Takeways From This Year's Singapore Fintech Festival

In the bustling halls of the Singapore Expo, where some 60,000 people from 130 countries gathered last week for a celebration and exploration of new financial technologies, Fintech Festival 2019’s government organizers challenged participants.

By Leslie Shaffer

How can the power of finance and technology «be harnessed to create a greener world and, in particular, a greener financial system,» Ravi Menon, the managing director of the Monetary Authority of Singapore (MAS), asked a packed house during the Singapore Fintech Festival’s opening ceremony.

«Fintech must have a larger purpose, must serve a larger good,» the central bank chief said. «One of the most important things that we can do to create a better world for the future is to be more sustainable. We need to make the world greener.»

While Menon’s call for innovation and sustainability resonated with many at the annual gathering, participants in sessions with titles like «Fintech for Good» and «Tech for Impact» surfaced challenges and unintended consequences of the 21st-century digital economy.

Energy Consumption

Top of the list is the energy consumed by cloud computing. Data centers currently account for approximately 2 percent of electricity usage worldwide. This is expected to rise four-fold over the next decade, according to a study by Huawei Technologies.

Greenpeace estimates that data centers in China alone emitted nearly 100 million tonnes of carbon dioxide last year, much of this related to the mining of crypto-currencies, such as bitcoin.

Climate Change

«If you look at the growth of the cloud, and the exponential growth in data center requirements to drive cloud computing, there’s no question that power consumption is a dimension of the expansion. That’s a fact,» said Jeff Smith of the Quebec-based institutional investor CDPQ. «So how do we minimize or mitigate that from energy consumption and, potentially, climate change point of view?»

Two inter-related strategies are the most common: One, build data centers in a cold locale to minimize the need for air conditioning to cool the servers, and two, buy electricity from a utility fueled by hydro-power or another source of clean energy.

Financial Incentives

«We’re pretty bullish on the idea that if people are intelligent about geographic location, and the access to green-tech based technology from an energy standpoint, you can go a long way towards mitigating that issue,» said Smith, who made a pitch to Fintech Festival goers to locate their data centers in northern Quebec.

While lower utility costs can provide an incentive to energy-intensive companies to relocate to a venue where their carbon emissions are also reduced, many environmental decisions are not adequately reflected in the bottom line. Instead, installing carbon scrubbers or properly disposing of toxic waste is often accounted for as a cost, discouraging companies from acting sustainably.

Environmental Performance

Businesses such as WorldCover, which provides crop insurance to smallholder farmers in the developing world, register as a ‹B Corporation,› ensuring that they remain true to their social and environmental goals. B Corporations have a private certification issued by B Lab after showing they achieved minimum standards on social and environmental performance.

Most publicly-listed companies, though, place sustainability in the second position, even if they tout the importance of what's known as a triple bottom line, the commitment to focus on social and environmental concerns as well as profits.

Everybody Is Going to Pay Attention

So how can companies overcome this dilemma, remaining true to shareholders while also investing in communities and the planet? One possible solution is to write environmental and social goals into employee KPIs, or key performance indicators.

«If my bonus has a formula that includes whether we’re reducing carbon footprint, I guarantee everybody in that company is going to pay attention,» said Smith.

Semantics Matter

Two years ago, Microsoft launched a programmed called «AI for Earth» to promote the use of artificial intelligence to solve environmental challenges. But the five-year $50 million initiative almost failed to get off the ground.

Lucas Joppa, the brainchild behind the program and Microsoft’s first chief environmental officer, was leading research at the intersection of environmental and computer sciences at the software giant when he decided the company could do significantly more to fight climate change and support sustainable development.

Nothing Happened

«There are huge opportunities to fundamentally change how we manage Earth’s natural systems,» Joppa said. «But we were very far away from managing the potential.» He had an idea, which he decided to circulate throughout the company.

«I wrote a memo,» he recalls. «When I first sent it around, nothing happened.» So Joppa changed the memo’s title to «AI for Earth» and recirculated it. The rest of the contents were unchanged.

Off and Running

«Four months later, we had $50 million and we were off and running,» he said. «Every business division had something to contribute. That was a fundamental shift.»

Today, AI for Earth supports more than 450 programs in seventy countries, including initiatives to prevent illegal fishing by analyzing suspicious vessel movements in real-time and to promote forest conservation through intelligent mapping.