Fintech is the decisive tool to make ESG work

The Fintech Association of Hong Kong (FTAHK) has released a paper outlining the importance of regtech in enabling financial institutions to make their businesses sustainable.

In collaboration with LITE Lab@HKU, a research unit of Hong Kong University, the FTAHK outlines four applications of regulatory technology that have the potential to improve the adoption of green finance.

They are:

• Using social media, eco-labelling and blockchain technologies to combat greenwashing 
• Using blockchain for land registration to decrease risks for green investments 
• Using data technologies, such as cloud and machine learning, for the disclosure, comparison and monitoring of climate risk and environmental data
• Using data technologies and statistical tools, such as scenario analysis, simulation and stress testing, to enhance risk management and governance frameworks

“Combining existing technologies and new technologies, RegTech has the potential to play a big part in combating the regulatory challenges currently facing green finance,” said Brian Tang, founding executive director of LITE Lab@HKU and a member of the board of FTAHK.

“The paper also shows that there is significant interest from investors in contributing to developments in this area, with total global investment activity in regtech reaching $3.4 billion in 2019,” he said.

DigFin argues fintech is the decisive tool that can make green finance actually work. Today the field is riven by a lack of standardization, a lack of global regulatory harmonization, and rampant greenwashing among the world’s leading financial institutions.

In this short video, DigFin’s editor, Jame DiBiasio – also a member of the board of FTAHK – explains why banks must accelerate digitalization in order to survive the coming tectonic shifts in finance in the face of dramatic climate change. (Video courtesy of Telum Media.)