Published on 21 Jan 2022

Fintech Stacs wants to make ESG tracking easier for SMEs

NBS alumnus Benjamin Soh, Co-founder and Managing Director of Fintech start-up HashStacs says Stacs the company can help small and medium enterprises access green loans, as well as help lenders monitor their progress.

Smaller companies here aren't that far away from tapping green financing as the bulk of the data required to track sustainability goals may already be tracked. The work that remains is about "getting the pieces together", such as integrating data on electricity consumption.

One fintech startup here, Hashstacs (Stacs), believes that this is the case, and is developing a product to bridge the gap.

In a call on Thursday (Jan 20), Stacs co-founder and managing director Benjamin Soh told reporters: "(Many corporations) are curious about how to get started (in tracking their environment, social and governance (ESG) goals). Sometimes, it sounds intimidating to them.

"Actually, I would like to say that it is really more of just getting the pieces together... All they really needed to do is to get this data that they already have, put into the right place, and onto the ESG registry that the financial institutions are already using."

The data may be from the firms' existing fleet management systems or building management systems, he added, pointing out that buildings could already be using central energy tracking systems or solar panel smart meters, for instance.

Stacs is in the midst of developing such a registry - one that is blockchain-based and could serve as a repository of all ESG-related data and certification. The project, which is created in partnership with the Monetary Authority of Singapore's (MAS) Project Greenprint, is currently being piloted, with input from several companies, including CO2 Connect, Containers Printers, and Surbana Jurong.

Soh said the partnership with MAS is "highly meaningful" as it gives Stacs the chance to work with several financial institutions including banks, which have drawn up frameworks on the type of certifications, metrics or key performance indicators that they are ready to accept.

Noting that the banks' requirements are "more or less the same", Soh said Stacs is looking at developing an "end-to-end playbook" for each sector, which may then be customised for companies in different countries.

"We want to be able to onboard the certificates and the measurements or data fields according to the sector and create this playbook where you will be replicable for the entire sector," he said.

Such a platform could help banks close more sustainability-linked deals, Soh said, pointing out that financial institutions currently find existing pools of ESG data fragmented, which makes it "virtually impossible to track end-to-end supply chains".

He said the insufficient and unreliable ESG data out there had given rise to hesitancy in the mobilisation of capital for sustainability, given fears of greenwashing, which, in turn, contributes to a vicious circle of a lack of ESG financing.

He also noted that banks currently gravitate towards larger companies in dishing out sustainability-linked loans as ESG certification is considered expensive to the smaller companies.

As more of the corporate world is drawn into the world of ESG reporting, more companies could well be nudged to take climate change and social issues more seriously, Soh added.

He said Stacs' ESG registry can support the retrieving of data on an "ongoing basis", and does not necessarily have to be "one off" or "periodic", such that banks can better manage their suite of ESG financial products.

"(Banks can) receive notifications, say 6 months, 9 months, or even years down the road if their portfolio company or the company to which they had issued a loan has started to become less green," he said.

For now, however, he could not say for sure when Stacs' ESG registry can be made publicly available for retail investors or rolled out to more companies, saying the platform is still in development.

But he said the registry can already support the tracking of ESG goals for those in the transport, building and construction, manufacturing, food and agriculture, and renewable energy sectors.

As of Nov 9 last year, at least 5 financial institutions had expressed interest in exploring collaboration with the registry. They are Aviva Singlife, Citi, OCBC, UBS and UOB.

Source: The Business Times