Finance Monthly - March 2022

companies offer a new option for retail investors to build a longterm sustainable portfolio. Trading Trading is a sector where FinTechs can leverage blockchain technology to lower costs, reduce intermediary involvement and at the same time establish exchanges and marketplaces that enable the trading of carbon credits to advance environmental goals while monetising that effort. Aircarbon, a Singapore-based, global carbon exchange platform built on blockchain technology, bundles carbon credits from different projects into a single instrument that can be traded on its digital platform. Unlike the current system of carbon credits trading, where companies purchase credits linked to individual projects, Aircarbon aims to create and offer standardised carbon credits instruments via bundling of projects. This approach could enable a more standardised carbon credit economy which could catalyse large-scale, institutional commodity trading. Climate Impact X is another Singapore-based global carbon exchange and marketplace for carbon credits jointly established by DBS Bank, Singapore Exchange Limited (SGX), Standard Chartered Bank, and Temasek. It supports trading of carbon credits created from projects involved in the protection and restoration of natural ecosystems. The company recently completed an auction of a portfolio of 170,000 carbon credits connected to eight recognised forest conservation and restoration projects located in Africa, Asia, and Central- and South America. The company aims to have such auctions on a regular basis starting in 2022. The development of an expanded carbon credit supply via auctions could help the carbon offset market reach $100B in tradable carbon by 2030. Risk Analysis Risk analysis is a Climate FinTech category that has seen the highest rate of exits and mergers & acquisitions based on a report issued by New Energy Nexus. Risk analysis companies focus on measuring two kinds of climate risk data: 1) transition risk, which relates to the process of transitioning to a lower-carbon economy and 2) physical climate risk, which focuses on the physical impact of climate change. Both of these risks are important to investors, and investors rely on these analytical solutions to guide their investment decisions. Carbon Delta, a Swiss company, provides insights that evaluate climate change risk in public companies for investment professionals. A key example of a company that measures this transition risk - Carbon Delta calculates ‘Climate-value-at-Risk” which provides forward-looking and return-based valuation assessments for an investment portfolio. By offering a calculation of the value of the future costs related to climate change, the company can help influence how investors and operators can direct capital to less environmentally harmful projects. This company was acquired by MSCI in 2019. Jupiter Intel, on the other hand, measures the physical risk of climate change at the asset level by using satellite data, artificial intelligence, machine learning and Internet-of-Things connectivity. The Climate Score provided by its platform enables users to project the effect of climate change on a portfolio of assets. Banks, asset management firms, and other financial services companies can leverage this data to manage risk and allocate capital to assets that maximise positive climate impact. The company raised $54M in Series C venture funding in a deal led by MPower Partners Fund and Clearvision Ventures in September 2021. Middlemarch is Poised to Support ESG-focused FinTechs Middlemarch Partners believe that FinTechs as well as traditional financial services players can use ESG to attract customers who care about changing how we interact with our environment and each other. Not only is Middlemarch Partners focused on helping capitalise on next-gen financial services companies that want to focus on environmental objectives, but we also want to help established traditional financial services companies find ways to reorient themselves towards ESG efforts. Middlemarch Partners is also cultivating investors who want to help lead the charge in ESGoriented financial services companies. We know those investors are looking for those businesses that can deliver strong returns and, at the same time, advance ESG objectives. That is the winning strategy that will allow us all to do well by doing good. F i nanc i a l Innov a t i on & F i nTech Finance Monthly. 58

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