McKinsey’s Joydeep Sengupta chatted with Sopnendu Mohanty, Chief FinTech Officer of MAS, about the role of data and technology in driving sustainable finance. Sopnendu discussed MAS’ Project Greenprint, which leverages public-private partnerships across the sustainability ecosystem, and how fintech can accelerate Asia’s transition to a low carbon economy.
McKinsey: You’ve worked in the fintech industry, and have experience in creating public-private partnerships. How do you apply what you’ve learned to the net-zero transition?
Sopnendu Mohanty: When we started building a fintech strategy in Singapore, we found that a lot of infrastructure was lacking. We asked: how do we ensure we can capture more value from fintechs? To do that, we’ve got to make the underlying data infrastructure efficient—not through arbitraging efficiencies, but by creating better value for the market. So, we created an SGFinDex that became the foundational rail from which data emerge. This became an opportunity for banks to build better services.
It’s the same now with net zero: we have to start thinking about the foundational infrastructure needed for green finance, and see whether public-private partnerships can be created. MAS has started to address this challenge about two years ago.
McKinsey: Could you tell us about some of the specific initiatives that MAS has launched?
Sopnendu Mohanty: The best example is our Project Greenprint. Here, the challenges are: how do we create public-private partnerships in building the common registry, in building common disclosure orders? Greenprint will be the foundational rail for people to start building the applications they need to solve these problems.
Until now, most of our government-to-government partnerships have focused on data disclosure and registry, and less on technology. Our data registry broadly covers most sectors in terms of the certification process. Regarding disclosure, we’re trying to incorporate as many standards as we can, so they become part of the templates we use.
Our focus is domestic for now: we first have to get comfortable with the whole process—how to take this range of data, aggregate it, and perhaps even pass it for disclosures. But while we have not yet ventured outside of Singapore with Greenprint, we will do so progressively—our idea is that in the next six to 12 months, we’ll take the first step. We should have enough data aggregators by then such that the data source becomes sufficient to drive other use cases.
McKinsey: Fintechs have been largely funded through private capital. Do you see something similar happening in the green space? What is the role of public-private funding?
Sopnendu Mohanty: It’s relatively easy to raise capital in the fintech space. There are banks with certain capacity or capability gaps, and fintech companies either competing or complementing each other. There’s already an established equation for attracting capital, namely banks and the people who consume financial services. In green finance, neither exists. The market demand is still nascent—it is not yet clear who’s going to consume the services. And the tech is also not certain—whether we have the right tech stack or the right business model to serve this unmet need.
However, the banks want to lend to companies looking for green-tech solutions. Investment needs to happen on this solution side, at the endpoint of the real economy—unlike in fintech, where the funding is at the top of the food chain. So we need to consider the marketplace and how to create startup and investment ecosystems. And as with fintech, we have to go beyond the banks. Where are they lending within the sector, and what companies are providing green-finance solutions? The marketplace is trying to link this whole, longer value chain. If we can achieve this, the green space will start attracting capital.
McKinsey: We believe that green finance will create the biggest reallocation of capital ever seen. Do you see this as a natural evolution, given the clear business case? Or will people need to be nudged by policy makers to move in that direction?
Sopnendu Mohanty: It’s much bigger than the fintech space. If you’re going to reallocate five to ten years’ worth of capital to this new green financing—or to environmental, social, and governance (ESG) topics, broadly speaking—the opportunity and the gaps are huge. There are so many subsectors needing green solutions. How do we bring this into the public arena, and build interest among investors? If we can get that done, I think you’re right about the capital reallocation. This is far bigger than what we’re seeing in the current digital economy.
The numbers look big and the predictions are attractive, but it’s still at an early stage. It’s a very complex area and it needs certain skills. However, it’s highly interoperable; if these solutions can apply to a wider sector, then we will definitely see exciting unicorns coming out of this space.
This interview is part of an ongoing series on Shapers of Sustainability, where we convene leaders on sustainability to discuss challenges and opportunities in the Asia-Pacific region’s transition to net-zero.