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EXECUTIVE PERSPECTIVE: An unusual collaboration launches into the world of finance

A unique new initiative, the Green Digital Finance Alliance, is being launched in Davos this month.  UNEP is co-leading it, along with the massive Chinese fintech company, ANT Financial Services.  We sat down with this interesting blend of collaborators to find out more about a movement that is both disruptive and accelerating.

17 January 2017

Thomson Reuters: What is the Green Digital Finance Alliance and why has it been created?

UN Environment: the Alliance has been created in recognition of the need to ensure that the new world of digital finance (i.e. fintech mixed with artificial intelligence, the internet of things, etc…) meets the needs of an inclusive green economy rather than replicating the unsustainable financing that has evolved under the current incumbent financial institutions and financial system. It is being co-founded by the world’s largest fintech company, ANT Financial Services Group, and the UN Environment (UNEP), and launched in Davos this month.

TR: What are the business reasons for ANT wanting to co-lead such an initiative?

ANT: ANT is inspired by the view that every person needs to ‘have a natural capital account’ and be rewarded or otherwise for their impact on the environment. So then payments platforms are not just about money, but about how financial transactions impact ones natural capital footprint. Companies that lead in this space stand to benefit from the more fundamental changes accompanying the transition to a green economy. ANT is already experimenting in turning this vision into practice, now in partnership with UN Environment. We have launched a new service on its payments platform that provides a carbon benchmark for any person signing up, and then rewards them for carbon savings through social media-related incentives and through real-world offsets in the form of tree planting.

TR: Is the demand growing?

ANT: 50 million people signing up in less then 90 days and leading to a million and a half tree planting obligations is certainly not trivial, and this is with no financial rewards at all. In addition, ANT has a range of wealth management services that include ‘green investment’ options, with minimum investments of exactly RMB 1, or about 20 US cents. We believe that growing awareness of environmental issues will lead to such initiatives being successful, even when there is no requirement, and when there is no direct financial reward.

UN Environment: Other companies are also rising to this challenge and opportunities, although to date at a far lower scale. Start ups like Sweden-based Trine, Kenya-based M-KOPA and US-based SolarCoin are building technological ecologies embracing clean tech, payments platforms, crowd sourcing and crypto-currencies that in effect circumvent the weaknesses in prevailing investment, lending and customer management value chains to get the low-carbon, clean and healthy, accessible job done

TR: How does this position the company and China from a global leadership perspective?

ANT: Green digital finance is a new arena for linking public good with profitable business developments. We think it makes some sense that the first global initiative on this topic, the Green Digital Finance Alliance, is being co-founded by a young company from an emerging nation.

UN Environment: Actually, to our knowledge, this is the first global public-private partnership to be co-founded by a Chinese company. The UN Environment is proud to be part of this positive milestone into the 21st century.

TR: What can such an Alliance hope to achieve and is there a danger that it will be just another talk shop?

UN Environment: The Alliance will bring together digital finance-focused businesses, alongside enabling experts and policy-makers to do three things. First is the need to raise the profile, impact and adoption of the world of green digital finance that already exists. Second is the need to co-design potential innovations, especially ones that could benefit from collaboration, including with policy makers and regulators and civil society. Third is the need to advance specific initiatives, and on this the current plan is to start with an expansion of ANT’s carbon-saving initiative.

ANT: Yes, we are excited at both the potential of raising the wider profile of green digital finance, as well as the specific prospect of involving other payment platform companies in what could become a highly innovative, borderless ‘carbon market’ of a kind never seen before. We are all learning although there is much experience internationally in partnerships. We hope to be successful of course.

TR: How can and will the big banks engage in this movement

ANT: Banks today are changing for many reasons, new regulations, new awareness of customer needs, and of course technology. There is no reason banks should not embrace green digital finance, but some may find it difficult. We hope over time that their involvement in the Alliance will help them to be ambitious and open and make the changes needed.

UN Environment: Yes, some will meet the challenge as did HSBC in an earlier period of disruption through its successful, UK-based, internet-only banking subsidiary, First Direct. In Kenya, similarly, the disruptive effects of the mobile payments platform, M-PESA, has driven domestic banks to figure out how they can play a role in the new financial-technological ecology. So it is perfectly possible for banks to play a key role in the new era of green finance, but some will be challenged to make the change.

Simon Zadek, Co-Director of the UNEP Inquiry into the Design of a Sustainable Financial System, was a significant contributor to this piece.  Edited by Tim Nixon, Managing Editor, Thomson Reuters Sustainability.

Any opinions Expressed in "Executive Perspectives" are those of external parties and not those of Thomson Reuters.

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