• FinTech startups should be prepared for escalating inquiries on sustainability, ESG and impact from investors, customers, employees and partners
  • RFI Foundation, together with HSBC Middle East, will run a 12-week program for a small cohort with about a dozen startups to gain a hands-on, interactive and collaborative learning experience to make responsible finance work for them (Applications are now open)

2021 was a transformative year when it came to responsible finance for the Middle East. The headlines have been filled with announcements on ESG reporting guidelines for listed companies. Across the MENA region, stock exchanges in Dubai, Abu Dhabi, Saudi Arabia, Bahrain, Qatar, Egypt and Morocco have adopted some form of sustainability guidelines, with mandatory reporting for exchanges in the UAE, while Oman is taking steps in this direction.

On the climate front, three countries in the region announced long-term national Net Zero targets (Saudi Arabia, Bahrain and the United Arab Emirates) and others stepped up their ambitions on climate change mitigation and adaptation. Meanwhile, companies and financial institutions have been making their own sustainability commitments. They are following up on their commitments with new sustainability- and ESG-linked financing and green bond issuance, which are becoming more commonplace in all sectors.

The language of ESG, responsible finance, sustainability and impact have become commonplace in the MENA region. All indications suggest that this trend will continue to permeate the region’s business and finance sphere, including shaping developments for startups and FinTech companies driven by founders, employees, investors, and prospective acquirers.

This is why the RFI Foundation partnered with HSBC Middle East and spent the last year building the Global Virtual Innovation Hub to help FinTechs to become active in or expand to the Middle East, North Africa and Turkey and take advantage of what is happening in responsible finance in the region. We believe that FinTech has a huge potential to change the financial sector and beyond, which it has already begun to do.

FinTechs need to appeal to consumers with rapidly changing expectations on their social and environmental footprint. They need to understand how to respond to heightened demand from investors of all types who expect more today than they ever have on ESG and impact metrics. FinTechs also need to know where their skills and disruption can drive change in financial institutions, whether as partners, customers or the mainstream financial sector institutions who define ‘business as usual’.

Startups face a tall challenge in responding to ESG risks, measurement and reporting, and in developing their own strategies around impact. The realm of the possible is nearly infinite, and the process of sorting out what matters to your business, and what will be valuable for your investors, employees, customers and potential partners requires an investment of time and patience that may be in short supply for most FinTech startups.

Instead, many assume that focusing on growth will be an interim solution and will provide the resources — time and money — in the future to backfill their ESG and impact capabilities. Many investors are still funding like they believe this too, but these perceptions are rapidly being overtaken as the evidence builds that responsible finance matters for the bottom line and therefore should influence investment decision-making.

A survey conducted by the European Investment Fund in 2019 found that 73% of European venture capital funds and 62% of business angel investors were integrating ESG into their investment processes. Awareness and action on ESG has grown significantly and dramatically globalised in the intervening years, driven further on by the Covid-19 pandemic, which showed in concrete terms how ESG issues and awareness of impact can affect FinTech startups everywhere.

The value of responsible finance today can be significant in sharpening your profile for customers, employees, investors because at its core responsible finance is about being more aware of what’s around you that can make your business thrive or fail. It also means identifying types of investors you may not have previously considered who can see the full picture about what makes your startup unique.

The RFI Foundation is now recruiting a small number of FinTech startups with links to the Middle East to get a quick, intensive, hands-on experience understanding what sustainability, responsible finance and impact strategy means for them. The Global Virtual Innovation Hub is interactive and collaborative, and asks for a solid commitment of a limited amount of your time over a 12-week period with benefits that last long after the cohort program ends.

The application period runs from 7 January to 23:59 GMT, 21 January 2022.

Apply now!

Interested but have questions? Sign up and drop an email to info@rfi-foundation.org. And find out more in the Q&A section of the GVI Program page on our website.

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Promoting adoption of responsible finance in Islamic markets & Islamic finance. CEO @RFIFoundation.

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Blake Goud

Blake Goud

Promoting adoption of responsible finance in Islamic markets & Islamic finance. CEO @RFIFoundation.

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