Accelerating transformation amidst economic slowdown

In the dynamic landscape of the ESG FinTech sector, resilience shines through as a catalyst for transformation, even amid economic downturns. It is also crucial to explore key insights into investment sizes across various segments, underscoring pivotal enablers such as strategic data utilisation and robust infrastructure, and uncovering the profound implications this resilience has for both the real economy and the financial sector.

This report is a captivating exploration of ESG FinTech, where progress unfolds as a testament to the imperative shift towards a low-carbon emission model. This journey is characterised by an unwavering commitment of major corporations, addressing not only the urgent need for transition but also aligning with the broader ESG agendas.

While global investments are projected to reach $28.8 bn in 2023, slightly below the 2022 figure of $29.4 bn, the sector remains resilient. In terms of in-house spending, a noteworthy surge is witnessed with ESG financial budgets witnessing an estimated 35.2% increase in 2023, compared with the last year. Furthermore, the investments are expected to soar further with a global investment of $123.7 bn by 2026. It is also important to note the temporary slowdown that the Asia-Pacific (APAC) region is experiencing in 2023 due to the absence of large deals in the preceding year.

• Singapore solidifies its standing in the APAC ESG FinTech realm through robust initiatives such as the Singapore Green Plan 2030 and the Finance for Net Zero Action Plan. These strategic frameworks not only underline the nation’s commitment to green investments but also serve as catalysts in shaping a dynamic ecosystem for green FinTech development.

• The Monetary Authority of Singapore (MAS) emerges as a pivotal force in elevating the country’s ESG FinTech landscape. By leading initiatives such as Regulatory Sandboxes and the ESG Impact Hub, MAS actively enhances the regulatory environment. Furthermore, Singapore’s investment in education, research and market regulations related to green finance underscores its commitment to talent development, reinforcing its position as an international FinTech hub.

• Carbon services anticipate significant growth, fueled by a surge in deals, particularly in early-stage ventures across the Americas and Europe. However, 2023 paints a contrasting picture for RegTech, experiencing a decline with the funding dropping to $1.6 bn from $3.16 bn in 2022. InsureTech and payments have also grappled with a funding drought this year.

• The ESG FinTech hotspots are blossoming globally. In the Americas, New York and San Francisco spearhead this development, while London and Paris take the lead in Europe. In the APAC region, Sydney and Singapore emerge as vibrant global hubs, showcasing the dynamic growth of ESG initiatives.

• On the global front, investments in the ESG FinTech sector are anticipated to be stable, owing to increase in in-house spends of tech and financial giants. KPMG in Singapore forecasts these investments to reach $37.4 bn in 2024 and grow further from 2025. However, the regional insights feature segment disparities and external deal volumes, which help identify and evaluate regional activity levels.