MEDICI’s new ‘ESG Meets FinTech – A Strategic Analysis’ covers the impact of financial technology on Environmental, Social, and Governance (ESG) criteria. It analyzes the various dimensions of ESG and sustainability in the context of FinTech.

2. ESG MEETS FINTECH – EXECUTIVE SUMMARY
Introduction
The Kingdom of Bhutan is the only carbon-negative country in the world.
Development is measured by Gross National Happiness (rather than GDP), which
is based on four critical factors: sustainable development, environmental
protection, cultural preservation, and good governance. While this might sound
almost mythical for industrialized nations, there has been a concerted effort
worldwide in the last decade, particularly in the last three years, to achieve
sustainable development goals (SDG) as prescribed by the United Nations and
adopted by all its members. However, we have a long way to go.
Environmental, Social, and Governance (ESG) refers to a set of standards
perused by socially aware investors to screen potential investments in
sustainability initiatives. ESG criteria scrutinize the impact of the company’s
activities on the environment, its relationships with its various stakeholders and
society in general, its governance, and overall management practices.
In 2020, the total assets under management in funds that follow ESG principles
exceeded $1 trillion. Likewise, the cumulative issuance of green bonds that invest
in ESG-abiding projects also came close to $1 trillion. More significantly,
consumer awareness of investing in sustainable and ethical businesses has
increased steadily. According to research by Morgan Stanley Institute for
Sustainable Investing, interest in sustainable investing among millennial
investors had gone up to 95% in 2019 from 84% in 2015.
There are several global and regional factors influencing this overall growth. The
legally binding nature of the Paris Climate Accord is one such global factor that is
expected to infuse investments into projects focused on carbon emission
controls. About a third of the €750 billion COVID recovery package announced by
the EU is expected to be allocated to green initiatives over the next six years.
Social movements like Black Lives Matter has also put the spotlight on equal
opportunity employment and governance.
FinTech has a pivotal role to play in accelerating the path to achieving SDGs. By
design, technology enables socially conscious enterprises to be more
transparent, be more efficient, equalize disparities in the society, increase
accessibility to resources including finance, and most importantly, measure
investments toward achieving sustainability. The United Nations Environment
Program (UNEP) compares the connection between FinTech and sustainable
development to the double helix structure of the DNA. Suffice to say that it
requires the entire FinTech ecosystem to come together and collaborate to
achieve these objectives.
In this research report by MEDICI, we have analyzed ESG and sustainability in the
context of FinTech across four broad dimensions:
1. FinTech products and services that are oriented toward ESG. These
include personal finance propositions, neobanking products and services,
carbon offset products, insurance, and more.
2. Impact investing with a focus on institutional investors focused on ESG-
oriented businesses in their portfolio.
3. Technology platforms that collect & relay data, rating engines, and
measurement tools.
4. Inclusion initiatives that promise to improve access to credit, insurance,
and value exchange.
We hope you find this report insightful.
0
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500
750
1,000
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Global Cumulative Issuance of Green Bonds ($, Bn) % of millennials who want to tailor their investments to their values.
90%
Source: Climate Bonds Initiative Source: Morgan Stanley Institute for Sustainable Investing 2

3. ESG MEETS FINTECH – EXECUTIVE SUMMARY
3
Four Key Areas Where ESG Meets FinTech
ESG
PRODUCTS AND SERVICES IMPACT INVESTING
FINANCIAL INCLUSION DATA AND RATING
FinTech products and services that are oriented toward
Environmental, Social, and Governance initiatives across
consumer and business propositions
“A neobank that plants a tree for every dollar round-up
at a customer’s end”
“A robo-advisor that offer portfolios consisting of
ESG-oriented funds for customers to invest in”
Investors (retail and institutional) that are approaching
the process of investing in companies and projects that
are creating a positive impact
“A venture capital firm that is focused on FinTech for
inclusion in emerging markets”
“Millennials who are socially responsible and look
out for investment funds that reflect their values”
Socially oriented FinTech initiatives covering payments,
lending, savings, and insurance directed toward the
marginalized sections of society
“A FinTech offers affordable credit to people who have
never had a formal credit history”
“Mobile money platforms that facilitate digital P2P
fund transfers in areas that have low banking
penetration”
Major players and the technologies they use for
collecting ESG data and rating various public and private
companies on ESG parameters
“A rating agency that provides company ratings on
various ESG parameters for institutional investors to
make investing decisions”
“Digital platforms that enable companies to
calculate and measure their carbon footprint”

4. Impact Areas
1. Products and Services
2. Impact Investing
3. Data and Rating
4. Financial Inclusion
4
ESG MEETS FINTECH – EXECUTIVE SUMMARY

5. ESG MEETS FINTECH – EXECUTIVE SUMMARY
5
WealthTech products comprises Investment Platforms that enable retail investors to invest in portfolios consisting of ESG funds. Fund Management products offer digital
platforms for fund managers to manage impact funds. Personal Finance Management refers to those applications that help individuals track their carbon footprint.
Crowdfunding platforms enable individuals to invest in or lend to sustainable projects. The Insurance segment consists of those startups that work toward identifying risks
and offer insurance products in vulnerable areas. The Neobanking segment covers those neobanks that offer their customers a financially conscious product thereby helping
them to create a social impact. Lending highlights those startups that are facilitating the flow of funds into sustainable projects.
This is not an exhaustive list
WealthTech - Investment Platform WealthTech - Fund Management
WealthTech – Personal Finance Management
FinTech Products and Services (ESG & Sustainability)
Crowdfunding
Insurance
Neobanks
Lending
Carbon Offset
Marketplaces
Products and Services: Market Landscape

6. ESG MEETS FINTECH – EXECUTIVE SUMMARY
Products and Services
Aspiration is a neobank that helps Americans have access to conscious financial products and services. Aspiration currently has over 1.5
million customers who have signed up for its banking service. It offers fossil-fuel-free deposits that do not put customer money into fossil
fuel projects such as pipelines and oil drilling. By moving their money to fossil-fuel-free deposits and investments, customers are bringing
about substantial CO2 reductions at the individual level.
Betterment is a US-based digital wealth management platform that offers robo-advisory and neobanking services. The platform provides
its users with custom-built portfolios that match their financial goals and risk appetite. Betterment has no
account minimum and charges 0.25% of assets under management as fees annually. In 2017, Betterment launched a Socially
Responsible Investment (SRI) portfolio for its customers, which has been renamed to Broad Impact portfolio. The company added two
more portfolios in 2020, which focus on climate and social impacts.
Payments Banking InsurTech WealthTechCrowdfunding Lending
1. Microfinance
2. Renewable project
financing
3. Pay-per-use
microgrids
4. Subsidized
financing for the use
of renewable energy
1. ESG investing
2. SRI portfolios
3. Green bonds
4. Carbon footprint
tracking
5. Carbon offset
trading
6. Digitized community
savings
1. P2P lending
2. Crowdlending
3. Renewable project
financing
1. Crop insurance
2. Geospatial mapping
3. Weather damage
insurance
1. Paperless banking
2. Branchless banking
3. Microsavings
1. Cashless payments
2. Mobile payments
3. Sustainable e-
commerce
Considering the tremendous growth, the question one needs to ask is the role of FinTech in achieving sustainable finance. FinTech is not
just banking and insurance. Technology has impacted all the sections of financial services. Each of these sections plays a crucial role in
enabling sustainable finance.
6
Featured Case Studies

7. ESG MEETS FINTECH – EXECUTIVE SUMMARY
7
Impact Investing covers venture capital funds that are focused on investing in startups that offer products & services to improve the financial lives of individuals.
This is not an exhaustive list
Impact Investing Investor Landscape (ESG & Sustainability)
Impact Investing: Investor Landscape

8. ESG MEETS FINTECH – EXECUTIVE SUMMARY
Impact Investing
Flourish is the FinTech investment arm of Omidyar Network, a firm that identifies
itself as a social change venture that works to bring about structural changes that
will fundamentally shift the systems that govern our daily lives. Flourish was founded
in 2019 and has $300 million in funding, which it will invest in FinTech startups in the
next five years. Flourish has so far invested in over 50 startups operating in the utility
and FinTech sectors.
Quona Capital is a scale-up stage venture firm focused on FinTech for inclusion in
emerging markets. Quona got its start at Accion before becoming an independent
venture firm in 2015. Accion is a global nonprofit committed to creating a financially
inclusive world, with a legacy in microfinance and FinTech impact investing.
Top Themes for ESG Fund Investment
8
Sustainable
Forestry
Energy
Efficiency
Inclusive
Finance
Green
Buildings
Education
Affordable
Housing
Health
Renewable
Energy
Water
Sustainable
Agriculture
Portfolio (Illustrative)
Portfolio (Illustrative)
Featured Case Studies

9. ESG MEETS FINTECH – EXECUTIVE SUMMARY
9
ESG Rating refers to firms that rate companies on ESG criteria. Data platforms are those that collect data based on the various ESG parameters on behalf of companies and
funds. ESG Reporting refers to those platforms that enable companies to measure and report their ESG performance.
This is not an exhaustive list
ESG Rating
Data Platform ESG Reporting
Data and Rating (ESG)
Data and Rating: Market Landscape

10. ESG MEETS FINTECH – EXECUTIVE SUMMARY
Data and Rating
10
ESG
Database
Annual Reports
Company Websites
NGO Websites
Stock Exchange
Filings
CSR Reports
News Sources
MSCI Inc., headquartered in New York City, US, is a global provider of equity, fixed income, hedge fund stock market indexes, multi-
asset portfolio analysis tools, and ESG products. Launched in 2010, MSCI ESG Research is one of the largest independent
providers of ESG ratings not just for companies but for funds and even country analysis. The research data is collected from
multiple sources, including government databases, company disclosures, macro data at the segment or geographical level from
academic, government, and NGO databases.
MioTech is an artificial intelligence platform that empowers sustainable finance with environmental, social, governance (ESG) data
and technology. Based out of Hong Kong, the firm has raised more than $7 million from various marquee investors such as Li Ka-
shing’s investment company Horizons Ventures, Moody’s Investor Services, and ZhenFund. Their recent fundraise is timely,
considering the new regulatory changes in the region, including the China Securities Regulatory Commission deciding to make it
mandatory for environmental, social, and governance (ESG) data to be disclosed by all “A-share listed” companies in 2020
Featured Case Studies
Data Sources for ESG Databases

11. ESG MEETS FINTECH – EXECUTIVE SUMMARY
11
The Lending segment consists of those platforms that make credit accessible and affordable to marginalized groups.
The Insurance segment consists of those startups that offer innovative and affordable insurance products.
The Savings & Investment segment covers startups that are offering micro-savings products and technologies that assist in the same.
The Payments segment consists of digital payment platforms beyond regular banking channels that are easy to access and affordable to operate.
This is not an exhaustive list
Lending
Insurance PaymentsSavings & Investment
Financial Inclusion: FinTech Landscape (Sustainable Finance)
Financial Inclusion: Market Landscape

12. ESG MEETS FINTECH – EXECUTIVE SUMMARY
Adults Without
an Account,
2017
Globally, 1.7 billion adults are without an account
12
Source: Global Findex Database
Note: Economies where the % of adults without an account is 5 (%) or less have not been represented.
This is just a graphical illustration and may not be exact.
200 million
100 million
10 million
1 million
<1 million
Tala is a US-based financial technology firm that offers affordable credit to the financially underserved population. It uses cutting-
edge algorithms to instantly underwrite and then disburse loans to people who have never had a formal credit history, all through a
smartphone app. Loans offered range from $10 to $500. Though based out of the United States, it currently serves five locations:
Kenya, Tanzania, India, the Philippines, and Mexico. Tala has raised $204 million from marquee investors such as PayPal, RPS
Ventures, Steve Case’s VC firm Revolution, Chris Sacca’s Lowercase Capital, and Data Collective.
Featured Case Study

13. Principles for
Responsible Investment
13
ESG MEETS FINTECH – EXECUTIVE SUMMARY

14. ESG MEETS FINTECH – EXECUTIVE SUMMARY
History of Principles for Responsible Investment
14
The concept of ESG investing emerged in January 2004. Kofi Annan, former UN Secretary-General, wrote to over 50 CEOs of major financial institutions, inviting them to
participate in a joint initiative under the auspices of the UN Global Compact, along with the support of the International Finance Corporation (IFC) and the Swiss government.
The goal of the initiative was to seek out ways to integrate ESG into capital markets. A year later, this initiative produced a report titled ‘Who Cares Wins,’ authored by Ivo
Knoepfel. The report made the case that embedding environmental, social, and governance factors in capital markets makes good business sense and results in more
sustainable markets and better outcomes for societies. At the same time, UNEP/Fi created the ‘Freshfields Report,’ which showed that ESG issues are relevant for financial
valuation. These two reports formed the backbone for the launch of the Principles for Responsible Investment (PRI) at the NYSE in 2006.
0
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1,000
1,500
2,000
2,500
3,000
3,500
0
20
40
60
80
100
120
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Assets Under Management
Asset Owners' Assets Under Management
Number of Signatories
Number of Asset Owners
Note: Data as of April 2020.
Source: unpri.org
N° SignatoriesAssets Under Management ($, Trillion)
Assets Under Management of PRI Signatories
Environmental, social, and governance (ESG) criteria refer to a set
of standards for a company’s operations; socially aware investors
use these standards to screen potential investments.
‘Environmental’ covers the impact of the company’s activities on
the environment, ‘social’ deals with its relationships with its various
stakeholders and society in general, and ‘governance’ broadly
looks at its conduct of day-to-day activities and overall
management practices.
Environmental Social Governance
• Climate change
• Resource depletion
• Waste
• Pollution
• Deforestation
• Human rights
• Modern slavery
• Child labor
• Working conditions
• Employee relations
• Bribery and corruption
• Executive pay
• Board diversity and structure
• Political lobbying and donations
• Tax strategy
Here are some ESG factors as per the Principles for Responsible Investing (PRI):

15. ESG MEETS FINTECH – EXECUTIVE SUMMARY
Principles for Responsible Investment
15
The PRI is the world’s leading proponent of responsible investment. Since its launch in 2006, the number of signatories has gone up from 100 to 3000, including asset
owners, investment managers, and service providers that commit to integrating ESG factors into investment decision-making.
The six principles for responsible investing, which the signatories abide by are:
• Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.
• Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.
• Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.
• Principle 4: We will promote the acceptance and implementation of the principles within the investment industry.
• Principle 5: We will work together to enhance our effectiveness in implementing the principles.
• Principle 6: We will each report on our activities and progress toward implementing the principles.
PRI’s Signatories – Region Breakdown and Increase Against 2017
Europe
1,022 10%
North America
456 10%
Latin America
68 10%
Asia
130 29%
Africa
68 8%
Oceania
152 12%
Number of Signatories in 2018 Year-on-Year Change (2017 vs. 2018)
Middle East
9 13%
Source: unpri.org

16. ESG MEETS FINTECH – EXECUTIVE SUMMARY
16
CONTENTS
What’s Inside “ESG
Meets FinTech — A
Strategic Analysis”
1. Introduction
2. Principles for Responsible Investment
3. Impact Areas
• Products and Services
• Impact Investing
• Data and Rating
• Financial Inclusion
4. Conclusion
5. Research Methodology

17. About
MEDICI is the world’s leading FinTech Research and Innovation Platform. MEDICI is a partner to banks, tech companies and FIs globally with over 13,000 FinTechs on the
platform, enabling FinTechs to scale and create global economic impact. MEDICI is committed to supporting the complex financial services ecosystem and enabling
stakeholders benefit from the industry’s accelerated growth and global impact.
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