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Does Covid-19 Challenge Sustainable Development? Within the last couple of years, sustainable development and impact have started to permeate companies’ agendas – especially thanks to the UN’s Sustainable Development Goals. But then the Corona crisis hit, and companies suddenly had to focus on survival. We asked four impact experts what the pandemic means for sustainable development. By: Jakob Lindmark Frier
Richard Georg Engström Entrepreneur and Advisor within impact investment How does the Covid-19 crisis affect the corporate agendas regarding SDG contributions through fintech solutions? The fintech industry has gained strength through the Covid-19 pandemic. We all now understand that there is an even greater need to adapt to a digitised and sustainable world. New fintech solutions not only digitise our access to borrowing capacities, insurance, pension programmes, investments, and other services. It also strengthens sustainable development. With crowdlending, you can go even further and create additional opportunities than the existing solutions. For the long-term unemployed at home and people in vulnerable areas of the world, we can now lend each other money outside the banks and other lending institutions. It strengthens the need for sustained, inclusive, and sustainable economic growth (SDG 8) and reduces inequality (SDG 10).
The Covid-19 crisis has slowed development towards 2030. But how can fintech solutions be the means to get back on track? Covid-19 has created new opportunities. In rocket speed, the crisis has motivated increased use of existing solutions and accelerated development of innovations and technologies. Here, the fintech industry can facilitate sustainable development. Danish solutions already do that – such as Unumed, which makes healthcare more accessible to all, November First and Tradeshift, which improve the possibility of international trade, or M-Payg, which makes solar cells and batteries accessible to low-income households.
How does the Covid-19 crisis affect the investment landscape in the fintech industry? A recession in the global economy will reduce most investors’ wealth and, thus, their willingness to take risks in the coming years. The valuation of startups is already starting to decline, and investors will be taking longer to invest because the due diligence processes are becoming more rigid. This is not necessarily a bad development. But it is a challenge for many small businesses that need new capital. I hope that the Corona crisis in a positive way helps to show that the world is connected - that you, as an investor, must prioritise investments that contribute to creating resilience, coherence, and sustainability. This is where the value creation lies in the startups of the future. And new fintech solutions enable this in many ways already.
Marianne Haahr Executive Director at Green Digital Finance Alliance How does the Covid-19 crisis affect the fintech industry’s work to promote the SDGs? In many developing countries, fintech, which has not previously been utilised to promote the SDGs, has become crucial in ensuring the fight against poverty (SDG 1) and the fight against hunger (SDG 2) during the Corona crisis. It is especially mobile payment platforms with many users in African countries that have become involved in executing Covid-19 action plans because they have gathered data on the citizens that the government does not have. They help by using their data to generate social profiles of users and citizens so that aid packages can be targeted to those most in need. And the aid packages can be received directly on the smartphone, so it is both fast and traceable – and the risk of misuse of the schemes is reduced.
How does the Covid-19 crisis affect the corporate agendas regarding SDG contributions through fintech solutions?
The Covid-19 crisis has slowed development towards 2030. But how can fintech solutions be the means to get back on track?
Covid-19 has highlighted the need to be able to supervise one’s value chain from a distance during a possible lockdown. This means that fintech solutions that can secure operational value chains in future crises will experience increasing demand. In relation to green fintech, the issuance of green bonds decreased in 2019 due to Covid-19, but social bonds’ issuance has increased. The rise in social bonds is a trend that will last for some time, and here digitalisation is crucial to ensure low transaction costs and reporting the social results to maintain the credibility of the instrument.
Fintech is the key to realising the EU’s Covid-19 plan. The green elements can be grouped into four categories: 1) energy efficiency of households, 2) nature restoration, 3) accelerated renewal of renewable energy, and 4) green transport. Each of these categories can use one or more fintech tools to deliver the desired results for use in financial decision-making processes by, for example, a bank that is to issue energy efficiency loans. The energy efficiency of households can be informed and facilitated by fintech. It is a way back on a green track as it reduces emissions, creates jobs for workmen, revenue for companies, and helps deliver on the Paris Agreement.
