In 2022, the SEC (the U.S. Securities and Exchange Commission) 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 laws that would require companies—especially publicly traded ones—to provide information about their impact on climate change and their mitigation efforts. 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 choose to track their carbon footprint and/or climate impact to become eligible for financing that requires environmental efficiency throughout the entire production or service chain, ensuring the lowest possible impact on the environment.

Funding the Transition

European consumers are increasingly aware of the financial sector’s impact on climate change. We have seen the creation of foundations, funds, and government incentives that enable or promote the intersection of finance, climate, and community. We are seeing several fintech companies already seeking to be classified as “green,” focusing on a community-based and educational environment that is environmentally friendly—such as companies that finance only the purchase of electric cars or that support recycling, among other initiatives.

We hope that in the coming years, new financial products will focus on sustainability and traceability, allowing us to monitor how financing—whether directly or indirectly—contributes to environmentally friendly projects and ensuring that its impact on the carbon footprint tends toward zero. 

That is why it is important to understand that, when financing both individuals and companies, these resources should be used to operate assets that have a positive impact on the environment and the community and enable meaningful economic development. This will also be an important factor in investment decision-making, both for institutional investors and individual investors, whether for portfolio diversification or environmental awareness.

Cristián Rodríguez

Private Debt Manager, Fynsa AGF