Green Brokers?: Javier Vergara, Co-founder at FinKratt
AI has undoubtedly taken centre stage in tech trends, but in the world of financial solutions, there’s been a quieter but growing shift towards what’s known as "green finance" or "green investments". While this rise in green fintech may not be as dramatic as AI (and doesn't make headlines as often), those within the industry have certainly noticed the trend.
In the EU, this green fintech surge has been closely linked to the Sustainable Finance Disclosure Regulation (SFDR), which brought ESG (Environmental, Social, and Governance) investing into the mainstream in 2021. ESG has now become integral to many major EU fintech companies like Wise and Revolut, both of which have dedicated ESG teams measuring their carbon footprints and adopting eco-friendly practices. Wise, for instance, has an entire website dedicated to ESG matters, and according to their 2023 Annual Report, they've been carbon neutral since 2020 and achieved clean power in their largest offices since 2021.
Sustainability efforts themselves are nothing new, but what’s truly interesting in green finance is the emergence of "green brokers". These are financial firms or platforms that specifically facilitate investments in environmentally sustainable projects. Estonia is home to startups like Grünfin and Single. Earth, which are some of the companies leading this trend. Their solution is straightforward: offer green investment products to investors who want to align their financial goals with positive environmental impact. Promoters of these green investments often claim they perform just as well, if not better, than traditional products. However, this claim remains debated, with recent data suggesting that real-world performance can be more challenging than ESG advocates suggest.
Interestingly, this trend hasn’t yet fully arrived in Latin America. Let’s just hope that if ESG-like investing ends up being a good idea, then the region gets its own local green brokers too!
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Javier Vergara, Co-Fundador de Finkratt
