The Future of ESGTech: Goal 9 – Industry, innovation and infrastructure

The Future of ESGTech: Goal 9 – Industry, innovation and infrastructure

Build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation. This is an extract from Finextra’s The Future of ESGTech 2022 report.

Focus target 9.3: Increase the access of small-scale industrial and other enterprises, in particular in developing countries, to financial services, including affordable credit, and their integration into value chains and markets.

Improving financial services for small enterprises under SDG 9 has faced significant setbacks as a result of Covid-19, and according to the UN, small-scale industries have continued to face “existential challenges” as a result. Yet, the possibility of bringing innovative technologies to developing regions is cause for optimism.

Much of the world is a long way from leveraging these technologies, and access to investment would enable the building of sustainable infrastructure is vital to truly improving outcomes for small-scale enterprises in developing markets. A recent report by the UN’s Task Force on Digital Financing of the Sustainable Development Goals revealed that digital financing is an effective means to drive this improvement rapidly, and has already broadened access to financial services for millions across the globe.

Not only can digital finance work to formalise the millions of people already engaged in the informal economy, but mobile money accounts can open the door toward financial health, social safety nets, formalisation of small savings and microinsurance.

In developing countries, the UN has found that 34% of small-scale industries benefit from loans or lines of credit, which enable them to integrate into local and global value chains. The UN’s Task Force report also explained that banks, mobile operators, digital platforms and fintech start-ups are using big data to expand access and lower the cost of credit, reduce application times, and offer existing debt refinancing alternatives. The report added that research has shown digitally enhanced scoring results in 27% more loan approvals with 16% lower interest rates across all customer segments. What’s more, digital finance in developing countries tends to increase savings behaviour.

The Mastercard Farmer Network, part of the company’s broader ‘Lab for Financial Inclusion’ commitment to connect one billion people to the digital economy by 2025, is a platform that digitises marketplaces, payments workflows and farmer financial histories within the agriculture sector. As it is being rolled out in East Africa and India, the platform is designed to support the small holder farmers that are critical to developing economies across the globe.

Extending this initiative in 2021, Mastercard launched the LEAF Farmer Network in partnership with the firm Lawrencedale Agro Processing India, to improve the lives of Indian farmers by leveraging technology aided by human intervention, solving challenges of transparency in India’s rural ecosystem.

During 2021 Citi announced it would commit $1 trillion to sustainable finance by 2030, aligning itself with the UNSDGs by allocating half of the sum toward transitioning to low-carbon. The remaining $500 billion toward other SDGs such as education, affordable housing, health care, economic inclusion, community finance, international development finance, racial diversity and gender equality. The bank argues that there is an “enormous social need for infrastructure investments, which have the capacity to improve the lives of those living in underserved areas and stimulate local economies.”

With $59 trillion in global infrastructure investment required over the next 15 years, Citi seeks to finance and make direct investments in infrastructure in cities and communities around the world. The bank states that its work with clients and partners to develop technology-driven solutions that expand access to safe, appropriate financial services to unbanked and underbanked micro and small business owners around the world aligns with SDG 9.

Specifically, Citi’s Inclusive Finance efforts support SDG target 9.3, which seeks to increase the access of small-scale enterprises, particularly in developing countries, to financial services to facilitate integration into value chains and markets. In 2017 the bank ran the Tech for Integrity (T4I) Challenge, a global open innovation competition to crowdsource technology solutions that address issues of integrity, transparency and corruption, and Citi currently works in partnership with governments and local networks to develop technology-driven solutions to these challenges.

ACTION FOR 2022: Provide access to investment that would enable the building of sustainable infrastructure and improve outcomes for small-scale enterprises in developing markets.

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