The recent survey into how FinTechs are implementing ESG principles within their businesses makes for positive reading, says Jim Colvine, senior vice president, Global Product, Sustainability, at Mastercard
There’s one primary goal for businesses, maximise profits for shareholders and, secondarily to that, grow as large as possible as quickly as possible. While laws have been in place to curtail the very worst of amoral activity by organisations, history is filled with examples of companies circumventing those laws to further their own ambition.
Today, companies are instead integrating Environmental, Social and Governance (ESG) into the heart of their business, often launching with a social goal that is just as important as profit. To measure and guide this shifting mindset and approach, The Payments Association researched the ways that FinTech companies are integrating social and sustainability goals into their long-term planning as well as daily operations.
As an industry, FinTech do great things for its end users, with the potential to revolutionise their lives, but it equally can be detrimental if it diminishes the finances they rely on or creates barriers to accessing products or services. But it doesn’t stop there. As our report outlines, a company can have a wide range of stakeholders, both internal, such as employees, investors, and external – customers, suppliers, or the wider community. Each of these could have opposing goals. For example, management might want to maximise productivity by putting in extra hours, but lower-level workers will want a better balance of their work and life. Identifying opinions is vital to an ESG project, while understanding stakeholders’ needs will help to align your company to reach your goals.
ESG is advancing
To get an overview of the ESG landscape within FinTech, members of The Payments Association were surveyed about their data privacy, social justice, sustainability, and governance activity.
Although there is more to running an ethical company than we could cover in a short survey, the results were extremely encouraging:
• More than 90% of companies measure progress towards gender equity
• 80% consider the social justice impacts of their products and services
• 60% seek to reduce waste from their supply chain
• 60% have identified their ESG stakeholders and prioritised them
• 60% communicate their top ESG priorities
FinTech is advancing, and most organisations tend to be young, but even with this structural advantage these numbers and the others found in the survey are extremely encouraging. In fact, they are evidence that most companies in the sector aren’t just paying lip service to the idea of ethical business but making it a part of their operations at every level.
‘ESG’ and ‘stakeholder capitalism’ are no longer ‘buzzwords’, and any scepticism around them has abated. In the most progressive parts of the corporate world, ethical principles now are as commonplace as health and safety guidelines. That’s because true advances trickle down into the rest of the economy and we’ve seen this most recently with the rising popularity of open plan offices and four-day work weeks.
ESG is proving to do the same, and FinTech is an industry that is ideally placed to lead that transformation; each company in the sector has the potential to influence thousands of other companies and transform the way payments work.
It is an exciting time to be part of the FinTech community as it continues to become a force for good.
