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    The need and importance of Green Fintech in India

     

    Table of Contents:

    1. Introduction
    2. What is green financing
    3. How can fintech take a stand on sustainability
    4. Challenges for green fintech in India
    5. How can green finance benefit our economy
    6. How to promote sustainable finance in India
    7. Facts about green financing in India
    8. Artificial Intelligence and Data Science are leading to a sustainable industry
    9. Conclusion

     

    Green financing takes away the fintech industry from the traditional shackles, which is evidently for the better. With the world moving towards sustainability, the future of green fintech in India looks hopeful. To a great extent, fintech has helped companies reduce their environmental impact with much credit to advanced technologies like blockchain technology, artificial intelligence and data analytics. Newer fintech business models are designed to create a reduction in greenhouse gas emissions and eventually diminish all negative impacts.

    Green financing is journeying to build green bold platforms. While fintech aims at automating the financial services for customers and enhancing the entire procedure; green fintech in India is introduced to minimize emissions and escalate biodiversity.

    Fun Fact: Singapore started to promote Green Fintech in 2015 and is now positioned as the world’s top FinTech hub. What’s in store for India? Let’s find out.

    What is green financing?

    Simply put, green financing is an investment that supports eco-friendly activities such as building an environmentally-friendly infrastructure or indulging in eco-friendly services. In a snippet, it is any structured financial activity that’s designed to ensure a greater environmental outcome.

    For all the obvious reasons, green financing is blooming. It is predicted to hold a whooping value of $2.36 trillion by 2023 , globally. In a gist, green financing is instigated to meet the needs of capitalism and environmentalism.

    The system of green fintech in India encourages development of green projects and minimizes the impact on climate with its debt mechanisms and array of other financial activities.

    Some typical projects that fall under the umbrella of green financing:

    • Sustainable use of land and natural resources
    • Biodiversity conservation
    • Energy efficiency and renewable energy
    • Pollution control
    • Sustainable transportation
    • Circular economy initiatives

    How can fintech take a stand on sustainability?

    Fintech is a primary player in India and plays a key role in environmental sustainability. Some of the avant-garde technologies are incorporated to eliminate inefficiencies and corruption.

    • Develop green technologies to streamline financial procedures and positively impact corporate behaviors.
    • Green solutions strengthen the brand sustainability.
    • Efficient management and disaster prediction.
    • Traceability of investment and supply chain
    • Innovative payment solutions
    • Making sustainability the USP
    • Operate a ‘green supply’ chain

    Challenges for Green Fintech in India:

    Leaving aside the rosy side of green financing, it comes along with a set of challenges.

    • Winning over the consumer
    • Prioritising planet over profit
    • Alignment of environmental and financial objectives
    • Funding over the competing needs
    • Addressing the inefficiencies in the green finance space

    How can green finance benefit our economy?

    The role of sustainable finance is cited with the process of making investment decisions while considering the environmental and social projects.

    • Green financing benefits by adopting climate-resilient systems.
    • Sustainable finance system leads to a regular flow of investments with utmost transparency.
    • To a great extent, green bonds disincentivize high carbon emitting projects.
    • India’s transition to a green economy is likely to create more jobs.
    • All of the activities are bound to create a better human life without destroying nature.
    • Green loans are expected to escalate green projects and contribute substantially in the reduction of GHG emissions, thereby combat climate change.
    • A proper management of green banks ensures positive revenue and environmental impact. They fund climate change projects, build safe water systems and more projects aligned with United Nation Sustainable Development Goals (SDG).

    How to promote sustainable finance in India?

    The term ‘green economy’ was first coined in 1989 by a group of leading environmental economists. Some statistics state that green fintech in India has increased by 150% from 2017-2020. However, there is a need for more from the private sector. And India must increase its green financial flow rapidly to meet its Panchamrit target . For fast-pace results, the following must be done.

    • Encouraging investments in clean and green technologies.
    • Boosting different sectors to participate in the ‘green movement’.
    • Urge the use of green bonds
    • Encourage more green projects
    • Line up financial decisions with sustainable development projects
    • Making necessary changes for green financing policies

    Some facts about green financing in India:

    • India requires about 162.5 lakh crores till 2030 for NDCs (nationally determined contribution) and INR 716 lakh crores to obtain net-zero emissions by 2070.
    • India suggested the issue of green bonds in 2015.
    • RBI joined the Network for Greening the Financial System (NGFS) to support the green economy practices in 2021, thereby encouraging environmental progress and eliminating climate related risk.
    • Looking closely at the landscape of green finance in India, it has evaluated the financial flow in energy, transportation, infrastructure and a footprint in several other sectors.

    Artificial Intelligence and Data Science are leading to a sustainable industry

    Artificial intelligence and advanced data science are the most promising fintech solutions for a sustainable finance industry. Here’s how:

    • Using big data to measure the environmental impact of companies assets. For instance, the traceability of their supply chain.
    • Scrutinise the exposure of fixed income portfolios to varied risk scenarios related to climate transition and the Sustainable Development Goals.
    • Evaluate whether a company has a negative or positive impact on the SDG.
    • AI combats climate change through predictability, problem solving and forecasting.
    • AI-augmented satellite imagery can recognize natural disasters, vegetation and forest cover.
    • New technologies, data sources, analytical approaches can provide more progress on the SDG.

    One Last Thought:

    Green FinTech plays a major role in the journey to a low-carbon future. Thus, a sustainable green fintech company is no longer a fad. The FinTech industry adopts a green shade with new products, funds and investment strategies. Famously called the city of tomorrow, what happened in Singapore must spread out to the world.

    With India’s Finance Minister asking the fintech industry to engage more with the government, the best is yet to come. Our findings indicate that green financing in India is fast emerging but the management system could pave the way better towards a sustainable long term economic growth.

    We, at Atria Univeristy , took the plunge by hosting ‘Beyonder Emergence & Green Future Summit’ to focus on laying an ideal blueprint for the future of Green Fintech and also suggested valuable policy changes. At the event, our students also showcased plenty of projects aiming at solving real world problems.

    Holding the responsibility of being India’s first Liberal Science University, we took charge of an insightful panel discussion on green gintech and how we can help India attain its goal of becoming a leading player in the ‘Green Economy’.

    Atria Admissions Team

    January 23, 2023

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