For decades – centuries even – businesses had one goal: maximise profits for shareholders. Whether these shareholders were a single capitalist or thousands of shareholders, the goal was always to grow as large as possible as quickly as possible. Although laws covering anything from child labour to emissions curtailed companies’ ability to be truly amoral, history is filled with examples of companies circumventing those laws.
Today the game has changed. Companies are integrating Environmental, Social and Governance (ESG) into their companies at a deep level, often launching the company with a social goal that is just as important as profit. To measure and guide this change, The Payments Association commissioned a whitepaper into the ways that FinTech companies are integrating social and sustainability goals into their long-term planning and day to day operations.
FinTech is an industry with great potential to uplift people and an equally large potential to harm them. Dealing directly with a customer’s finances and data can allow them to revolutionise people’s lives or diminish the finances that they rely on, and their potential to do good or ill doesn’t stop there. As the report outlines, a company can have a wide range of stakeholders, both internal (employees, investors) and external (customers, suppliers, and the community at large.) Each of these might have sub-sets with opposing goals – 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, for example. Identifying these shareholders is vital to an ESG project, and understanding their needs is the first step to aligning your company in order to reach your goals.
Progress is already being made
To give us a view of the progress being made in the FinTech industry, we asked our members about their current ESG progress in terms of data privacy, social justice, sustainability and governance, although we acknowledge that there is far more to running an ethical company than we could possibly cover in a short survey.
The results were extremely encouraging:
- Over 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 of course a very progressive industry in general, and most of its companies tend to be young, in both the age of the founders and the age of the staff, but even with this structural advantage these numbers and the others found in the survey are extremely encouraging. They show that a majority of 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 clearly moving beyond being buzzwords, and much of the scepticism around them has long since evaporated. We are seeing that in the most progressive parts of the business world ethical principles are as commonplace as health and safety guidelines, but far more transformational when applied by companies who deal directly with the finances of millions of people around the world.
In business, the innovations in the most progressive businesses, ranging from open plan offices to four-day work weeks, tend to trickle down into the rest of the economy. ESG is likely to be the same, and FinTech is an industry that is ideally placed to lead that transformation. The companies working in the sector are extremely diverse and young, but each one has the potential to become the next Klarna or Revolut, and from there influence thousands of other companies. It is an exciting time to be part of the FinTech community as it continues to become a force for good in the world.
To download a copy of the ‘Sustainability Superheroes: a how-to guide to ESG for FinTechs’, please visit: https://bit.ly/3aMVS4o
And to download the on demand webinar “Linking profit and purpose – embedding sustainability in the payments ecosystem”, please visit: https://thepaymentsassociation.org/webinar/linking-profit-and-purpose-embedding-sustainability-in-the-payments-ecosystem/