what it is and what it involves

Climate change is the biggest challenge of our time, according to the United Nations.There are other challenges closely linked to this environmental challenge, such as lowering pollution, putting an end to garbage in the oceans, promoting the energy transition and implementing a sustainable food model. Digital green finance, which includes a wide range of technologies like big data, artificial intelligence, blockchain and the internet of things (IoT), offers innovative solutions to extend sustainable finance and the prospect of a more efficient, accessible and less vulnerable financial system.

It may therefore be a useful method of addressing these challenges, because technological and innovative models can be applied to promote sustainable investment and their results can be recognized and compensated. Antoni Ballabriga, global head of Responsible Business in BBVA, has recognized the importance of connecting digitalization and sustainability “to unleash the full potential of the banking sector and the financial system in contributing to the UN’s Sustainable Development Goals (SDGs) and the Paris Agreement.

“In a world that is increasingly concerned with caring for and preserving the environment, an increasing number of companies are investing in projects which aim to reduce the environmental impact or promote sustainable policies,” explains Óscar Fuente, director and founder of the business school IEBS. He points out that “the number of investors who include these variables in their investment algorithms” has also increased.

But what precisely is green digital finance? Marianne Haahr, CEO of the Green Digital Finance Alliance (GDFA), explains that it means “harnessing emerging technologies and digital tools to create new services, products, strategies and commercial models that work to create offers focused on the green finance demanded by today’s user.”

According to Fuente, it is a term that is used increasingly in many countries and that refers to a number of institutional policies and agreements to attract private capital investment to green industries: “That covers from environmental protection to clean energy conservation through financial services.” Green finance can adopt a variety of formats, “such as green bonds, green loans, green insurance and other financial derivatives.”