Finance Monthly - FinTech Awards 2022

ESG & F i nTechs 52 Finance Monthly FinTech Awards 2022. trading and risk analysis. For each segment, we present unique companies that are building innovative products to tackle climate change through financial innovation. Banking Over the last few years, some of the largest and most influential banks globally have committed to reducing emissions attributable to their operations. They have also pledged to reshape their lending and investment portfolios to produce a net-zero carbon footprint by 2050. Although it remains to be seen how much this ‘Net Zero Banking Alliance’ can actually achieve among the largest banks, Middlemarch believes next-generation FinTechs are winning the battle for ESGfocused consumers who choose their banking providers based on the strength of their ESG-related banking products and their ability to address climate-related objectives. One traditional financial institution that is taking action to advance ESG goals in a material way is Amalgamated Bank, a US-based regional bank. It is a great example of a traditional bank focused on sustainability. A net-zero bank powered by 100% renewable energy, Amalgamated Bank believes in supporting sustainable organisations, progressive causes, and social justice. It does not lend to fossil fuel companies, and 24% of its loan portfolio is dedicated to climate protection loans and PACE financing (e.g., financing for energy efficiency upgrades, water conservation upgrades). Amalgamated Bank has made tangible progress in aligning its long-term business to achieving Paris Climate Agreement targets. Amalgamated Bank offers a strong business case for how a bank can deliver against socially responsible investment objectives. A compelling example of a FinTech using ESG to market as well as to address environmental issues is Aspiration Bank, a US-based, online-only FinTech that offers a ‘Spend & Save’ cash management account (CMA) where the deposits are not used to fund any oil and gas projects. It also offers a zerocarbon footprint credit card which claims to plant a tree every time a purchase is made from the card. The bank is set to go public in a $2.3B SPAC transaction later this year. With celebrity investors like Leonardo DiCaprio, Orlando Bloom, Robert Downey Jr. and Drake, a multi-million sponsorship deal with Los Angeles Clippers and a multi-billion SPAC in process, Aspiration Bank sets the tone for high-profile, ESGlinked FinTechs to disrupt the banking industry by attracting a younger and more environmentally oriented consumer demographic. Similarly, Ando, a US-based, online banking platform, invests customers’ deposits exclusively in green initiatives like renewable energy and responsible agriculture. By allocating more than $12M of its customers’ money to green loans since launch, Ando has empowered its users to make a meaningful impact with their savings. Launched in Jan 2021, the company announced a $6M seed round in October 2021, with over 30,000 customers. Lending The financial services sector that has most embraced ESG-related efforts is Debt Financing. There have been many green bonds and sustainability-linked loans issued. In addition to these bonds and loans that are promoted by large financial institutions, specialised FinTech lending companies are emerging that focus on sustainability and have developed dedicated lending platforms and products to address the ESG objectives of their consumer clients. Both Goodleap and Mosaic Inc. are excellent examples of lending platforms focused on financing sustainable home improvements. Goodleap, America’s top point-ofsale platform for sustainable home solutions, offers home upgrades with flexible payment options. With more than $9B in loans deployed through its platform, the company is valued at $12B post its recent $800M capital raise. Mosaic is a leading financing platform for US residential solar and energyefficient home improvement projects. The company surpassed $5B in loans through its platform in July 2021 as well as closed its 10th solar securitisation — more than any other solar loan issuer in this space. Both these platforms offer simple financing solutions for their customers and are poised to capture a critical component of the sustainable lending market in the years to come. Carbon Zero, a US-based credit card issuer, offers a simple way for customers to offset their carbon impact. Thecredit cardfeecollected by the company is invested in industry-leading forestry and

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