Sustainable Responsible Fintech: How SRI is changing Fintech (and viceversa).








Among the new releases of the financial Netflix, Fintech and Sustainable Responsible Impact (SRI) investments are the most popular shows that everyone is talking about. These main areas are not only rich in opportunities and innovation, but they are also intrinsically connected to each other, feeding, sourcing one another in an endless loop that makes investors hope for the best.

SRI investments differ from usual investment because they take into consideration environmental, social and governance perspectives, besides obviously returns. During the last few years, these factors have strongly impacted the dynamics of investment, creating therefore several opportunities for technology to expand the frontier of finance (fintech).

SRI investment is experiencing a period of growth, jump-starting in 2012 and continuing steady up to this day. The Global Sustainable Investment Alliance (GSIA), for example, shows that SRI assets under management have risen from $18.3 trillion in 2014 to $23 trillion in 2017, a 25% increase in the years 2014 – 2016.

Screened investments (excluding companies that operate in sectors such as firearms and tobacco) count for $15 trillion, 65% of SRI assets. Considering the general increase of green bonds, bonds reached 40% in SRI assets in 2014, growing to 64% today.

Global investment in renewable energy hit $333.5 billion in 2018: solar power dominated the trend in 2017 with $160.8 billion invested worldwide. The biggest investors in 2017 are China and USA. The former invested in $133 billion in all green energy, with $86.5 billion exclusively for solar. The North American counterpart poured $57 billion in green energy, despite Trump’s attempts to favour fossil fuels, with a particular attention of almost $20 billion in solar energy.

SRI can definitely be considered a revolution, not only for scenarios of portfolio, but also for the engagement from investors. Europeans invested in 50% of global SRI assets, against 38% of their US counterparts. Retail investors have also shown an increasing interest in global SRI assets, up to a total of 26%.

It is not a surprise then that the majority of SRI assets comes from institutional clients, co-founder endowments, pension plans and high net-worth investors (HNWIs : net value > $1 million). The latter category is more engaged into SRI investment, especially the new generation, the millennials: ultra-high net worth millennials (net value > $30 million) consider criteria such as sustainability, human rights, education, water and environment as very important in their investment decisions.

Women, taking up managerial and professional roles in more tertiary degrees, are more likely to base their investment decisions on sustainability.

As result of their growing popularity and significance, the UN has backed the Principles of Responsible Investments, a set of investment principles created independently by investors, aiming to develop a more sustainable financial system. This approach has clearly changed the status quo: SRI investments becomes more “standardised”, recognised and normalized as a goal that is ultimately able to shape the economy. How can a bond be considered sustainable, allowing therefore the investors to conform to said Principles? In other words, how can sustainability be measured?

The UN offers an exhaustive tool that investment firms and analysts have chosen to use as an “absolute benchmark”: the Sustainable Development Goals (SDGs). The Goals, divided in different rights from quality of education to decent work, are able to portrait a framework of measure in which answers to questions like “Is the company stimulating employment through its services?” can lead to a sufficient depiction of the company in issue, in terms of sustainability.


Source: University of Cambridge Institute for Sustainability Leadership

The close relationship between SRI and SDGs is just another proof of the shift in mindset of the contemporary world. The intricate web of socially responsible choices in finance meet the mission of 200 governments to establish a correct modus operandi for a sustainable future. Finance is not an exclusive court for handpicked big players anymore; finance is now linked to the ESG sphere of every public company and institution.

The countries that are more affected by the successful rate of SDGs, and therefore the allocation of SRI investments, are mostly emerging markets. In this perspective, technology is able to reach these often overlooked countries, offering potential solutions to increase financial inclusion.


In 2017 more than 2 billion adults globally do not have a bank account, and most of them live in emerging markets. Nevertheless, the recent fast growth in the same areas has found its biggest supporter in mobile money accounts. The mobile payment revolution has allowed people to find a different solution for transferring money and paying by mobile, thus posing a challenge for fintech in terms of affordability and universal access to financial tools. Affordability is the pivotal point of this innovation: developing countries seek low-cost solutions, in order to provide their citizens with a solid start to improve their standards of living. A simple money-transferring app may not change much for any household’s income, but it could certainly offer the ability to send and receive money in a safer and more reliable way. The biggest fintech stories of success, especially in digital banking and microfinance, are set in emerging countries, such as Kenya, Zimbabwe and Botswana. Interestingly, 25% of Kenya’s GDP flows through a mobile-payment app, M-Pesa.

Emerging markets or else, this late trend has not passed under the radar of potential providers and other companies of the field: in order to find the capital to scale their technology, providers need to establish a reliable partnership with financial institutions. The collaboration among banks, insurers and payment companies is the key to ensure more fintech solutions for emerging markets and worldwide. The actors on stage have finally taken into account the interconnection, the mutual demand between technology and responsible investments. It is a slow change in attitude, but it is a change nonetheless.

Not everyone is looking at this progress with a positive look. Some segments of the banking system (and some governments) disagree with the general enthusiasm, and look suspiciously to the widening reach of fintech. The reasons of the discomfort come from the conservative attitude towards privacy and security: financial technology is in fact breaking free from the traditional ways of monitoring and scrutiny, flying over the boundaries and limitations of the current banking screening. After the new hit show “Bitcoin”, hosted by the infamous Blockchain, the argument against fintech has reached record views. People could tend to watch (buy) what is popular and go with the flow, influencing an investor’s distorted behaviour.

While fintech seems to be a wonderful response to the most impending answers of emerging markets, it is not difficult to understand why traditional financial systems feel uneasy. A tight collaboration, with cooperative monitoring and norms is definitely the right path for the future of finance and technology.

Tending to the welfare of its own employees should be the core of any company or institution, along with its mission. A company can actually do much more than providing salary: it could (and should) also offer the necessary education that goes with it, financial education. Among the efforts for gender equality and inclusion, financial literacy should be integrated in every company or institution, and although it is (alas) still a long way to close the wage gap, it is surprisingly easy to educate employees towards better financial decisions: providing the same financial knowledge means giving all employees the same starting point to build their own financial prospects.

Technology does not discriminate, nor does fintech. On the contrary, fintech offer solutions, from robot-advisors to budgeting apps, that help keep track of financial movements, future expenses and asset management.

In Brazil, for example, fintech has found an extremely fertile ground. There are more than 230 fintech companies in the country, 33% of the Latin American total. These companies want to provide financial services to those who are still unbanked (without a bank account) or underbanked (those who do not have access to traditional financial products), and furthermore to small medium enterprises, 53% of whom do not have access to credit.

The country is showing a driven attitude towards not only innovation, but also the social progress that comes with it. If more people have the opportunity to reach low-cost digital financial solutions, then financial inclusion and literacy is closer than before.

In the light of the Brazilian case, other countries such as Italy have much to learn. The financial crises and the subsequent disruption of middle classes has deepened the social problems of the country. Furthermore, the population is old, tech-adverse.

The government is doing much for the newer generations in terms of financial education: mandatory courses in schools, didactic events and meetings are definitely increasing financial literacy among the young, but the latters are already tech-savvy, interested in innovative programs and opportunities, living in a digital era that fits like a glove.

What about the older generations? The Italian workforce is aging quickly and it is not yet well-adjusted to the technologic seed, planting in everyday life. Tailored solutions and opt-out/opt-in choices are what fintech is all about: companies and institutions can feed from this wide range of opportunities to lead the way towards the best interests of their own employees.

Companies and institutions should focus on three keypoints to promote financial literacy:

  • Good Diversification: dividing a portfolio in 50% bonds and 50% stocks or between two fields or company assets is not good diversification. The Enron case speaks for itself. A suitable diversification takes into account the market, the expected returns and foremost, one’s attitude towards risk.
  • Pension Plan: pension plans are usually sorted out when the employee is first hired. Many companies offer complementary plans, but very few employees take advantage of this option. Incentives and nudges to discover such options can definitely have a positive impact of the employee’s retirement.
  • Savings Plan: when first hired, employees tend not to consider future expenses that may rise, such as medical fees, mortgages or college tuition fees of future children. A proper savings plan for these cases is the result of an adequate financial culture.

While financial education should be among school subjects from an early age, companies can, in the meanwhile, take care of the financial wellbeing of their own employees, helping them to engage into good financial decisions. How? As mentioned earlier, incentives and nudges can go a long way, but they are probably not enough.

Few opt-out courses and one-on-one meetings with financial advisors and (objective) consultants do not involve huge expenses from the company and a waste of employees’ time.

These courses can be provided by associations and foundations that already organised these activities for women in trouble or families, and use fintech tools to promote a better understanding of the financial and economic sphere.

A company or institution that engage into financial technology with such spirit not only prove its commitment towards ESG practices, but it ultimately boosts its SRI appeal.


Many do not believe that impact investing is “doing good”: investors need to be taught that SRI investment is not giving away money, it is a proper investment, with a proper return.

As result of demand for fintech bespoke solutions for emerging markets, investors look for potential gains in these fields. The matter of sustainability is becoming the measure of decision-making for allocating the capital.

Investments are usually judged by the capability to produce returns. SRI investment is still commonly considered as less performing from retail investors: 54% of the latter thinks that there is some kind of trade-off between sustainability and financial returns (Morgan Stanley, 2015). In reality, evidence shows that there is not: investing in companies with a stable ESG mission outperform traditional companies in the long-run.

Companies are therefore embedding the PRIs into their mission statements, putting their commitment down in black and white. Their pledge is not only pushed by mere good intentions, it is mostly a manifesto to attract potential investors who look for SRI to fill their portfolio. SRI is going to become the new norm, as more investors and HNWIs decide to opt for such investments.

As the SRI investment sector grows, fintech is fed by the same and grows as well. Financial technology is making easier for investors to manage SRI assets by automating elements. Global venture capital investment in fintech established an average of $4 billion per quarter in funding and more than 270 deals per quarter in 2017. Low-cost advisory services are set to be easily accessed through the web and smartphones, within reach of any retail investor. This not-so-farfetched future can bring compliance-related procedures and track records on the surface of transactions, leading to a better interaction (and transparency) between investors and companies.

75% of Asian investors believe that automated advisors would have a positive impact, especially on product choice, while only 53% think the same in the Americas.

The democratisation of investment is an inevitable result of the fintech-SRI synergy. Automated and mobile platforms lead to lower costs, closing the gap between large institutional investors and HNWIs especially in terms of the accessibility of information and investment opportunities. Blockchain itself can lead to democratisation: it is not only a public ledger for cryptocurrencies, it is furthermore a great provider for secure, low-cost sharing and storage of data and identification. Potentially, Blockchain could reduce the cost for settlement and custody, and facilitate transaction and investment decisions. These collected data could ultimately establish a validated “universal” client profiling system, with behavioural and demographic analysis.


The profound impact on management products and processes will make investing in SRI assets easier and more appealing. The fintech-SRI cycle is here to last, to grow, to nurture every fiber of today’s financial and entrepreneurial system. Sustainability has found an ally in technology, and financial technology has found a bottomless resource for its own greed. How will they shape the next generation? We just need to wait for the next episode.






Global Sustainable Investment Alliance. 2016 Global Sustainable Investment Review. Accessed on January 22, 2018.
Price, Dennis. Global sustainable-investment assets hit $23 trillion, up 25 percent in two years. Impact Alpha. March 28, 2017. Accessed on January 22, 2018.
University of Cambridge Institute for Sustainability Leadership (CISL). (2016, May). In search of impact: Measuring the full value of capital. Cambridge, UK: Cambridge Institute for Sustainability Leadership.
Chow, Lorraine. Worldwide Clean Energy Investments Hit $333.5 Billion Last Year. EcoWatch. January 17, 2018. Accessed on January 22, 2018.