG reporting and data analytics: Fintech firms can offer specialized ESG reporting and data analytics services to help SMEs comply with regulatory requirements and improve their sustainability performance.
Green finance platforms: By building digital platforms that connect SMEs with green lenders and investors, fintech startups can facilitate access to sustainable financing.
Financial inclusion: Fintech solutions can help bridge the financing gap for SMEs, particularly those in underserved markets, by providing innovative financing products and services tailored to their specific needs.
🎯 India leading in AI-Driven sustainability, says IBM Report
✅ Key Insights
The report suggests ways to confront sustainability challenges.
There is an overwhelming response from Indian businesses and their leaders to achieve sustainability goals through AI.
Most Indian business leaders (96%) plan to invest more in the IT sector.
A report released by IBM notes that India is ushering in sustainability through artificial intelligence (AI) and plans to make more investments in IT to achieve sustainability goals over the next 12 months.
🎯 responsAbility and Phlomis Finance Combine Blockchain and Impact Investing
✅ Key Insights
The collaboration aims to bring the concept of impact investing to more people by using blockchain for transparency and efficiency.
responsAbility and Phlomis Finance leverage their expertise in social impact investment and blockchain technology, respectively.
The tie-up also supports micro-entrepreneurs in developing countries and the United Nations Sustainable Development Goals.
responsAbility Investments AG, a leading impact asset manager, has joined forces with Phlomis Finance, a blockchain-enabled investment platform, to advance financial inclusion and climate finance.
🎯 Normative acquires Eivee to strengthen carbon accounting
✅ Key Insights
The company is a leading provider of carbon accounting services in the Nordic region, the EU, and the UK.
Strengthen Normative's ability to help its clients with regulations such as the Corporate Sustainability Reporting Directive.
Facilitate clients' compliance with carbon reduction laws and reporting standards.
Normative, a carbon accounting and net zero expert based in Denmark, has acquired Eivee, another leading carbon accounting solution provider, to expand its market reach and cater to large corporations.
🎯 Spain's impact investment market hits €3.34bn in 2023
✅ Key Insights
Spain's impact investing has witnessed a 135% growth since 2020.
Institutional investors remain underrepresented in the country's market.
Foundation investments also increased, though at a smaller scale (€260m).
A recent study executed by SpainNAB and the Esade Center for Social Impact (Esade) shows that Spain's impact investment market reached €3.34 billion in 2023, including bank financing and investments. Direct impact investments saw a 26% spike, reaching over €1.52 billion, driven by private equity funds and other investors. Also, assets under management increased by 32% in the wake of new entrants.
🎯 Over half of European companies invest in climate action
✅ Key Insights
EIB survey says that EU firms have weathered climate challenges relatively well.
EU businesses are investing more in climate change mitigation initiatives.
Around 27% are moving towards a zero-carbon economy and seeing growth in the sector over the next five years.
Companies in the European Union (EU) have fared well in dealing with various challenges, such as health issues, price increases, and trade problems in the last four years, notes a recent survey by the European Investment Bank (EIB).
The green premium explained
In 2021, Microsoft co-founder Bill Gates authored How to Avoid a Climate Disaster, a comprehensive plan for reducing global net CO2 emissions to prevent a climate catastrophe. Among the key concepts he discusses is the “green premium,” which refers to the additional cost associated with producing goods or services in a pollution-free or environmentally friendly way. This premium represents the price tag for choosing a greener option.
✅ Highlights
Sector-wise analysis of the green premiums
Call to action: How do we bring the premium down?
Early signals of market demand for low-carbon technologies are emerging, bolstered by supportive policies and green subsidies. However, challenges such as untested green premiums persist. The ability of the industry to pass along this premium or to monetise near-zero-emission products as a differentiating attribute depends on the target consumer segment (B2B vs consumer) and geography.
How Ushur is revolutionising AI innovation with robust risk management and compliance
✅ Highlights
Introduction of AI and GenAI technologies
A unique set of risks
GRC frameworks playing in the governance of AI technologies
As companies across the financial services landscape seek to expand their offerings with advanced artificial intelligence (AI) and generative AI (GenAI), how can they ensure they maintain cybersecurity, regulatory compliance and data privacy standards.
Ushur, an intelligent automation and customer experience solution provider, aims to help firms leverage the latest in advanced technology, but not at the expense of security, compliance or ethical responsibility.
🌏 Join my community connecting climate fintech startups with investors.
📰 Share this newsletter with a friend and start to stand out in the executive meetings.
🖇️ Connect with me on LinkedIn for daily insights on expanding into the US market.
🤝 Need a board director? Reach out to me today.