New releases of Occasional Papers of the Bank of Italy – 20 June 2023; No. 780 – Climate Fintech: The Italian market in an international perspective

The Bank of Italy has published six new Occasional Papers, although due to relevance we only summarise the paper No. 780 – ‚Climate Fintech: The Italian Market in an International Perspective.
The focus is on comparing the number and types of initiatives launched in Italy with those in major European countries, taking into account regulatory developments at the EU level.
It discusses the impact of climate change on the European economy and the need for substantial financial resources for adaptation and mitigation measures. It mentions the growth of green finance and the role of the financial sector in expanding available tools and mobilizing behavior for environmental transition.
This paper provides an analysis of Climate Fintech, which refers to digital applications that support the process of decarbonization and transition to environmental sustainability within the financial industry.
It provides a taxonomy of Climate Fintech applications, including payments and accounts, investments, ESG data and analytics solutions, crowdfunding and syndicates, risk analysis and InsurTech, digital loans and deposits, asset digitalization, and RegTech.
Furthermore, it also mentions the international database assembled by F10 Ecosystem and the Green Digital Finance Alliance, which maps Climate Fintech solutions in various countries. It highlights the prevalence of Climate Fintech solutions in Europe and discusses the factors influencing their diffusion, such as digital adoption, environmental policies, and financial ecosystems.
In Italy, there are several initiatives that align with those of other European countries, with a particular emphasis on green crowdfunding. Green crowdfunding enables fundraisers to gather small contributions from a large number of individuals to finance ecological transition projects. However, digital solutions for measuring the environmental profiles of securities, companies, donors, and digital green assets are comparatively lower than what is observed internationally.
More specifically, in Italy, the number of Fintech companies per capita is less than half compared to the UK and the Netherlands, despite a greater specialization in green topics within the sector. Switzerland, on the other hand, associates a higher presence of Fintech operators with a higher share of those involved in providing financial support for environmental transition.
In terms of operational and geographical specialization, Italy shares a strong specialization in the green crowdfunding sector with Germany, with about 30% of national operators belonging to this category. Italy hosts almost a quarter of the green platforms worldwide, and specialized crowdfunding portals focused on environmental issues make up nearly 15% of the national total.
Italy has seen a considerable increase in Fintech platforms since 2018, driven in part by European policy initiatives. The use of Fintech solutions varies across different sectors. Solutions related to carbon accounting and offsetting, green tokenization for project financing, and sustainable energy exchange and usage are less prevalent compared to other countries.
The dominant thematic category of funded projects includes clean energy production from alternative sources, sustainable agriculture, waste disposal, and sustainable mobility.
Overall, Italy’s Climate Fintech sector is in line with major European countries but lags behind the most advanced countries. While Italy has demonstrated specialization in certain areas like green equity crowdfunding, there is room for growth in other segments such as ESG analytics and green investment solutions. Stricter regulatory requirements incorporating environmental factors into operational processes and market communication will likely drive the development of more advanced data validation and sharing systems. Top-down initiatives from national and supranational facilitation systems will contribute to the development of new projects in the coming years.