Fintechs and ESG are names related to technology and sustainability that have become popular in the current world scenario, either by the interest of the general population or the business environment.
It is noticeable that technology is advancing day by day, but this progress should not disregard the preservation of our planet. At this point, Fintechs and ESG end up getting directly involved.
Numerous companies are increasingly immersed in the technological world, offering attractive and inclusive solutions to their customers. Fintechs have this standard in their essence, without losing sight of the necessary care for the planet when joining ESG.
The truth is that Fintechs and ESG are intrinsically connected within a context of a new vision for the sustainable market, as both contribute to a healthy ecosystem at the organizational and environmental levels.
We prepared this material for you to better understand the concepts of Fintechs and ESG and understand that both are a sustainable market perception . Have a good read and enjoy the content.
What is a Fintech?
Fintech is a term that comes from the union of two English words: financial, which means financial, and technology, which means technology. From this junction, the word Fintech emerged, which can be translated as financial technology.
The abbreviation Fintech is used to refer to companies and startups that are responsible for developing fully digital and innovative finance products in some way.
Fintechs are relatively recent: in 1998, the online payments company Paypal was created and is considered as the ground zero of Fintechs.
Fintechs’ great idea is the creation of digital financial solutions for people, where technology is the main innovation within this scenario, making them totally different from other traditional companies.
It may even seem that Fintechs are far from us, but the reality is that the services of these companies have been common in our daily lives.
The advantage of Fintechs is the exclusivity in contact with customers and the customization of services, since it is possible to use your cell phone to access banking resources directly in the palm of your hand, for example.
Because of this, we can see that Fintechs are increasingly popular around the world, generating great adherence to the digital financial market.
What is ESG?
ESG is an acronym that comes from the English Environmental, Social and Governance, which in Portuguese is Environmental, Social and Governance.
It encompasses the components that are related to the structuring of a fairer culture and administration.
The usefulness of the ESG mainly involves concern for environmental issues, after all, we need to be aware of the importance of these debates for the present and future of our planet.
So, the ESG helps to define whether a company is developing its work in accordance with ecological guidelines, whether it is conscious of sustainability and society, and whether there is balance in business management.
ESG measures meet the social challenges we are seeing today and help companies to discuss related topics, outlining strategies for the next steps of the business and making the journey more responsible.
If there are several investments in the company, many of them can be made by embracing the needs of the planet and prioritizing ESG even more.
The debate that ESG provides is important not only for environmental issues, but for analyzing your own business and generating positive impacts.
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The basis of ESG
ESG practices are part of a movement whose main idea is a more sustainable capitalist way that is not just about profiting for the sake of profit, placing the planet as a relevant agenda.
The aspects that govern this movement are defined by the United Nations (UN) and are connected in all countries, aiming at the common interest of making the world a better place. There are some ESG principles that we will list below.
Let’s look at the environmental criteria:
– Waste Management.
– Levels of deforestation.
– Conscious use of renewable sources.
– Opinion on climate change.
Now the social criteria:
– Turnover rate due to dismissals.
– Pension plan.
– Participation of employees in management.
– Benefits and advantages that the company should offer.
– Salary commensurate with the duties performed.
Finally, the governance criteria:
– Transparency in finance and accounting.
– Security in financial analysis.
– Shareholders with appropriate remuneration.
Fintechs and ESG suitability
Fintechs can use the ESG criteria mentioned above to fit into a more sustainable market without losing their identity as a business.
Many ESG goals must be established by Fintechs in an organic way in order to meet planned deadlines and achieve goals.
Reporting is a good way for a Fintech to comply with the ESG principles, as the information will formalize the implementation of the ESG criteria for Fintech investors.
It is notable that Fintechs that follow ESG practices have higher growth compared to those that do not adapt, either in the financial area or in internal processes.
Speaking specifically of Brazil, Fintechs have enormous potential to be relevant, both nationally and globally. This protagonism has greater chances of being achieved with the fulfillment of the ESG criteria.
ESG molds are the present and future for Fintechs. The idea of making a profit at any cost, regardless of the result, no longer fits.
If we are in such a connected world, Fintechs also need to connect to a sustainable market through ESG.
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