Green power -and accountability- to the people
Updated: Aug 4, 2019
The greening of fintech is a powerful idea whose time now seems to have come. We saw this more clearly than ever last week with the launch of “GCash Forest” in the Philippines by Alipay’s e-wallet partner in that country. Inspired by Ant Financial’s hugely successful “Ant Forest” project in China, GCash Forest is the first attempt outside of China to leverage fintech to address environmental problems on a large scale. Both initiatives illustrate the impact that becomes possible when ordinary citizens feel empowered to play a direct role in the response to climate change. The Alliance is deeply interested in the potential of putting citizens at the center of the green revolution, and in finding ways to tap that potential. But first some context about GCash Forest.
Like Ant Forest, GCash Forest is an app that lets users collect “green energy” points by frequently using the app. Once a user has accumulated enough points, he or she can choose a species of tree to be planted in a selected area. The need for reforestation in the Philippines is clear enough. According to the Department of Environment and Natural Resources’ Forest Management Bureau (FMB), the Philippines is losing 47,000 hectares of forest cover every year. The FMB also stresses that 1.2 million hectares of forest lands must be rehabilitated by 2022 to prevent landslides, ensure water availability, and preserve biodiversity.
The idea that ordinary people using an app could constitute a meaningful response to that situation might sound to a skeptic like so much tech-hype. But the real-world experience of Ant Forest provides a useful corrective to cynicism. Just five years after launch, Ant Forest reports 500 million users who collectively have planted 100 million real trees—not to mention the impact of the carbon-conscious lifestyle decisions that allowed them to earn the necessary points in the first place to plant those trees. It’s harder to quantify than trees in the ground, but there is power in that shared vision of citizen responsibility for the planet,
Of course, it is the link to fintech that makes Ant Forest and GCash Forest so particularly relevant for the Alliance. Both initiatives run on apps embedded into mobile-wallet platforms, integrating green elements into existing digital finance solutions. Big Data, artificial intelligence, and observations via drones and cameras bring visual images of the trees growing, letting people see ever-larger tracts of previously brown desert land turning green as a direct result of their collective actions. It is a potent tool to promote behavioral change.
During the past month, the Alliance has been reaching out to fintech communities in a number of geographies via our collaboration with the UN Secretary-General’s Task for Digital Financing of the Sustainable Development Goals. We want to understand other ways in which fintech is unlocking green impact or green finance. This issue of The Digits describes a few of the more intriguing ones we have come across, but the key takeaways I see so far are two. First, it is very early days. Twelve years after the smartphone first hit the mass market, we are barely beginning to understand the potential of fintech in general, much less the specific ways it could be harnessed to sustainability. There are examples of green digital financing hiding in fintech hubs or on platforms in various scattered places. They hold real potential to drive change and to inspire other fintechs to develop green use-cases for their platforms. But at the moment, we remain very much in experimentation stage, with only Ant Forest as the scaled champion so far.
Second, we need to explore the steps that policymakers and regulators can take to unlock more types of green finance innovations. The solutions will require knowledge-sharing, and probably direct operational collaborations, among groups who may not be accustomed to it. Financial, technology, and environmental policy have not historically been jointly developed, and policies aimed at industries are often developed separately from (and under much different incentives and pressures) from those aimed at citizens.
There is a long history of policy innovations being crafted not only to prohibit harmful actions but also to “nudge” positive ones. The difference now is that we have a mix of the data and technology available, combined with strong demand among the world’s citizens, to enable individuals to contribute to cooling the planet. Of course, individual efforts cannot replace the need to reduce carbon emissions at the industrial and sector level—the two must go hand in hand.
The Alliance is diving into intensive dialogue with central banks, institutional investors, and fintech innovators, and we will bring you more insights soon.