During 2022, the U.S. Securities and Exchange Commission (SEC) required companies to disclose their emissions and other impacts that may affect the environment, while environmental groups are calling on the U.S. Congress to enact legislation requiring companies to disclose information on their impact on climate change and mitigations, especially publicly traded companies. More than two-thirds of Americans are required to report and reduce their carbon footprint. 

This represents an opportunity for software, technology, financial and other regulated companies that adopt the path of tracking their carbon footprint and/or climate impact to be eligible for financing that requires environmental efficiency throughout the production or service chain, ensuring the least possible impact on the environment.

Financing the transition

European consumers are increasingly aware of the impact of the financial sector on climate change. We have seen the creation of foundations, funds or state incentives that enable or encourage the intersection of finance, climate and community. We see how there are already several Fintechs seeking to be labeled "green", focusing on a community and educational environment that is pro-environment, such as, for example, companies that finance only the purchase of electric cars, or that support recycling, among several initiatives.

We hope that in the coming years new financial products will focus on sustainability and traceability, where it will be possible to monitor how financing - either directly or indirectly - contributes to environmentally friendly projects and that its effect on the carbon footprint tends to zero. 

It is therefore important to be able to understand that, when financing both individuals and companies, these resources are used to operate assets that have a positive effect on the environment and the community, and allow for economic development with an impact. This will also be an important component for investment decisions, both for institutional investors and individuals, both for portfolio diversification and environmental awareness.

Cristián Rodríguez

Private Debt Manager Fynsa AGF