The news: The Green Digital Finance Alliance (GDFA) and the Swiss Green Fintech Network launched a draft taxonomy to help investors, policymakers, and technology providers consistently assess fintechs’ environmental impact, per Finextra.
More on this: The proposed taxonomy arrives in the wake of the UN Climate Change Conference (COP26), where the Glasgow Financial Alliance for Net Zero (GFANZ) pledged to align its members’ financing activities to achieve net-zero emissions by 2050.
Why it’s worth watching: Climate anxiety has made consumers pay more attention to and prioritize sustainable brands. Environmental, social, and governance (ESG) strategies have emerged as a strong growth vector for investment managers and will be a major trend during 2022, but charges of greenwashing pervade the investment world—and the SEC is concerned that ESG funds might mislead investors.
ESG ratings rely on corporate disclosures—yet without established global standards, questions arise about the ratings’ validity.
Fintechs that promote their sustainability efforts have an opportunity to play an active part in forming these standards: The GDFA is inviting feedback on its report and aims to finalize a taxonomy during Q1 2022.