2022 Predictions: Singapore’s $40 trillion Green Fintech hub ESG opportunity

The global value of assets where investment decisions are driven by environmental, social, and governance (ESG) data reached US$40 trillion last year, doubling over four years.

In the year ahead, ESG will continue to be a major theme given the general trend of the world moving towards sustainability to address climate change.

We believe the emergence of new technology platforms to serve growing business needs around ESG finance and related certification will present a significant opportunity for Singapore’s growing green fintech capabilities and pool of green fintech experts.

For example, the recent developments in the Monetary Authority of Singapore’s (MAS) Project Greenprint are a monumental step forward for Singapore in the sustainability space: the regulator recently announced its partnership with leading industry partners including STACS, SGTraDex, MUFG, and Olam, to develop four digital platforms for better ESG data to support enhanced sustainable finance across all sectors, utilising Blockchain, IoT, and APIs.

Greenprint’s new digital platforms, including the DLT-based Greenprint ESG Registry built by STACS, address industry challenges such as the need for a common ESG registry to provide accessibility to quality ESG data of various industry sectors and enhance the mobilisation of ESG capital.

Infographic – MAS Project Greenprint

For the city-state to position itself as a leading global green fintech hub, recognised not just in Asia but internationally, we believe there are three key priorities it must not lose sight of if it is to be seen as a leader in accelerating the planet’s race towards sustainability and net zero.

Building a vibrant green fintech ecosystem

The first key consideration for 2022 is ensuring we maintain a world-leading green fintech ecosystem that can go toe to toe with some of the other leading technology and sustainability hubs in the world.

Growing and scaling technology-led solutions that tackle concerns related to climate change at home in Singapore, as well as beyond its borders, will require continued support of the local ecosystem by both public and private sectors.

Previously, we wrote at length about why Singapore can be Asia’s leading centre for green fintech, and we think now is the right time to revisit these thoughts and strategic recommendations as we look to the year ahead.

Driving more partnerships

Secondly, our city-state must continue its important work towards enabling connections across financial institutions, investors, ESG data service providers, green technology providers, certification bodies, rating agencies, fintech firms, and corporates from various sectors.

We think MAS’s partnership with us on the Greenprint ESG Registry is a good example of how the government can tie up with the private sector to drive more technology collaborations that really contribute positively towards Singapore’s national net zero agenda.

While good progress has been made on some of the new public-private partnerships in 2021, the year ahead will provide even more opportunities for the government and its agencies to identify the best of our homegrown entrepreneurial talent and startups for green tie-ups.

It is a strong local ecosystem petri dish, as identified in our first point, which sets the opportune conditions for the microbial startup culture to blossom into unicorns and technology juggernauts that eventually compete with the best in the region and world.

Establishing trusted ESG data flows

Finally, developing digital infrastructure to facilitate the flow of consistent, clear, and reliable ESG data with access to other global and sectoral data platforms must be a priority in 2022 if we are to become a world-leading green fintech hub.

Global institutions are not short on liquidity or capital as we begin the new year, but they are becoming more strict when it comes to where they invest their money – the burden of proof lies with individual businesses to pass the ESG litmus test.

Thus, for Singapore to tap into some of that growing pool of US$40 trillion in ESG-earmarked capital, businesses across every sector will need to be able to clearly demonstrate their ESG compliance and providence.

The blockchain-enabled technology platform we’re building at STACS is the right solution to this challenge, and we’re very excited to partner with more companies here in our Little Red Dot (and beyond) to help them transparently track and report their ESG credentials in 2022.

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