14 December 2016: The UN Environment Programme (UNEP, or UN Environment) has released a report that assesses how financial technology, or “fintech,” is likely to disrupt the financial system’s core functions. It discusses the potential of fintech innovations to support or hinder efforts to align financing with sustainable development outcomes.
The report also proposes key steps to support a “fintech for sustainable development (Ft4SD) journey,” such as incentivizing fintech alignment with sustainable development by supporting social impact and venture capital funds with sustainable development ambitions.
UNEP’s Inquiry into the Design of a Sustainable Financial System produced the report titled, ‘Fintech and Sustainable Development: Assessing the Implications,’ as a companion to the second edition of ‘The Financial System We Need.’ The Inquiry’s work has underscored the need to reset the global financial system to ensure a transition to an inclusive green economy that can contribute to achieving the Sustainable Development Goals (SDGs) and climate commitments. Fintech encompasses innovations such as blockchain and bitcoin, crowdfunding, high-frequency trading, mobile payment platforms, and virtual currencies.
On action to shape the direction of fintech, the report recommends ensuring fintech is an integral part of financial system national development plans, particularly in developing countries.
The report analyzes ways to, inter alia: promote greater financial inclusion by reducing payment costs and increasing access to capital; collect, analyze and share information on the financial system to support improved economic decision making, regulation and risk management; provide financial markets with a level playing field and market integrity to support long-term economic investments that align with the sustainable development agenda; and mobilize domestic savings at scales that will support long-term economic stability.
The report also explores how advances in blockchain, machine learning and artificial intelligence (MLAI), and the Internet of Things (IoT) could build transparency, traceability and trust, contributing to future financial systems that are more efficient in mobilizing green finance.
On action to shape the direction of fintech, the report recommends ensuring fintech is an integral part of financial system national development plans, particularly in developing countries. It further recommends creating a challenge fund to create a “global community of purpose” to pilot and replicate solutions, and establishing a platform of fintech companies to connect fintech and sustainable development. The report provides a portfolio of Ft4SD case studies that illustrate how fintech could help address SDGs on poverty, hunger, energy, jobs and growth, climate, oceans and other environmental challenges, consumption, peace and partnerships, among others.
UNEP established the Inquiry in 2014 to advance policy options to improve the financial system’s effectiveness in mobilizing capital towards a green and inclusive economy. [UNEP Press Release] [Publication: Fintech and Sustainable Development] [SDG Knowledge Hub Story on the Launch of UNEP Inquiry’s Report ‘The Financial System We Need’] [SDG Knowledge Hub Story on Launch of ‘Inquiry into the Design of a Sustainable Financial System: Policy Innovations for a Green Economy’]