Financial technologies to drive decarbonization and unlock $127+ trillion in economic benefit.

1. N O V E M B E R 2 0 2 0
CLIMATE FINTECH
Financial technologies to drive decarbonization
and unlock $127+ trillion in economic benefit

2. ABOUT THIS REPORT
This report was compiled by CommerzVentures, an independent VC firm sponsored by Commerzbank
Group.
Our goal is to give an overview of the emerging ecosystem of financial technology startups facilitating
climate action (“Climate FinTech”). Given the existential threat posed by climate change, governments,
businesses and we as individual consumers must act urgently.
Achieving a rapid reduction of carbon emissions will be key, which is where Climate FinTechs can play a
crucial role. We aim to provide insights into the economic mechanisms they build on, as well as their
technologies and business models, allowing readers to assess the development of this space.

3. DISCLAIMER
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© CoV Management GmbH 2020. All rights reserved.

4. P A R T I
P A R T I I
DRIVERS OF
DECARBONIZATION
P A R T I I I
CARBON PRICING
P A R T V
CARBON
ACCOUNTABILITY
P A R T V I
INFLUENCING CONSUMER
CHOICES
P A R T V I I
OUTLOOK
CLIMATE
FINTECH
P A R T I V
CARBON OFFSETTING
THE RATIONALE

5. THE RATIONALE
P A R T I

6. Decarbonization is rational, urgent,
and inevitable (1/2)
● Failure to prevent further climate change will lead to
unprecedented human hardship and economic damage
● To avoid the most dangerous impacts, the Paris Climate
Accord of 2015 sets out a framework for limiting global
warming to well below 2C
● To reach the Paris target, we can only emit an additional
400bn tons of CO2 in total1
(2020 emissions are projected at
35bn tons, implying only 11 more years of emissions at the
current pace)
● Meeting the Paris target would yield an economic benefit of
$127tn to $616tn within this century (in the form of avoided
damage)2
1 Intergovernmental Panel on Climate Change (IPCC)
2 Wei, Y., Han, R., Wang, C. et al. Self-preservation strategy for approaching global
warming targets in the post-Paris Agreement era. Nat Commun 11, 1624 (2020).

7. ● Emission reductions and programs to draw down carbon
from the atmosphere in line with the Paris target will require
investments of $18tn to $114tn1
● As the realities of climate change become ever more
apparent, it is inevitable that governments will enact policies
to mobilize these investments and build low-carbon
economies (“Inevitable Policy Response”)
● Decarbonizing the global economy will be very high on the
agenda of governments, corporations, and investors. It will
also need to be driven by individual consumers
● Climate FinTechs will provide solutions to support the
decarbonization agenda of all stakeholders and to channel
the required investments
Decarbonization is rational, urgent,
and inevitable (2/2)
1 Wei, Y., Han, R., Wang, C. et al. Self-preservation strategy for approaching global
warming targets in the post-Paris Agreement era. Nat Commun 11, 1624 (2020).

8. DRIVERS OF DECARBONIZATION
P A R T I I

9. Decarbonization will be driven by four economic levers
$
Introduce a carbon price
covering all products, relative to
carbon-intensity. Cover both
domestic production and
imports (Border Carbon Tariff).
Direct carbon taxes and/ or
cap-and-trade schemes are
conceivable
CARBON PRICING
Channel funds into carbon
reduction and atmospheric
carbon drawdown projects
CARBON OFFSETTING Make companies’ climate
impact financially material, hold
jurisdictions accountable for
emission reductions, enforce
rigorous accounting and
reporting on climate impact
CARBON ACCOUNTABILITY
Financial and social incentives
for consumers to transition to a
low-carbon lifestyle
INFLUENCING CONSUMER
CHOICES
CARBON ANALYTICS
Real-time carbon analytics as
key enabling infrastructure

10. Decarbonization drivers and exemplary Climate FinTech startups
CARBON PRICING CARBON OFFSETTING FINANCIAL ACCOUNTABILITY INFLUENCING CONSUMER CHOICES
CARBON ANALYTICS

11. CARBON PRICING
P A R T I I I

12. ● In most of today’s carbon pricing schemes, a cap is set on the
total level of certain greenhouse gases that can be emitted by
installations covered by the scheme. The cap is reduced over
time so that total emissions fall
● Within the cap, companies receive or buy emission allowances
(“credits”), which they can trade. The limit on the total number
of credits available ensures that they have a value. If a
company reduces its emissions, it can keep the spare carbon
credits to cover its future needs or sell them to another
company
● Major carbon credit schemes have been introduced in the EU,
several US states, South Korea, and New Zealand. Carbon
credits have been one of the best-performing commodities over
the last three years, and are a rapidly-emerging asset class
● Carbon pricing schemes are spawning ecosystems of related
products, services and enabling technologies (e.g. tokenization,
exchanges, custody and brokerage, investment data and
products)
CARBON
PRICING

13. Climate FinTechs linked to carbon pricing
CARBON PRICING
Terrapass provides carbon offsets and
renewable energy certificates to
homeowners and business customers.
Both can calculate their carbon footprint
online and buy certificates.
Spark Change provide investors direct
exposure to the value of physical carbon
allowances, through securities issued via its
platform. Carbon securities can be held as a
standalone investment or be integrated into
equity and fixed income products.
Source: Screenshot from sparkchange website
Source: Screenshot from Terrapass website

14. CARBON OFFSETTING
P A R T I V

15. ● Governments, businesses and consumers offset their
emissions by paying for carbon reduction projects. In order to
reduce the carbon footprint effectively, offsetting is used in
addition to direct emission reductions
● In the compliance market, companies or governments buy
carbon offsets in order to comply with caps on the total amount
of carbon they are allowed to emit
● In the voluntary market, individuals, companies, or
governments purchase carbon offsets to mitigate their own
emissions from transportation, electricity use, and other
sources.
● In the future, large parts of the voluntary market may become
mandatory, ie. the price of certain products will need to include
offsets
● Both markets present opportunities for big data analytics,
regulatory technologies (RegTech), InsurTech, PSD2 “account
information services”, and Neo Banks
CARBON
OFFSETTING

16. Climate FinTechs enabling Carbon offsetting
CARBON OFFSETTING
Pachama, a carbon-offsetting ‘RegTech’
company, monitors projects using
high-resolution satellite imagery. Based on
LiDAR imaging and machine-learning
algorithms, Pachama is able to remotely
monitor forests and estimate their carbon
sequestration and biomass.
Source: Screenshot from Pachama website
Source: Screenshot from Greenly website
Greenly leverages real-time consumer
payment data to measure individual carbon
footprints. Consumers are shown how they
can reduce their footprint and are offered
offsets to compensate for the remaining
footprint.

17. CARBON ACCOUNTABILITY
P A R T V

18. ● Some of the largest global investors across the world (such as
BlackRock, the Japanese Government Pension Fund and
Norges Bank Investment Management) already consider
sustainability as central to their investment mandate
● Demand for investments in climate-transparent companies is
also driven by retail investors and regulation (e.g. MiFID II and
ESG criteria)
● As a consequence, more and more investors see Companies’
climate impact as financially material
● Technology can play an important role in enabling
climate-related disclosures and in making them auditable and
replicable
● Climate impact management & reporting software is another
key opportunity
CARBON
ACCOUNTABILITY

19. Climate FinTechs for carbon accountability
FINANCIAL ACCOUNTABILITY KlimaMetrix offers automated carbon
footprint analytics for companies, with a
special focus on industries that face
immediate regulatory pressure regarding
carbon emissions, such as shipping, airlines
and heavy industry.
ClimateView optimizes carbon abatement for
cities and regions, identifying a path that
maximizes carbon reduction while minimizing
impact on GDP. Its software enables
real-time tracking of a city’s climate transition,
and makes it accessible in a unified
dashboard (“Climate Board”).Source: Screenshot from ClimateView website
Source: Screenshot from KlimaMetrix website

20. INFLUENCING CONSUMER CHOICES
P A R T V I

21. ● Everyday consumer choices will be the biggest driver for
decarbonizing our economies
● Producing material goods consumes energy and leads to direct
carbon emissions, both from the production process and the
transportation of the finished goods
● If consumers were to shift their spending from carbon-intensive
material products to services and digital products, the effect
would be dramatic
● Governments will seek to influence consumer choices, creating
a huge opportunity for startups helping consumers to adopt a
low-carbon lifestyle
● Real-time payment data is a starting point for consumer carbon
footprint analytics and for financial products with in-built
incentives to lower carbon footprint
● Climate FinTechs are uniquely positioned to combine financial
incentives with insights from behavioral science
INFLUENCING
CONSUMER CHOICES

22. Climate FinTechs influencing consumer choices
INFLUENCE CONSUMER CHOICES
Source: Screenshot from By Miles website
Doconomy provides a global standard for
consumer carbon footprinting. It powers
banking & payment card products and
loyalty schemes, incentivizing a low-carbon
lifestyle.
By Miles (CommerzVentures portfolio) offers
“pay by the mile” car insurance. Customers
save money by driving less. Owners of
electric vehicles typically drive less than
owners of internal combustion engine (ICE)
cars, thus By Miles also offers policies
especially tailored to electric vehicles.
Source: Screenshot from Doconomy website

23. OUTLOOK
P A R T V I I

24. The key to decarbonizing our economies will be an
adequately high and universally applied price for
carbon.
It will provide the financial incentives to businesses and
consumers for lowering their footprint and to raise the
funds needed for investments in low-carbon
technologies and carbon removal.
As of today, carbon pricing covers only c. 20% of
global emissions. There are hopeful signs that this
share will increase substantially, and that the price
itself will become more meaningful (ie. $100+ per ton).
Climate FinTech will be in a unique position to
create deep economic and social value.
Overall, the Climate FinTech space overall is still at a
relatively early stage. But it has extraordinary
momentum, and the rationale for further
acceleration is very clear.

25. “The fiercest carbon fighters will
build the most valuable businesses”
Our credo at CommerzVentures
On a Friday morning in August 2018, a then 15-year-old
Swedish girl called Greta made a placard with the inscription
“Skolstrejk för Klimatet” (“School Strike for Climate”) and sat
down outside her school.
Back then, who could have guessed that Greta would within
a matter of months spark the global “Fridays for Future”
movement, and inspire millions of people to walk out of
schools and workplaces in protest?
Awareness of the pressing need for climate action is rapidly
becoming mainstream: People are demanding answers from
their political and business leaders.
FinTech founders with the genuine desire to help solve this
crisis, applying their expertise and entrepreneurial energy, will
be on the right side of history. The stakes have never been
higher. And neither have the number of opportunities.

26. Lorenz Hering
Paul Morgenthaler
CONTACT
If you are building a FinTech or InsurTech company helping to
decarbonize our economies, we at CommerzVentures
would be happy to hear from you.