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Home » How can the fintech industry spearhead the MENA’s ESG commitments?

How can the fintech industry spearhead the MENA’s ESG commitments?

by Mohammad Ghazal

FinTechs, these start-ups and smaller companies that specialise in different aspects of the financial sector- are in a unique position to build Environmental, Social and Governance (ESG) criteria into the fabrics of their businesses. As a relatively new sector, there is an opportunity to mould the future of fintech, whilst nudging other financial services to make socially and environmentally positive changes and help the MENA region in meeting its global climate and social impact commitments.

The primary goal of a Fintech as we know is to assist businesses and customers to manage their financial operations and eliminate the friction that they experience with standard financing offerings across various categories including payments, insurance, mortgages, personal finance, etc.

Over the last few years, the topic of ESG and sustainability in the finance sector has been growing in popularity, along with a demand for sustainable finance solutions from customers and investors.

In my career advising fintech start-ups with their ESG and sustainability journey It was clear that due to their lean business model, they are in a much stronger position than the larger financial institutions to embed ESG within their products and services and this is why this industry is becoming one of the industries that the MENA governments are focusing on developing it so that they can help them achieved their UN Sustainable Development Goals and Green Agenda.

To date according to Statisca there are 800 FinTechs in the region with the majority having presence in UAE (400) followed by Saudi (155) and Bahrain (100). The Saudi government anticipates that their country based FinTechs will contribute to SAR 13.3Bn in GDP, 18,000 jobs, and SAR 12.2Bn in VC Investments led by Saudi Fintech and its country strategy.

Whereas in the UAE the DIFC Innovation Hub was launched in 2021 to act as the region’s ecosystem and play a role in linking early-stage start-ups with unicorns and large tech firms.

This new wave of ESG conscious Fintech’s is truly making an impact within their space. From supporting consumers in reducing carbon emissions to topping up purchases in checkouts to allow for ESG donations, to offsetting emissions by planting trees or offering organisations carbon credits to offset their emissions.

However, For ESG and sustainability to be embedded and be part of the fintech industry’s main offering and success these companies need to remain up to date with the ever-evolving legislation and regulations that are currently being imposed globally.

ESG positioned Fintech’s need to also be very transparent in their communications with their ESG and sustainability impact data, while having impact reports audited by an independent party to remove basis. Fintech’s need to regularly analyse and report on their ESG and sustainability framework to satisfy and retain trust with consumers, customers, investors, regulators, and employees.

By Gihan Hyde, Founder of CommUnique the award winning ESG Strategy and Communication Advisory Firm.

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