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UK fintech can be a force for good in the fight against climate change

Nick Lee, Head of Regulatory Affairs at OakNorth

As a sector reliant on cloud computing, the fintech sector has a significant carbon footprint , but is also fortunately in a greater position to help address climate change than many others. Not least because it’s a magnet for new capital – UK fintech has attracted c.$12bn of investment so far this year[1] – but also because it is viewed as a strategically important sector for the growth of the UK economy.

In June, a group of UK tech companies powered by Tech Nation and led by renewable energy supplier, Bulb, launched the Tech Zero Task Force with an aim to accelerate progress to net zero. Companies that join the Task Force must commit to measuring their scope 1-3 emissions with an aim to halve emissions by 2030 across all scopes. They also need to appoint a member of their executive team to be accountable for their net zero target, and report progress on short-and medium-term targets to their Board annually, and on their website. OakNorth is a member, as are other fintechs such as Starling, Revolut, Habito, Onfido, Wise and Go Cardless.

The former Governor of the Bank of England and Stripe board member, Mark Carney, has described reaching net zero as “the greatest commercial opportunity of our time”. Combine this with the  obligation that we all feel to reach net zero  and it’s perhaps unsurprising that so many fintechs (including Stripe) are throwing their weight into the ring. Net Purpose for example, is on a mission to make impact measurement effortless for all investors by providing raw, quantitative data on the social and environmental outcomes of companies and investment portfolios. Tumelo, a sustainable investment platform shows investors the companies they own and empowers them to engage on issues they care about such as protecting the planet. Urgentem is the leading independent provider of transparent carbon emission data and climate risk analytics to the finance industry. At OakNorth, we’re developing a Climate Change Risk Framework to help lenders measure, manage and mitigate the physical and transition risks in their commercial portfolios.

With COP26 at the end of the month, it’s the perfect opportunity for decisive action to be taken, with the UK Government’s recent release of it’s Net Zero Strategy an encouraging start. Furthermore, at a policy level we would welcome more incentives at the national and local level for the development of green buildings – something that is particularly important to us as a lender to SME housebuilders.

Given the challenges that lie ahead, it’s clear that this is a global problem and collaboration will be key. Across the world, the more that fintechs and authorities can share experiences, data and methodologies around climate change with one another, the easier it’s going to be for the industry to create some consistency around measuring it, and the better prepared we will all be to move towards a more sustainable future and better serve our customers.

[1] Source: Fintech Finance

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