What is green finance?
While we clearly understand the contribution of industry and manufacturing to greenhouse gas emissions, the role of the financial services sector in climate change is less obvious. But green finance is becoming more important due to a number of factors, including national and international policies and regulation, and consumer demand for more responsible business practices that help in the preservation of the planet. It can be defined in a number of ways including green bonds, loans and investments, sustainable or green financial products both real and virtual, and carbon tracking and offsetting.
As corporate auditing and reporting protocols move to include the demonstration of climate control mitigation and offset measures embedded in business practices right through a company’s supply chain, financial services become as implicated in the need to ‘green’ their processes as any factory or manufacturer.
Green finance trends in Africa
Although Africa is not a net contributor to carbon emissions and global warming, the continent is especially vulnerable to their effects, as extreme weather patterns disrupt farming and impact food security.
Across Africa, many leading banks and financial institutions are dedicating resources to managing sustainability and driving green finance initiatives. According to the Landscape of Climate Finance 2024 Report, conducted by the Climate Policy Initiative (CPI) and commissioned by FSD Africa, there was a significant increase in climate finance flows into Africa, with investment up by 48%, totalling US$44 billion in 2021/2022. Mauritius has gone one step further and has established the Mauritius Africa Fintech Hub where it encourages not only innovation but a sustainable finance framework for the region.
However, Africa faces specific challenges, as according to the same report, 50% of the total climate finance goes to just 10 countries on the continent, while the bottom 30 countries receive only 10% of available funding, leaving them under resourced to build infrastructure or awareness programmes around climate change issues. To address this, the establishment of the Green and Resilience Debt Platform aims to increase the issuance of green bonds in the Sub-Saharan region with the emphasis on climate resilience. While South Africa has implemented a Carbon Tax Act, it remains the only African country with a substantive carbon tax policy, however, other African nations are exploring similar measures. Kenya, Africa’s largest supplier of carbon credits, has joined a growing list of African countries embracing carbon trading rules to govern domestic trade in carbon and tap into a $2 billion market. Additionally, the African Tax Administration Forum (ATAF) has released policy guidelines to support the implementation of carbon taxes across the continent. These efforts reflect a broader commitment to adopting sustainable finance regulations and policies to combat climate change.
The role of fintech in advancing green finance
EFTCorp’s innovative and forward-looking approach to the development of new products for the payments sector single the company out as a leader in its field. Their eco-friendly EMV cards made from recycled PVC represent not only a high-quality product but also help reduce plastic waste, conserve resources and lower users’ carbon footprint. But more important and relevant to EFTCorp’s core value proposition for its partners, is their range of digital payment solutions which eliminate the necessity of even having a bank card. Contactless payment options reduce user reliance on cards and paper transactions, are eco-friendly and lower the costs and impact of delivery of funds to merchants.
In addition, EFTCorp’s products promote greater financial inclusion on a continent that still has millions of people who are un-banked.
Benefits for business and consumers
Faced with a new generation of discerning consumers, companies and brands that cannot demonstrate environmental and social responsibility will not thrive. Furthermore, non-compliance with green legislation, or making empty promises can result in financial and reputational damage for a company. Choosing to purchase from or support companies with green credentials is a primary driver of today’s consumer choices including in the financial services sector. EFTCorp’s suite of products and services makes it easier for the consumer to make green choices, creating social value and contributing to the decarbonisation of the global economy.
Green auditing takes into consideration a company’s social and environmental assets, and liabilities and the impact of its generation of emissions and consumption of resources. Companies whose balance sheets reflect sound environmental practices will attract more investment, and so the circular green economy turns.
EFTCorp is committed to being at the forefront of innovative green payment technologies and contributing to a safer and more sustainable planet.
