On International Water Day, How can Fintech Stem the Flow of Climate Change?

Every year, March 22nd marks a somewhat solemn reflection on the state of the world’s water security. The bedrock of all known life, water is a fundamental need for all communities, depicted throughout literature as a unifying symbol of life and renewal.

However, this year’s International Water Day warns against a not so far future in which water is a source of division, not unity. This year’s theme is ‘Water for Peace’, encouraging nations to work together to codify access to shared water that crosses national bodies - only 24 countries out of 153 which share rivers, lakes and aquifers have signed cooperation agreements, according to the UN. Climate change is depleting many of these water sources, causing nations to become more isolationist to ensure water security.

Fintech has the opportunity to ease the pressure on global water sources, better connecting businesses to the voluntary carbon markets and guaranteeing water security for generations to come.

Water Fears and Climate Change: Two of the Same

Climate change isn't just warming our planet - it's putting our water at risk. As rising global temperatures cause erratic rainfall, extreme weather, and melting glaciers disrupt our water supplies, whole ecosystems are coming under threat. With rising sea levels threatening to swallow freshwater sources whole, every drop of water is becoming a precious commodity. It's a clarion call for us to act, both prioritising the efficient use of fresh water and slowing climate change to a stop. 

Per the World Meteorological Organization, terrestrial water storage has dropped at a rate of 1cm per year, with major ramifications for water security. The UN’s Intergovernmental Panel on Climate Change states that limiting global to 1.5°C compared to 2°C would approximately halve the proportion of the world population expected to suffer from water scarcity, compelling all polluting organisations to better track and mitigate their emissions.

Bridging the Gap Between Businesses and Emission Mitigation

The defining feature of the fintech industry is a keen focus on reducing barriers to the free flow of data. Key innovations, like open banking infrastructure and payments rails, demonstrate that fintechs have the tools to create systems to analyse and exchange vast amounts of data and assets. 

The intersection of fintech with voluntary carbon markets opens up new avenues for businesses to reduce their impact on the environment. Fintech solutions can streamline buying and selling carbon credits, a process which previously entailed the navigation of a technical and opaque marketplace, making the market more approachable for a wide range of businesses. 

There are now plenty of examples - Nori, an end-to-end carbon removal marketplace, built a platform for the agricultural industry to claim and sell the carbon reductions realised by adopting regenerative practises. Other fintechs are seeking to improve our understanding of climate change’s regional impact, such as MioTech, enabling investors to focus their funds on heavily-affected regions.

Governments across the globe are beginning to recognise fintech’s ability to limit climate change, too. A coalition of Caribbean nations teamed up for the “Caribbean FinTech Sprint for Financial Inclusion”, aiming to address habitat loss due to water scarcity among other climate-related goals. 

International Water Day provides a crucial annual reminder that the effects  of climate change are not frontier risks, but are effecting lives in real time. It’s key that the fintech industry maintains a focus on climate change throughout the year, employing its expertise to improve access to voluntary carbon markets, better track emissions and increase the accessibility of climate data.