Singapore and Hong Kong lead green fintech development among the five economies in the Asia-Pacific Economic Cooperation (APEC), a report said Friday.

Both Hong Kong and Singapore are in the stage of scaling up and accelerating to mature levels in terms of green fintech development compared to the past two years, a report done by GoImpact, an ESG and Sustainability education firm, together with The Chinese University of Hong Kong’s Business School (CUHK Business School) showed.

The report also found that government support plays a vital and essential role in facilitating green fintech development, while talent shortage is a common concern in the five economies in the region.

Derived from three elements — environment, finance, and technology — the industry report defines green fintech as financial activities that utilize green technologies that bring better environmental outcomes.

The report noted industry experts from five APEC economies, namely Hong Kong SAR, China, Indonesia, South Korea, Singapore and Thailand, have urged policymakers to establish a conducive environment for green fintech to flourish.

According to them, governments can help through offering incentive schemes for startups to develop in this area and spearhead the change by setting sustainable regulatory frameworks and mandating disclosures, reporting, and thresholds.

The study also suggested that financial institutions should embrace the sustainable agenda to achieve the triple bottom line: profit, people, and the planet.

Given the current competitive banking environment and the global shortage of green talent, it highlighted that financial institutions should utilise their unique positions in the business ecosystem to develop more in-house sustainability talent to promote the sustainability agenda.

Meanwhile, the report found green fintech startups in Asia have already provided many different types of green fintech, such as green digital payment, green digital investment solutions, digital green analytics, green crowdfunding, green risk analysis, green digital lending, green digital asset solutions, and green regtech

It also found regulations on environmental, social, and governance (ESG) disclosure play an important role in advancing the green fintech ecosystem.

Supporting evidence comes from case examples in Hong Kong SAR that suggest that green reporting startups grew at a faster pace since the requirement of ESG reporting for all listed companies came into effect in 2020.

According to the report, as the green FinTech ecosystem develops, cooperation and partnerships will become more mainstream.

There are already several successful collaborations in Asia, including Project Genesis in Hong Kong SAR, Climate Impact X and Project Greenprint in Singapore, and a carbon offsetting program by Gojek and in Indonesia.

The report also noted governments in Asia are aware of the importance of a green economy and have set roadmaps and initiatives to help the economy transition into a more sustainable one: for example, South Korea’s Green New Deal and Thailand’s Sustainable Finance Initiatives.

According to the report, financial institutions have already provided several green fintech services, including biodiversity-screened equity indices, tokenized carbon credits trading platforms, robotic platforms for ESG investment, green certificates, and ESG credit rating systems.

The report also highlighted sustainability-related education is imperative to building a mature green FinTech ecosystem. It will raise awareness, push the demand for green finance, and cultivate the talent needed for green FinTech Development in Asia.

It also said the four-pronged approach required to build a well-functioning green FinTech ecosystem is: boost demand for green services; increase supply of green services; mobolize resources; and strengthen policies.

Southeast Asia’s digital economy expected to hit $200B GMV in 2022, report