The government’s updated Green Finance Strategy is a significant and welcome step forward on the UK’s path to net-zero transition.
Sustainable digital finance describes the intersection of the use of technology in finance with environmental, social and governance (ESG) objectives. Although there is no universally accepted definition, this concept often refers to the use of technology, including artificial intelligence (AI), distributed ledger technology (DLT) or the internet of things, to further ESG or sustainability initiatives in the finance sector and the wider economy.
To date, the UK’s policy approaches to sustainability and FinTech have generally been considered separately and have developed in parallel. There are a host of existing initiatives in each of these areas which impact the current UK regulatory and policy landscape and are likely to influence any future approach taken on sustainable digital finance.
Here are our five recommendations for policymakers to ensure that the UK retains its leadership in sustainable digital finance, while meeting its international obligations and other applicable targets.
The UK has a valuable opportunity to harness the benefits that FinTech can bring in achieving ESG goals by helping to remove key legislative or regulatory barriers, but at the same time also addressing the growing challenges and potential harms that increased use of certain types of technology may bring.
By acting now the UK can ensure that technology is best utilised to accelerate the penetration and use of green and sustainable finance products to help achieve the UK’s broader ESG targets, and to maintain the UK’s role at the forefront of sustainable digital finance developments.
This is an agenda that demands urgent action. By acting now, governments and policymakers, working in partnership with industry, can set the framework needed to realise the benefits of sustainable digital finance in future decades.