Karsten Wenzlaff, Advisor
August 26th, 2025
Karsten Wenzlaff is a Crowdfunding and Fintech Expert from Germany. He is Secretary-General of Digit[...]
Category Archives: Fintech Opinions
Techlash continues to batter technology sector
Source: Felix Decombat
In our Brookings Press book, Turning Point: Policymaking in the Era of Artificial Intelligence published last year, John Allen and I note the backlash against technology that has reduced public support for many things digital. As an illustration, Pew Research Center surveys show people are worried about privacy intrusions, cybersecurity risks, and misinformation campaigns. Many individuals think the pace of technological change is advancing too rapidly and it is hard to distinguish fake from actual phenomena.
Now a new Edelman Trust Barometer poll shows how much more widely this “techlash” has spread. In the United States, trust in the technology sector has fallen from 78% in 2012 to 57% in 2021. Globally, tech sector trust has dropped from 77% to 68% during that time.
In less than a decade, according to that firm, the public has grown far more suspicious about misinformation, personal privacy, 5G networks, and AI bias, among other things.
The decline of public trust in the technology sector has profound consequences for how people view digitization and options for government oversight and regulation. The precipitous drop over the past year is noteworthy because of the crucial role technology has played in the pandemic response. Due to COVID-19, people have shifted to online learning, telemedicine, remote work, and e-commerce.
See: Edelman Canadian Trust Report: Trust declines in all sectors including 8% in technology
In this situation of widespread technology utilization to cope with the social distancing requirements of the pandemic, one might imagine the public would see the benefits produced in at least some of these areas would outweigh the costs and the risks. COVID-19 forced what otherwise might have been five years of digital change into five weeks. Nearly everyone has grown quite dependent on technology to work, learn, and communicate. That should have boosted public confidence in technology.
In the United States, trust in the technology sector has fallen from 78% in 2012 to 57% in 2021. Globally, tech sector trust has dropped from 77% to 68% during that time.
Yet the loss of trust suggests many are not happy with the role technology plays in their pandemic lives and feel there are many problems that need to be addressed. Although digital connections helped them work remotely, a number are suffering from Zoom fatigue, misinformation, privacy loss, and social isolation. A significant percentage seems to feel that tech risks outweigh benefits.
In addition, widely reported problems with online learning platforms have frustrated students, parents, teachers, and administrators. Rather than boosting confidence, these issues have eroded public trust. Although technology enables some types of learning, some experts have concluded students learned far less from online platforms than what would have been the case with in-person classrooms.
See: PwC Report: Canadian Digital Trust Insights 2021: Cybersecurity comes of age
If public opinion continues to trend in negative directions for the technology sector, both in the United States and around the world, it likely will broaden support for government actions that regulate technology, raise taxes, ban certain applications, and limit product rollouts seen as detrimental to humanity.
A lack of public confidence will encourage political leaders to take tough regulatory actions and limit the freedom private companies have had for decades to develop new products, bring them to the marketplace, and engage in international commerce.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Crypto whale ‘Metakovan’ sees NFTs as ‘huge risk’ for traders
BNN Bloomberg | | Apr 6, 2021
The cryptocurrency entrepreneur who spent more than US$69 million for a piece of digital art has a message for speculative buyers of non-fungible tokens: be prepared to lose your money.
Vignesh Sundaresan, also known by the online moniker MetaKovan, vaulted into the spotlight last month after paying a record-breaking sum for the NFT of Beeple’s “Everydays: The First 5,000 Days.” As Sundaresan tells it, his motivation wasn’t to make money but to support the artist and showcase the technology.
Anyone trying to profit from NFTs is “taking a huge risk,” he said in a video interview. “It’s even crazier than investing in crypto.”
Many investors may prefer investing in growth stocks or other safer investments that may have great upside potential with less downside risk.
The comments may raise eyebrows coming from someone who made his fortune in cryptocurrencies and has done more than perhaps anyone else to fuel the mania surrounding NFTs with big-ticket purchases of digital art. But it’s also hard to argue with Sundaresan’s warning: Average prices for NFTs tracked by Nonfungible.com tumbled almost 70 per cent from a peak in February through early April.
See: After you die what happens to your digital assets and NFTs?
B.20, a token created by Sundaresan to enable “shared ownership of an open art project” that includes some of Beeple’s works, has dropped to about US$7 from US$23 since he won the Christie’s auction for Everydays on March 11. It was trading below 50 cents in January, according to CoinGecko.com.
The extraordinary boom and bust has fueled a debate over whether NFTs -- essentially digital certificates of authenticity -- will have a lasting impact on markets for art, collectibles and beyond, or turn into the latest example of an investment bubble that enriches a select few while saddling latecomers with losses.
Some skeptics have questioned whether Sundaresan’s Everydays purchase was partly an attempt to drive up the value of his existing NFT positions. He denies having profited from the transaction and said he hasn’t sold his personal holdings of B.20 tokens.
On the long-term outlook for NFTs, Sundaresan agrees with aspects of both the bull and the bear case. He describes the technology as an enduring innovation that will enable a “new patronage movement” for artists and other content creators, many of whom now rely on ad-supported revenue models via internet platforms like Instagram. But Sundaresan also said the fervor around many of the highest-priced NFTs will likely fade.
See: What’s possible with Non Fungible Tokens (NFTs)
“I don’t think NFTs will hold the same kind of hype forever around high-value items,” he said. “The market will get divided. There will be very few high-value items and an infinite number of very low-valued items.” He said the best way to participate is by purchasing NFTs from artists you want to support. “It’s not primarily an investment,” said Sundaresan, who grew up collecting stamps and WWE playing cards.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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After you die what happens to your digital assets and NFTs?
TechCrunch | Erin Bury | Apr 5, 2021
As consumers build their wealth, assets are typically tangible: cash, investments, property, cars, jewelry, art. But increasingly we’re adding a new type of asset to the mix: digital assets, whether in the form of cryptocurrency or a new asset class, NFTs.
We’re going through the biggest wealth transfer in history right now, with an estimated $16 trillion expected to change hands in the coming decades. While it’s easy to hand over the reins of a physical asset in the event of an emergency or death, it’s not as simple with digital assets.
See: 3 Ways Digital Assets Will Reshape The World
When someone dies, they either have a will that dictates how their assets will be distributed, or, if they die without a will, a government formula outlines how their assets will be divided. While a will outlines who should receive what, it typically doesn’t have an up-to-date asset list, nor does it contain passwords or access keys. There’s an estimated tens of billions in unclaimed assets sitting in banks today as a result of a family or executor not knowing about those accounts following an individual’s death.
But an executor can do due diligence by calling financial institutions to double-check whether the person held accounts and get access to those funds, which typically requires providing copies of the will and/or death certificate. With digital assets, it’s not as simple as calling the bank and finding out a relative had a valuable NFT. There’s no directory or central body that governs NFTs or cryptocurrency — it’s purposely decentralized, which is great for privacy but less than ideal for family members who want to figure out if someone held valuable digital assets.
And it’s not just about knowing digital assets exist — it’s about knowing how to access them. A recent study from the Angus Reid Forum, commissioned by Willful, showed that consumers under 35 are way less likely to have shared account access with loved ones (19% of those under 35 have shared account info, compared with 32% of those over 55). This makes sense, since the younger you are, the less likely you are to think about passing on assets after you die. But this tech-savvy younger demographic may leave their families in the lurch if something happens.
So what can consumers do to ensure their digital assets are protected? First, consider using a password manager like 1Password — which can store all of your account information, logins, private keys to digital assets and any other key information — and share the master access password with your executor or store it with your will.
See: LabCFTC Releases Primer on Digital Assets
Second, consider using a digital wallet or exchange to store your digital assets — if your family has access to that, it may also include access to your private keys, depending on the wallet’s features, or the exchange itself may have a death-management process.
Third, create an up-to-date list of your assets that your executor and/or key family members have access to — this should include physical and digital assets, and should be reviewed and updated either annually or when you acquire a new asset or change financial institutions. Finally, create a will that clearly outlines how you want your assets to be distributed and provide specific instructions on how you want digital assets to be distributed.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Canada’s payment system needs more competition
Financial Post OpEd | | Mar 25, 2021
Insulating industry incumbents from competition keeps the cost of sending and receiving payments in Canada higher than it needs to be
What started as a vision half a decade ago is almost a reality: the Canadian payment system, which processed $55 trillion in 2019, is on its way to being decommissioned and replaced. But while Canada is closer to getting its long-awaited safer and faster payment system, fintechs are being left out.
Payment system modernization wasn’t just going to be a technology upgrade. It was also supposed to make the financial sector more competitive, putting fintechs that hold and move Canadians’ money on a more level playing-field with Canada’s biggest banks.
For more than 30 years, one of the biggest public policy questions in payments has been, “Who gets access to the payment system?” To this day, the theoretical answer is banks and other financial institutions. In practice, however, it has mostly been Canada’s biggest banks.
The Canadian Payments Act prohibits fintechs from accessing the system themselves, so they access it through banks. The problem with indirect access is obvious. Imagine having no choice but to do business with your competitor in order to compete with them.
See: Overview of how Canada is modernizing its core payments infrastructure
The Canadian payment system is essential infrastructure. Operated by Payments Canada, it consists of the Large Value Transfer System (LVTS) and the Automated Clearing Settlement System (ACSS). The LVTS processes wire payments, whereas the ACSS processes payroll, bill payments and debit payments at the point of sale, among other payments.
Despite the clunky names and arcane processes, Canada’s payment system essentially works like a spreadsheet. Payment industry insiders occasionally joke that the Canadian payment system is a “glorified calculator.” It’s the most important glorified calculator you’ve likely never heard of. When I pay you, or you pay me, money doesn’t exchange hands right away. It takes time for our banks to move the money from account to account. When funds do appear in either of our accounts in almost real time, our banks have usually just fronted us the money. They use the glorified calculator to keep track of what they owe each other before the money actually moves.
I liken it to the telecommunications industry. As the only ones with direct access to essential infrastructure, a handful of banks are in a privileged market position, just as a handful of telecom giants are. From that privileged position, banks resell their access to fintechs.
But there’s a big difference. In telecommunications, the CRTC works to make sure privileged market positions aren’t being abused. In payments, there’s no such thing.
Since banks resell their access to the payment systems to fintechs, many fintechs are at an unfair disadvantage when it comes to cost and service levels. The high price of indirect access makes it difficult for them to offer their tried-and-true services, let alone experiment with more innovative offerings. That they’re forced to go through banks brings more complexity and slower payments.
That’s if you can find a bank willing to partner with you. Some banks will outright refuse to, depending on your business model. Then you can either become a bank or leave the Canadian market. Becoming a bank under the more than 800-page Bank Act is just not feasible for many fintechs, who often start off doing only a fraction of what a bank does. So exit becomes the only option.
See: Penrose Report: Power to the People: Stronger Consumer Choice and Competition
Instead of creating a CRTC-equivalent in payments, the federal government was going to make the sector more contestable. First, it was going to pass new legislation to regulate fintechs that hold and move Canadians’ money — not regulate them as much as banks are regulated, but enough to safely give them access to the payment system. Then it was going to give fintechs the right of access by amending the Canadian Payments Act.
These changes were announced in Budget 2019. But it’s 2021 and we’re still waiting.
The obvious danger is that when the new system goes live next year, the result will continue to be a less competitive market. That doesn’t just hurt fintechs. It also hurts consumers and businesses. Insulating industry incumbents from competition keeps the cost of sending and receiving payments in Canada higher than it needs to be.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The evolution of ESG: Corporate sustainability leaders in the financial services sector are taking on new responsibilities
KPMG US | Adam Hirsh | March 23, 2021
Corporate sustainability leaders in the financial services sector are taking on new responsibilities
Few roles have changed so dramatically, so quickly, as that of the Chief Sustainability Officer (CSO).
The spotlight continues to brighten on responsible business practices. CSOs at banks, asset managers, broker-dealers and other financial institutions have responded to customer, regulator, and investor demands for increased transparency by providing greater details and a more timely discussion and report of their firms’ environmental, social and governance (ESG) performance.
See: New SEC task force will scrutinize ESG and climate disclosures and marketing
It is more important than ever for financial services firms to centralize the management and strategic allocation of capital in ways that positively impact ESG issues. In order to best support their companies’ ESG goals, CSOs are broadening their skill sets and working across their organizations to define, measure and disclose how their companies are adhering to ESG principles.
Financial services company CSOs are adjusting to changes driven by several developments in corporate ESG.
ESG has risen to the top of the corporate agenda.
The financial allocation of green investments was once primarily the domain of asset managers deep within their own companies, and just one of many factors influencing their individual portfolio decisions. Companies are now realizing the importance of developing a firmwide ESG investment strategy. “We are sounding the alarm bells that if you are an investment institution and you’re not embracing this and taking it into account, it’s going to be at your own peril,” according to MSCI chairman and CEO Henry Fernandez.1
Today, the C-suite understands that weak ESG performance represents significant financial risks and can adversely impact funding costs, while strong ESG performance can provide opportunities to gain competitive advantage and market share.
The sustainability officer is no longer the sole owner of ESG.
Integration of climate / green strategies and investments are increasingly supported by business heads, compliance, chief financial officers and the chief risk officers along with the CSO. Companies are appropriately prioritizing their ESG programs relating to their revenue-generating businesses, integrating efforts in the company’s operational strategy across functions. Additionally, we are seeing a transformation of CSOs evolving from a heavy public relations focus to one of setting ESG strategy for the company across products and services.
See: OECD Report Outlines Challenges Facing ESG Investing
ESG terminology, materiality and approach can differ greatly across geographies, lines of business, and products. However, it is anticipated going forward that there will be a lean towards more consistency, driven by increasing regulatory focus as well as other developments impacting ESG reporting. Hence, there is an opportunity to align on the future state vision and agree what steps firms should take in the shorter term as well as the longer term when the investment community and market dynamics evolve. All disciplines must work in harmony together to effectively manage risk and capture opportunities across the entire enterprise.
Stakeholders demand data-based proof that firms are adhering to their ESG goals.
It’s one thing for a financial company to declare an ESG investment target over the span of a decade. It’s another to show where, how, and what impact that investment is having across the markets, industries and communities they currently serve. Increasingly we see companies applying a broader, more holistic consideration of ESG factors in their investment strategies. While environmental topics continue to be highly important, investors are looking for opportunities to drive additional benefits across a range of social domains, which improve the perceived ESG impact of the investments.
CSOs will continue to work more closely with their finance colleagues to ensure their companies improve data capture, cleanliness, and analysis (often with the help of modern technologies such as artificial intelligence), as well as to identify and report meaningful metrics to their shareholders and broader stakeholders.
CSOs play a critical role in building ESG programs that can deliver five key outcomes.
The activity among financial institutions to define, standardize, and assess ESG activities and disclosures is intense. Many of them have made progress by establishing financing commitments to advance environmental and social issues, setting zero-carbon targets, and releasing details in annual ESG reports.
See: Why a shift to Impact Investing will create big winners and big losers
The goal is to work toward an ESG program that establishes:
- Standard ESG eligibility criteria, with continuity in investment and program goals across all global markets and front-office divisions.
- A control framework that mitigates reputational risks inherent in external reporting.
- A global operating model, optimized for deal tagging and commercial allocations.
- Technology enablement for a modern, integrated approach to firmwide ESG data aggregation, with a reporting solution that operates across divisions and global product distribution.
- A culture shift that supports applying an “ESG lens” to all transaction commercial decision making.
While the aim is to eventually harmonize global ESG standards, CSOs should continue to focus on identifying and accumulating relevant ESG data, with transparency and controls, to demonstrate their firm’s integrity around ESG commitments and disclosures for investors, counterparties and employees.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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The Under-Appreciated Significance of Coinbase Going Public
Crowdfund Insider | | Mar 15, 2021
Once the Coinbase registration statement becomes effective and Coinbase shares trade publicly, a sea change will have occurred in the US without most people recognizing it. Part of that unacknowledged difference will be the broader awareness of blockchain and cryptoasset trading it brings. It is both novel and important to have a public company dedicated to the emerging technology and the markets it creates. It is cool that Coinbase founders, employees, and early investors will get rewarded for seeing the future before the rest of the world. No doubt the event augers well for other blockchain and cryptoasset companies going public. Oh, and Coinbase is doing it by direct listing, rather than an old-fashioned underwritten offering or new-fangled SPAC.
Yet the significance of the Coinbase registration statement goes far beyond these important markers.
First, it provides something for everyone: it sets the definitions most people will use when they talk about blockchain and cryptoassets.
Second, it provides something specific to Coinbase: a measure of insulation from a regulatory challenge; not forever, not completely, but in a way that should not be underestimated.
See: Coinbase’s Direct Listing Pushed Back to April
Definitions are important: Scrolling through the registration statement, the first thing you hit after the SEC form stuff and Coinbase’s short and sweet mission statement is “Glossary to the Cryptoeconomy”. It defines 32 words or phrases that are critical to understanding blockchains, cryptoassets, and Coinbase’s business. So critical are these terms that they appear even before Brian Armstrong’s letter introducing the company and its vision, before the summary financials and before the summary risk factors.
These definitions are bound to become the go-to reference for people talking about blockchain and trying to understand what it is all about.
US regulators and policymakers will have their glossary of terms for legislation and rulemaking as well as speeches and informal conversation.
Scrolling through the registration statement, the first thing you hit after the SEC form stuff and Coinbase’s short and sweet mission statement is “Glossary to the Cryptoeconomy”. It defines 32 words or phrases that are critical to understanding blockchains, cryptoassets
We blockchain denizens spend lots of time trying to explain concepts to anyone who will listen. Many of the terms have real legal and regulatory consequences; their usage is not limited to the domain of programmers or HODLers (yes, HODL is one of the 32). As the law and rules grapple with cryptoassets (defined) and blockchain (defined), as financial authorities and other regulators write new rules and interpretations about forks (defined but no distinction between “hard fork” and “soft fork”), wallet (defined, as is “hot wallet” and “cold storage”), stablecoins (defined; no coincidence that the Glossary only mentions USDC, created by Coinbase) and DeFi (defined), the Coinbase Glossary will be the starting point.
See: A blog post by Coinbase’s CEO has raised a fury. Will it affect a potential IPO?
This also means that the descriptions throughout the prospectus (especially but not exclusively in the Risk Factors section on “Risks Related to Crypto Assets”) will become the guidepost for concepts and ideas about blockchain, cryptoassets, and their trading, and the world that is growing up around both.
Note that “cryptoeconomy” and “ecosystem partners” are in the Glossary but “metaverse” is not. Spellcheck is even learning new terms as I write this article!
The Risk Factors discuss the “high degree of uncertainty” about definitions of “security” in many jurisdictions.
Going through the process is important: Which brings us to the Coinbase-specific benefit of some insulation against enforcement action. Make no mistake: this is not a “get out of jail free” card. Nevertheless, the process at the SEC before this registration statement is declared effective will be rigorous.
It will scrutinize all aspects of Coinbase’s business and the descriptions in the document, including the Risk Factors. The SEC will have a chance to ask any questions they want, learn as much about Coinbase’s business and regulatory footprint as they want. The easy problems, if any, will be found and that will make it harder for the SEC to claim that Coinbase does not have proper licenses for its business, harder to let years go by before raising concerns over regulatory issues, and harder to criticize current activities once the registration statement is effective.
See: United States: Virtual Currencies Regulatory Overview (and Comparative Guide)
Coinbase has an extensive discussion in the Risk Factors about the level of regulation that impacts its business and operations. The description offers no illusions that the path is easy, in part due to policymakers remaining uncertain and in part, because they will face regulation from many jurisdictions, not just from single country. It also includes an acknowledgement that they are subject to competition from unregulated players. Although couched in the standard, somewhat sterile registration statement language, these Risk Factors make it clear that regulatory risk is no joke, both in the sense that regulators may impose huge burdens but also with the view that there will be some sleepless nights for an organization with responsibility to public shareholders.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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Why a shift to Impact Investing will create big winners and big losers
Roar Growth | Peggy Van de plassche | Mar 8, 2021
Across the globe, Covid-19 has brought massive disruption in all areas of our lives, mostly for the worst. One of the positives that came up from the pandemic has been the increased focus on various forms of inequalities and climate change and the need to tackle them with a different approach than the ones that created them, or what some might call Stakeholder Capitalism.
Investments aiming at reducing inequality and climate change fit neatly under the broader category of Sustainable, Responsible, Impact (SRI) investing. We first find mentions of SRI investing in religious traditions dating back to 1,500 BCE, so nothing new under the sun! However, the impact investing philosophy goes nowadays way beyond investments solely focusing on SRI-based business models, such as Cleantech. By taking into consideration SRI results jointly with financial results when allocating capital, investors are now extending impact investing from its original niche to the entire universe of public and private companies.
Still slow-moving pre-Covid-19, the pandemic has fueled a fast-growing interest in impact investing from institutional and retail investors, both in public and private markets. We can make a first parallel between this acceleration and the one we have seen in the technology space with the rapid adoption of digital tools across the globe that was also enabled by the crisis.
See: Opportunity for FI to be more impactful
Impact or SRI investing is taking over from Environmental, Social and corporate Governance (ESG) methodology that was developed in previous decades. ESG was criticized for its lack of teeth — loose standards and only accounting for the “good stuff” enabling green washing (making people believe that your company is doing more to protect the environment than it really is). However, with all its flaws, ESG was a necessary step to enable SRI investing… one needs to learn how to walk before running, or in this instance to crawl before to walk.
As an investor, why should you care about Impact Investing? Impact investing is simply the biggest wave you can ride and also the biggest risk you should manage
You should care for multiple reasons, and I will not preach here the goodness of SRI Investing.
As technological innovations have been permeating every industry at an increasing pace since the industrial revolution creating big winners and losers, SRI has been and will be doing the same for the foreseeable future at an ever-faster pace.
We will see an upending of industries with the extinction of some and organizations unable to transform, the creation of new champions, the disruption of the allocation of capital and massive impacts on ROI.
See: The Steps to Designing a more sustainable and digital economy
In the grand scheme of things, these tectonic shifts are still in their infancy but they are definitely real: 1) asset managers call for more sustainable investment, such as:
Blackrock’s Larry Fink, and Canadian Pension Funds;
2) companies, such as Peabody Energy Corp., the biggest US coal producer is warning of potential bankruptcy;
3) capital is reallocated to companies scoring high SRI results, such as Blackstone’s $200M investment in Oatly;
4) PE-VC impact-focused funds are going mainstream, such as Impact Engine, Renewal Funds, Social Impact Capital;
5) multiplication of impact-focused retail investments solutions, such as impact mutual funds, green bonds, ETFs,…;
6) the price of carbon in the world’s biggest, most liquid market is soaring;
7) Stakeholder Capitalism championed by the likes of Klaus Schwab is gaining traction;
8) multiplication of companies aligned with the SRI agenda, such as Impak Finance, Long Game, or FrontFundr in the Fintech space.
These are only a few examples of how impact investing is picking up steam globally across all fields.
In an atypical situation, Europe is way ahead of the impact investing game while Asia is way behind. In North America, with the US having just rejoined the Paris agreement, should catch up to Europe in ~3–5 years assuming their respective levels of engagement stays the same, while Canada is likely to follow in the US footsteps.
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The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org
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