Fintech and Green Investment

The following sections are included:

• Preface
• About the Editors
• About the Contributors
• Acknowledgements
• Contents

This chapter begins by addressing the food, energy, and water trilemma. A critique of the impact of neoliberalism that traces the transition from industrial to financial capitalism follows. The trade-off arising from improvements in living standards and environmental impact is then explored. In a context where socioeconomic and cultural differences result in conflicting views of what is virtuous, there is a problem of trust. The central proposition is that a new frame grounded in New Institutional Economics (NIE) is required. Fintech and distributed ledger technology (DLT) offer a unique way of building the essential institutional infrastructure required to overcome the problem of trust. Examples showing how fintech can address climate change follow. Whilst these initiatives are to be applauded, new international institutional infrastructure is required to enable fintech to realise its potential. Examples of future possibilities are presented. The chapter concludes by making the case for a new paradigm that prioritises international cooperation because unrestrained competition will lead to rising temperatures, mass migrations, and the collapse of civilisation as we know it.

This chapter intends to explore the concept of sustainability in the blockchain ecosystem, providing an overview of what already exists in the literature, as this new technology is rapidly gaining interest in different sectors and nowadays the global economy is moving towards sustainable development of financial markets and businesses. Considering the dominant uses of this technology for the green economy narrative, the purpose of this chapter is to expand knowledge on the topic of blockchain that could also allow effective ecological regeneration, facilitating degrowth objectives (Balaguer Rasillo, 2020) and socially equitable outcomes, through institutional reforms that disrupt debt-based economic systems, inspired by alternative currencies. In fact, after the COVID-19 lockdowns, there is a real need for a green, inclusive economy to build a stronger financial system, and blockchain could enable sustainable investments, mainly through collectively owned energy systems for a reduction in total energy use.

One of the main challenges with food waste minimisation relates to measurement and traceability across the food system. Complete, comprehensive, and transparent data are required to track progress on reduction targets, explore environmental impacts, and suggest mitigation strategies. The present chapter focuses on the use of material flow analysis and its utility in end-to-end traceability powered by blockchain technology, which stores digitised records in a decentralised and immutable manner and promotes trust and transparency across the entire food chain. The authors develop a food loss and waste measurement framework based on a mixed approach. On the one hand, material flow analysis emerges as an essential tool to quantify and qualify food loss and waste streams in the food system; on the other side, blockchain technology enables the optimisation of partnership networks and implementation of circular economy paradigms, thereby reducing food loss and waste.

Financial technologies and digital finance emerge as new elements to support countries in their quest for green transformation and sustainable economic models. The green revolution is a complex process supported by policies and reforms that achieve a well-grounded institutional, financial, and economic framework. This chapter focuses on analysing China’s green revolution and the importance of prioritising technologies within the financial ecosystem to achieve energy and environmental sustainability. In particular, the country’s financial system, the innovations associated with the fintech sector, green digital finance, and particularly Beijing’s financial incentives through its state-dominated banking sector are critical to driving China’s green revolution. However, the scale of the required operations, infrastructure, and innovations is enormous, and financial support to empower the green economy will be crucial. China’s five largest state-owned commercial banks are poised to take a decisive role in realising the country’s ambitious plan of becoming a more environmentally friendly economy. It is expected that green finance should promote high-quality economic development through its positive impact on the ecology, generating economic efficiencies and achieving solid economic structures. Nevertheless, Chinese authorities face a daunting task in moving away from a heavily coal-dependent energy model that has become a predicament as political leaders are confronted with the reality of managing the ongoing energy crisis. Policy-makers must balance the new economic realities and their existing energy and economic models to ensure an appropriate balance between sustainability and political and economic interests. In order to progress towards China’s 2060 “carbonneutral” agenda and to shift towards a high-quality growth vision, the Chinese authorities must engage in a cautious and slow approach to change and transform so as to avoid destabilising the country’s economy.

The competitive process of creating blocks in blockchains — the technological backbone of cryptocurrencies — is computation intensive and consumes a large amount of energy. However, its environmental impact may not be significant, or at least not significant enough to undermine the application of digital currency as both a medium of exchange and a store of value. This chapter uses a unique dataset from the United States Environmental Protection Agency (EPA) to compare the carbon footprints of various industry sectors in the US with that of Bitcoin. Overall, the equivalent amount of greenhouse gas emissions from the Bitcoin network in 2020 is about one-third of the amount emitted by the entire mining sector in the US. In cross-sectional analysis, Bitcoin has a significantly larger carbon footprint than many companies and even industries after controlling for the economic value created. What is alarming is the rate of increase in Bitcoin’s energy consumption since 2017 and the possibility that its carbon footprint may eventually surpass all industries in the near future.

This research aims to examine the relationship between Cardano (ADA) return, which is used as a proxy for green cryptocurrency, and Google search volume (GSV), which is used as a proxy for investor attention. The weekly data cover the period from January 2018 to June 2022. To analyse the causal relationship between investor attention and Cardano returns, the VAR model and Granger causality tests are implemented. As a result, it is found that there is a bidirectional relationship between Cardano returns and investor attention. However, while changes in investor attention have little impact on the Cardano returns, changes in Cardano returns have a substantial impact on investors’ search intensity. Finally, it is concluded from the VAR results that both variables positively affect each other.

This work aims to understand current trends in the financial sector. Many trends are the technological solutions provided by new players operating in the financial sector (fintech), leading to different perspectives for the future awaiting private citizens and companies. This work presupposes the need to understand how the traditional financial system is able to keep up with the continuous and changing demands of a society that is evolving towards 4.0 and is increasingly aiming to meet environmental, social, and governance sustainability criteria. Above all, this chapter requires an understanding of the real reasons why systems such as decentralised finance are taking over despite the presence of well-established players. In this work, the authors aim to investigate the players, the battleground of a clash between tradition and innovation in the financial field, and whether the measures adopted by the banking system to adapt to the trends of technological innovation are sufficient to stand up to a real model of innovative development which sees a closer relationship between stakeholders and companies and which is far from the traditional banking–company system.

This chapter uncovers the effects of green banking regulation (GBR) on cross-border lending using panel data of 2,814 country pairs from 1995 to 2019. We label banking regulations as de jure and de facto ones. The former captures whether a central bank has explicit sustainability objectives or supports the government’s policies to pursue sustainability goals. The latter reflects whether a central bank takes on green activities or not. We use panel data of 2,814 country pairs from 1995 to 2019. The empirical results show that while de jure regulation acts as a brake, de facto regulation fosters cross-border banking flows (CBFs). When both genres of regulation are matched, the joint effects are positive. GBR mitigates the detrimental effects of environmental risks. These results are robust for alternative measures of green finance regulation and when we take the endogeneity into account. Our findings suggest important policy implications that central banks should engage in green banking activities to spur CBFs.

The pandemic has triggered economies to rethink, rebuild, and transform into inclusive, environmentally friendly digital societies and businesses. A key enabler for the vision is technology, and women are driving the adoption of digital and green financial solutions to achieve economic and social goals. This chapter highlights how women are playing a greater role in protecting the environment, fighting climate change, and addressing financial inclusivity, all through digital finance. However, women are still under-represented, despite being more adversely affected by environmental issues and having less access to digital finance than men. This chapter provides recommendations for using digital financial technology to tackle environmental sustainability and gender equality at the same time.

The world is marked by an extreme disparity of economic inequality, and the widening gulf of income and wealth distribution between the “rich” and the “poor” is one of the defining challenges of our time (Dabla-Norris et al., 2015). This chapter, set under the contemporary context of cascading disparities within social hierarchies and progressive innovations in financial sectors, outlines the roles of Central Bank Digital Currencies (CBDCs) in the elimination of economic inequality and probes three potential legal obstacles likely to be encountered during the implementation of CBDCs, by studying the correlations between the issuance of a CBDC and the reduction of economic inequality. This chapter, based on the welfare analyses on the socioeconomic manifestations of economic inequality and the roles of CBDC in the elimination of economic inequality, aims to promote common prosperity from the poorest to the people in high places, in order to construct a justified and legitimate economic system and to establish a free market welfare state, departing from poverty and inequality towards sustainable democratic states and common prosperity territories.

Despite the worldwide strides in advancing financial inclusion amongst the youth, a significant percentage of the population is still financially disadvantaged. While traditional banks have long offered basic financial services to the younger generations, a further opportunity has been spotted to provide better and slicker digital banking to tech-savvy kids and teenagers. This chapter summarises the ongoing development of Digital Youth Banking while highlighting its latest trends. It then explores challenges and opportunities relating to digital youth banking from the accessibility, practicability, and sustainability perspectives. This chapter further presents three exemplary cases to highlight the unleashed potential of digital youth banking from the traditional bank, neobank, and fintech points of view before setting out a series of recommendations to ramp up the endeavours towards financial inclusion of young people in society.

In recent years, we have been living through two epochal transformations in business: the new approach to sustainability and digital transformation. In this chapter, we analyse how these two phenomena intersect. To tackle this research question, we first discuss the opportunities and the limits of the energy efficiency sector, specifically referring to the role of green investments and the challenges of Energy Service Companies (ESCos). Thereafter, we introduce the leading technologies of the digital–financial revolution and illustrate the main features that characterise fintech, especially highlighting the role of blockchain and tokenisation in the energy efficiency sector. Through the analysis of the EFFORCE case, we highlight how in practice fintech and blockchain are supporting the crossing of certain limits of the energy efficiency sector and sustaining green investment.

Banco platform, which was launched by RABC Group, is a digital banking platform with a mission to align the transformation efforts of enterprises and financial institutions with innovative digital financing products. The company has recently collaborated with Savills (Singapore) Pte Ltd to digitise financing solutions in the property industry and provide more competitive financing options to suppliers and service providers, as well as enhance sustainability practices through accredited green financing options. This partnership is aligned with the initiatives of the Monetary Authority of Singapore (MAS) under the Green Finance Action Plan that was launched in 2019.

The following section is included:

• Index