How FinTechs are prioritising ESG

By Jim Colvine, is the SVP for Global Product, Sustainability, at Mastercard

Businesses typically have one goal: maximise profits for shareholders and grow as large as possible as quickly as possible. While laws have been in place to curtail the very worst of amoral activity by organisations, history is filled with examples of companies circumventing those laws.

Today the game has changed. Companies are integrating Environmental, Social and Governance (ESG) into their companies at a deep level, often launching with a social goal that is just as important as profit. To measure and guide this change, we researched the ways that FinTech companies are integrating social and sustainability goals into their long-term planning and day to day operations.

FinTech is an industry with great potential to uplift people but equally to harm them. Dealing directly with a customer’s finances and data can allow organisations to revolutionise people’s lives or diminish the finances that they rely on, and it doesn’t stop there. As the report outlines, a company can have a wide range of stakeholders, both internal (employees, investors) and external (customers, suppliers, and the community at large). Each with the potential to have sub-sets of stakeholders with opposing goals. For example, management might want to maximise productivity by putting in extra hours, but lower-level workers will want a better balance of their work and life. Identifying these opinions is vital to an ESG project, and understanding stakeholders’ needs is the first step to aligning your company in order to reach your goals.

Progress is already being made

To get an overview of the ESG landscape within FinTech, The Payments Association’s members were surveyed about their data privacy, social justice, sustainability, and governance activity. (I would note, however, that there is much more to running an ethical company than we could possibly cover in a short survey.)

That caveat aside, the results were extremely encouraging:

• More than 90% of companies measure progress towards gender equity
• 80% consider the social justice impacts of their products and services
• 60% seek to reduce waste from their supply chain
• 60% have identified their ESG stakeholders and prioritised them
• 60% communicate their top ESG priorities

Fintech: the progressive industry

This is a progressive industry, and most FinTech organisations tend to be young, but even with this structural advantage these numbers and the others found in the survey are extremely encouraging. They are evidence that most companies in the sector aren’t just paying lip service to the idea of ethical business but making it a part of their operations at every level.

‘ESG’ and ‘stakeholder capitalism’ are moving beyond purely buzzwords, and any scepticism around them has subsided. In the most progressive parts of the corporate world, ethical principles now are as commonplace as health and safety guidelines. That’s because innovations tend to trickle down into the rest of the economy – we’ve seen this most recently with the rising popularity of open plan offices and four-day work weeks. Similarly, ESG is likely to be the same, and FinTech is an industry that is ideally placed to lead that transformation. The companies working in the sector are extremely diverse and young, but each one has the potential to influence thousands of other companies. It is an exciting time to be part of the FinTech community as it continues to become a force for good in the world.

About author:

Jim Colvine is the SVP for Global Product, Sustainability, at Mastercard. He is an effective Consultant and Business Development Leader, who has successfully created and delivered multiple payment consulting engagements across a wide variety of financial services clients and markets. A versatile and energetic with over 15 years of payment cards experience, Jim is keenly focused on developing strong relationships with clients to design and implement tailored value-creating solutions