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Green Financial Tech Startups in Europe: How DNBC Supports in Global Transfers

DNBC Team DNBC Team

Jul 04, 2024

Table of Content

Green financial technology (fintech) start-ups are driving innovation and reshaping the financial landscape in Europe. As the world shifts towards sustainability, these companies play a crucial role in achieving ambitious production targets. Let’s explore how they’re making a difference!

European green financial fintech startups are innovating and changing finance.
European green financial fintech startups are innovating and changing finance.

Green Financial Technology in Europe

The 6th assessment report by the Intergovernmental Panel on Climate Change (IPCC) emphasized the urgent need for action to combat climate change. Human activities significantly contribute to global warming, necessitating a green transformation across various sectors of our economy.

Green Finance Meaning

Green finance is the process of financing money to investments that are good for the earth. Among these advantages are decreases in:

  • Pollution of the air, water, and land.
  • Mitigation of greenhouse gas (GHG) emissions
  • Improved energy efficiency
  • Adaptation to climate change

The European Green Deal

Sustainable finance is leading from Europe. The European Green Deal commits the EU to achieving climate neutrality by 2050. To achieve this goal, green fintech investments are required from the public and private sectors.

The EU estimates that approximately €350 billion annually is needed for the energy system alone to achieve a 55% emission reduction target by 2030.

Funding the Green Transformation

The European Union Commission has promised to pay for the Green Deal. This organization will fund a total of €1 trillion. These funds will be generated through mechanisms such as:

  1. 2021-2027 Multiannual Financial Framework (MFF) : A framework for allocating EU funds across various policy areas.
  2. Next Generation EU fund : A recovery instrument aimed at supporting sustainable and resilient economic growth.
ESG businesses are encouraged by government organizations
ESG businesses are encouraged by government organizations

However, funding a notable gap mostly falls to the corporate sector of at least €2.5 trillion.To encourage private investment, appropriate regulatory frameworks and incentives are crucial, promoting environmental, social, and governance (ESG) investments.

Europe’s Leading Role

European financial centers play a pivotal role in green finance. London and Amsterdam are leading the way in eco friendly activities. While San Francisco, Beijing, and Singapore are also gaining prominence.

Green finance isn’t just a trend; it’s a necessity for our planet’s well-being. As Europe continues its commitment to sustainability, innovative financial solutions will drive positive change.

EU Policies and Regulations Promoting Green Financial Tech in the EU

EU policies and regulations that are driving the adoption of Green Financial Technology (GreenFinTech) across Europe. These initiatives play a crucial role in aligning financial systems with sustainability objectives:

1. EU Taxonomy for Sustainable Activities

The EU has developed a taxonomy that defines environmentally sustainable economic activities.

It provides a common language for investors, companies, and policymakers to identify which activities contribute to environmental goals.

By categorizing investments as “green,” “transition,” or “brown,” the taxonomy guides capital flows toward sustainable projects.

2. Sustainable Finance Disclosure Regulation (SFDR)

SFDR requires financial market participants and advisors to disclose information about how they integrate environmental, social, and governance (ESG) factors into their investment decisions.

SFDR considers ESG considerations when investing.
SFDR considers ESG considerations when investing.

It promotes transparency and helps investors make informed choices based on sustainability criteria.

3. Net-Zero Industry Act

The EU is actively working on legislation to achieve net-zero emissions across industries.

This act aims to accelerate the transition to cleaner technologies, including those related to finance.

By incentivizing investments in low-carbon solutions, the EU encourages financial institutions to support sustainable practices.

4. Strategic Technologies for Europe Platform (STEP)

This initiative focuses on critical technologies essential for Europe’s competitiveness and resilience.

As a result, by promoting investments in areas like renewable energy, circular economy, and clean transportation, STEP contributes to the growth of GreenFinTech.

In summary, the EU’s commitment to sustainability is driving a paradigm shift in financial services. Therefore, as Green Financial Technology gains momentum, innovative solutions will emerge, creating a more resilient and environmentally conscious financial landscape.

Green Financial Tech Start-Ups: Key Trends

Investment Influx

In 2023, climate-related fintech firms in Europe and the US attracted a staggering $2.3 billion in investment.

These startups surpassed fintech trends, highlighting sustainable finance's growing popularity.
These startups surpassed fintech trends, highlighting sustainable finance’s growing popularity.

Despite challenges, these start-ups outperformed broader fintech trends, emphasizing the growing interest in sustainable finance.

Areas of Impact

Green fintech start-ups cover various areas:

  • Renewable Energy Finance: Facilitating investment in solar, wind, and other clean energy projects.
  • Carbon Footprint Tracking: Developing tools to measure and reduce carbon emissions.
  • Sustainable Investments: Offering platforms for ethical and green investments.

European Investment Fund (EIF)

The EIF is committed to mobilizing €2.5 billion for climate action and environmental sustainability across Europe through equity funds. Their efforts support start-ups working on green technologies and solutions.

Hence, Europe’s green fintech start-ups are at the forefront of sustainable finance. In addition, by combining innovation, technology, and purpose-driven investments, they contribute to a greener future.

Consequently, green finance isn’t just about profits—it’s about safeguarding our planet for generations to come.

Greentech Innovators in Europe

Let’s explore the world of GreenTech innovators in Europe who are making significant strides toward a more sustainable future. Indeed, these companies are at the forefront of environmental impact and technological advancement:

  1. Hygraph (Gyeben, Hungary): Hygraph recently secured €27.7 million in funding. They focus on developing technology to collect, manage, and report environmental, social, and governance (ESG) data.
  2. ZEWAY (Paris, France): ZEWAY received €26 million in funding. They specialize in mobility solutions that help people transition to electric scooters for better transportation.
  3. Enapter (Berlin, Germany): Enapter secured €25 million for its hydrogen generators with patented Anion Exchange Membrane (AEM) technology and energy management software.
  4. Norsepower Oy (Helsinki, Finland): Norsepower Oy raised €28 million to pioneer the generation of renewable wind energy.
  5. Agreena (Copenhagen, Denmark): Agreena secured €46 million to mint, verify, and sell carbon credits generated by farmers.

Additionally, let’s shine a spotlight on Greenlyte Carbon Technologies, founded in 2022. They take a circular approach to cut carbon emissions, operating a low-energy direct air capture method that captures carbon dioxide and creates hydrogen as a byproduct.

Difficulties Of Europe’s Green Financial Tech Start-Ups In Accessing Finance

Europe’s green financial tech start-ups indeed face significant challenges when it comes to accessing finance and navigating public procurements. Thus, let’s explore these difficulties:

European green financial tech startups confront severe financing problems.
European green financial tech startups confront severe financing problems.
  1. Regulatory Delays: European start-ups encounter delays in regulatory approvals, especially for renewable energy projects. While the US permits such projects within one or two months, Europe takes significantly longer.
  2. Private Finance Hurdles: Raising capital remains tough, particularly for ‘tough tech’ ventures with high investment and technological risks. European venture capitalists are more accustomed to software investments, making green technologies a unique challenge.
  3. US vs. EU Investment Climate: The US offers a more favorable investment environment due to its movable labor market, faster technology implementation, and subsidies like the Inflation Reduction Act (IRA). European companies find it harder to justify investing in the EU.
  4. Net Zero Industry Act: The EU aims to address permitting delays with this act, simplifying and accelerating the process for net-zero manufacturing projects.
  5. Public Procurement Impact: Public procurement can play a crucial role. Its greenhouse gas emissions are directly reduced by substituting polluting goods and services with eco-friendly alternatives..

In summary, while Europe strives for sustainability, overcoming these barriers is essential for green tech start-ups to thrive.

How International Money Transfer Services Support Start-Ups Boost Green Tech Targets

International money transfer services play a crucial role in supporting green tech start-ups as they strive to achieve their sustainability goals. DNBC Financial Group offers services that can facilitate smooth cross-border transactions for both businesses and individuals . So, here are benefits:

Open account!
  1. Currency Conversion Solutions: Start-ups often deal with multiple currencies due to global operations. Money transfer services offer a hassle-free solution to currency conversion, eliminating the need to negotiate various exchange rates.
  2. Transparent Fees and Tracking: Transparency is essential. These services offer clear fee structures, ensuring that start-ups understand the costs associated with each transfer. Additionally, real-time tracking features allow businesses to monitor their transactions at every step.
  3. Compliance and Regulatory Support: Navigating international regulations can be complex. Money transfer services assist start-ups in complying with legal requirements, anti-money laundering (AML) rules, and Know Your Customer (KYC) procedures.

In conclusion, a seamless cross-border money flow contributes to the success of green tech start-ups, enabling them to focus on innovation and sustainability.

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Note: The content in this article is for general informative purposes only. You should conduct your own research or ask for specialist advice before making any financial decisions. All information in this article is current as of the date of publication, and DNBC Financial Group reserves the right to modify, add, or remove any information. We don’t provide any express or implied representations, warranties, or guarantees regarding the accuracy, completeness, or currency of the content within this publication.