ESG in Fintech: An Overview

Environmental, social, and governance (ESG) performance evaluation criteria have become increasingly
important for Fintech as tools to assess a company’s ability to generate environmental and societal
value.
On the one hand, Fintech is well-positioned to take advantage of ESG in their business models. The
application of digital technology to financial services generates a significant amount of financial data
that can be both shared with and analysed by governments and investors to inform the development of
ESG guidelines. On the other hand, Fintech businesses are also under compliance pressure to integrate
ESG in their own financial reporting and operations, as well as to adapt to new performance assessment
criteria. ESG becomes even more important as customers and investors in Fintech businesses pay
increasing attention to ESG performance, and talent and founders focus more and more on being
sustainability-conscious and impact-driven.
This report provides an overview of the current ESG reporting status of Fintech businesses in Denmark
and the European Union (EU). We focus on startups as they tend to be disproportionately burdened
by compliance and investment pressure due to their limited resources. Our goal is to take a first
step towards developing a collective ESG reporting model for Fintech startups that enhances their
competitive advantage despite a volatile economic and regulatory environment.
This report presents the current state of ESG reporting in the Danish Fintech sector as informed by
wider international discussions within the sector. In it, we map out the five forces that shape the Fintech
ESG landscape: 1) policy and regulatory authorities; 2) capital providers; 3) clients and customers; 4)
talent; and 5) knowledge communities. We focus on ESG reporting needs, practices, and challenges
from different stakeholders’ perspectives. Building on these insights, we suggest a collective approach
to ESG reporting in Fintech that is adaptive to the dynamic nature of developments in both ESG and
Fintech.
The findings and insights are based on a series of interviews with various practitioners in the Fintech
ESG sector conducted from February to August 2022 alongside an analysis of relevant documents.
The document analysis includes both existing ESG regulations and venture specific ESG frameworks.