The Fintech industry could leverage its tools and capabilities to gather climate-related data in the Philippines, which would be in line with the nation’s goal of supporting sustainable financing, according to FintechAlliance.ph Chairperson Angelito M. Villanueva.
In statements shared with local news outlet, the BusinessMirror, Villanueva noted that the Fintech sector could potentially help with estimating climate-related risks for green financing.
“We (the Fintech industry) can play a big role in the collection of data as climate-related [information] is not available. We need to properly quantify the cost of climate-related risk.”
Villanueva added that his group plans to do its part when it comes to achieving sustainable financing – which has been recommended by the Asian Development Bank, an institution that has been supporting climate financing and related innovations in financial services.
The FintechAlliance.ph team has confirmed that they’ve been working with the Bangko Sentral ng Pilipinas or BSP (the nation’s central bank) and various financial institutions so that they can take measures to adopt green financing.
Villanueva explained that his organization can help with providing the technology needed to achieve “the goals of sustainable financing.” He added that the ongoing development of digital financial technology can potentially lower the number of paper transactions; and “this would also greatly reduce the impact on the environment.”
Villanueva further noted that sustainable financing can help the country’s economy with recovering from the challenges created by climate change. He also mentioned that the problem of climate change can’t just be ignored, especially considering the massive flooding the country experienced in November 2020 and the previous years as well.
He pointed out that cash flows in the Philippines have been affected “as people try to recover from their misery.” He explained that this is “why the green financing framework is necessary and important to mitigate the risk that [the country’s] broken environment would cause us.”
The BSP has released guidelines or recommendations on establishing a sustainable finance framework, which would require financial services providers to add environmental, social and governance (ESG) and sustainability principles to their business strategy, overall risk management policies and banking operations. The nation’s banking institutions have been given 3 years to satisfy these requirements.
Sabine Mauderer, who serves on Deutsche Bundesbank’s Executive Board, recently noted that climate-related data isn’t easily accessible or always available. She claims that associated risks might not always be priced in “adequately.”
This might be where Fintechs can serve an important role, Mauderer suggested. She believes financial technology firms could help gather the data needed to address these challenges.
Mauderer added that digital technologies including AI, Big Data and blockchain or distributed ledger technology (DLT) could potentially enable cost-effective data collection – which may help us deal with climate change or other environmental risks. Fintechs could also assist with analyzing climate-related information, Mauderer said.