Published on 22 October 2018

SUSTAINABLE FINANCE

Sustainable finance : three trends making finance more positive

Finance is not our enemy. On the contrary, it can even be used to develop a positive economy! This is the message that a changing sector wants to deliver. With a focus on three innovations created by startups discovered at the Change Now event, major financial institutions want to direct funding to more responsible companies.

Startups are innovating to move finance in a more positive direction and increase its positive impact.
@Phototechno

1 / Use of blockchain and cryptocurrency

Most are familiar with the ICO, or the fundraising cryptocurrencies that the Pacte law is trying to regulate. But blockchain and cryptocurrency is also used to finance social projects. Such is the challenge for Root Project, an American crowdfunding app that finances local projects to improve the lives of local residents, such as building playgrounds for children or park benches. Residents can propose projects, create descriptions, and upload photos and budget estimates.

These proposals are then analysed by the Root Project team. If they are selected, they are financed either entirely by the submitter, or via crowdfunding, all while knowing that this qualifies them for tax credits. Project construction is then assigned to the homeless or low-income workers.

For the app’s founder, Nicholas Judge, the "transparency and security that blockchain brings is essential to the project" and is a "game changer" for the financial sector.

As for the decision to base such an app on cryptocurrency, Root Project explains that it creates "an economic logic that aligns the interests of those who possess capital and those who are trying to escape poverty. When the currency appreciates, it creates value for everyone in the system because ROOTS tokens are held in a pension-like fund for those who complete RootProject activities, while those who have purchased tokens see their value grow due to reduced supply and continued demand.”

2 / Resorting to participatory ratings

Are rating agencies overwhelmed? "No expert in the world can single-handedly assess the extremely complex and multifaceted impact of a business, which requires the input of many analysts who share their insights, confronting views, and - collectively - revealing the real impact of "a company", says Bertrand Gacon, co-founder and CEO of Impaakt.

Its collaborative platform makes it possible to multiply varying viewpoints concerning companies by encouraging everyone connected with them to express themselves (employees, local residents, etc.). The most informed, balanced and relevant contributors are rewarded. The objective is to help investors, the ones who buy these analysis reports, to finance companies that have the greatest positive impact.

3 / Creating unexpected partnerships

In an unexpected alliance, two investors have joined forces with the Vatican to select positive impact startups. After the publication of the encyclical Laudato Si in 2015, or Pope Francis' call to save the planet, Eric Harr and Stephen Forte wanted to contribute by launching the "’Laudato Si' Challenge".

The goal is both to "awaken the conscience" on the role of companies in society and to find the solutions of tomorrow that will preserve the environment, water resources and develop access to energy."  And what better way to do that than a partnership with a brand as global, massive and positive as the Catholic Church?" says Forte.

Out of more than 300 applications received, nine startups were selected and incubated for two months at the Vatican. They were then mentored remotely before being presented to investors worth a combined  $30 billion. Due to much success, a second edition is being planned.

Béatrice Héraud @beatriceheraud

 

(1) All the cases are picked from Change Now on 28 September, 2018, an event in partnership with Novethic.


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