Fintechs focusing on sustainable solutions for financing, ESG management, and green real estate have been notably less affected by the investor retreat in the venture capital markets compared to other young, innovative fintech startups, according to a survey by the consulting firm EY. “The number of ESG fintechs continues to grow,” said Peter Fricke and Anna Caroline Lange from the EY Fintech Business Development Team during the launch event for a new startup program at Frankfurt's Techquartier. “Climate Tech proves to be resilient,” confirmed Christina Koch, an investment manager at Neosfer, the early-stage capital subsidiary of Commerzbank.

In Europe last year, EY identified 70 new ESG-focused fintech companies, with a growing number specializing in regulatory technology (Regtech) and energy market solutions. Venture financing in the EU for ESG-related fintech firms increased sixfold, reaching 1.5 billion euros between 2016 and 2022. Data compiled by Neosfer further supports the idea that funding for climate-focused fintech firms has experienced significantly more growth in recent years compared to general fintech funding. According to EY's calculations, this expansion has led to the creation of 17,800 jobs, underscoring the economic significance of fintech companies specializing in sustainability solutions. London leads the list of locations, followed by Paris and Berlin. Notably, young companies in the "Data and Rating" category have shown vigorous growth.

Fricke anticipates that the growth of ESG-Fintechs will continue. "Regulatory tailwinds will further boost the ESG growth story," he predicted, pointing to increasing reporting requirements related to the SFDR and CSRD regulations. Additionally, there is a need for financial solutions in the context of building energy renovations.

Fricke also sees potential in the opportunities provided by artificial intelligence (AI): "ESG and AI have only just begun and will be a defining trend in the coming months." Another trend in the making is "Token Carbon Offsetting," where the trading of carbon assets on a secondary market aims to facilitate asset managers in integrating carbon offsetting into their offerings.

The Frankfurt Techquartier launched a program specifically for ESG-Fintechs with the kick-off event. In the coming weeks, these companies will receive intensive guidance on all aspects of business models and financing from banks, consulting firms, and law firms supporting the "Green Transformation Incubator."

In addition, startups that have already passed the initial phase of founding also participate in the exchange of experiences. During the opening event, Christian Mittermaier, co-founder and CFO of Constellr, shared his insights. Constellr is a satellite operator that provides granular and precise data on temperature, water availability, and carbon. Mittermaier encouraged ESG startups not to attempt to provide every aspect of their solution on their own but to collaborate with others, even if it means sharing revenues.