Fintech and its imapact on ESG investment .pptx

use of Fiintech in ESG investments

1. FinTech's potential for promoting financial inclusion, ESG alignment, and sustainable finance By Nilotpal Sarma

2. FinTech accelerates Environmental, Social, and Governance (ESG) integration by enhancing data availability, transparency, and accountability. ESG Data Analytics: AI and Big Data tools assess corporate ESG performance, identify greenwashing, and provide investors with real-time sustainability metrics. Blockchain for Transparency: Distributed ledgers track sustainable supply chains, verify carbon credits, and ensure integrity in green bond issuance. Digital Platforms for Impact Investing: FinTech platforms channel capital toward ESG-compliant projects, connecting socially conscious investors with sustainable ventures. Crowdfunding for Social Enterprises: Platforms like Kickstarter and Kiva enable financing of projects with measurable social and environmental benefits.

3. FinTech supports the broader agenda of sustainable finance by facilitating the flow of capital toward green and socially responsible investments. Green FinTech Products: Development of green bonds, carbon credit trading platforms, and climate risk analytics tools. AI-Driven Risk Management: Use of predictive analytics to assess climate-related financial risks and align investment strategies with sustainability goals. Tokenization of Sustainable Assets: Blockchain-based tokenization allows fractional ownership of renewable energy projects, making sustainable investing more accessible. Digital Platforms for Carbon Accounting: Tools that help firms and consumers measure and offset carbon footprints.

4. Introduction Sustainable finance  integrates environmental (E), social (S), and governance (G) factors into financial decision-making. Driven by: climate urgency, policy reforms (e.g., EU Taxonomy, SFDR, SEC ESG rules), and shifting investor preferences. Challenge: ESG investing lacks standardized data, transparency, and trustworthy ratings. FinTech , defined as the integration of digital innovation in finance, offers solutions through blockchain, AI, decentralized finance (DeFi), and digital platforms.

5. Before FinTech: Challenges in ESG Investing Lack of Transparency and Standardization Different ESG rating agencies (MSCI, Sustainalytics, S&P) produced inconsistent results. No unified framework; self-reported ESG data enabled greenwashing. Example: Volkswagen emissions scandal (2015) exposed deceptive environmental reporting.

6. Financial Exclusion High capital requirements limited ESG access to institutional investors. Developing economies lacked sustainable finance infrastructure. Small green projects (solar, waste management startups) rarely attracted funding. Manual Processes Paper-based ESG reporting was time-consuming, prone to error, and expensive. Regulators lacked real-time oversight tools.