Fintech feature – Sugi
Sugi is on a mission to transform green investing. The app gives users clear green data about their investments, so they can understand their personal climate impact and make informed decisions when managing their portfolios.
We spoke to Josh Gregory, Founder of Sugi to find out more about this exciting FinTech focused on green investing.
Why did you create Sugi?
Sugi was born out of my background in conservation, finance and green investments.
I became fascinated in how we can encourage private finance to go green. Most of the green finance sector has been focused on institutional investment to date, whereas I saw an opportunity to help shift everyday investors and the vast pool of private capital they hold to green.
I was looking at the various investment platforms and available technology and it became clear that many investors don’t really know where their money goes – there’s a lack of transparency in the industry. At the same time, most investors want their finances to make a positive impact on our planet.
ESG ratings have become increasingly popular in the last few years but they’re not designed for retail investors. There’s no real analysis that lets the everyday investor understand the impact of their investments beyond its financial risk. Does this company that I’ve invested in cause pollution? It’s really simple questions like this that consumers can’t find the answer to.
Open Finance came to my attention as a potential solution to this issue.
That’s how Sugi was born. We released the beta app in November last year and we’ve had a lot of great user feedback and press coverage since. What we’re doing with Open Finance has never been done before.
So how does Sugi work?
Users sign up to Sugi for free and connect to their existing investment platform using Open Finance, through our partner Moneyhub. Through Moneyhub’s API, we can connect to over 80 UK platforms including all the major brokers.
Once connected, the user receives their personalised impact data about their individual investments and overall portfolio. Currently, the app displays the carbon impact data for investments, shown as kilograms / tonnes of greenhouse gases emitted annually. This is quite a technical metric and we wanted to make the value more understandable, so we also show it as an equivalent number of trees lost.
We show users how their investments perform against industry benchmarks. Each investment is marked as green or red, depending on whether they are better or worse than the benchmark. We also show comparisons with similar investments in the market, so users can contextualise their investments. It’s really useful for helping users research the environmental impact of investments more broadly.
Can Sugi begin to change behaviour in the industry?
If enough people make greener decisions, I think we could see a real change in the industry.
I’m a big believer in the nudge principle.
There’s a big retail investment market out there and I want to encourage as many people as I can to go greener and put pressure on large corporations to do better because this can make a big difference.
And how does Open Finance come in to start to support this change?
Open Finance is a key part of this change because it allows people to have more visibility of their financial life, all in one place. People can make better decisions about their finances as a result.
Open Finance is predicated on data aggregation and transparency. There needs to be more of it in green investing. There also needs to be more data made available, in a more accessible way, to people who are interested in it. That can only lead to better things.
If we take the example of ESG ratings, it can be very difficult to break down the weighting of the E (environmental), S (social) and G (governance) sections. A company may perform well in ‘S’ and ‘G’, but not so well in ‘E’ and still get a good rating.
Sugi breaks down environmental data and helps users understand their impact so they can make greener decisions.
Are we seeing an inflexion point for green technology solutions?
It’s been said before, but I think people and investors are really starting to understand that we need to act on climate change now before it’s too late. As a result, more and more people are wanting to make little changes to their everyday lives – finance is part of that shift. That mentality has also fed through to innovation in business.
Sugi is a member of the Greentech Alliance, which is a European-wide body focused on climatetech and greentech. It feels like there is a new wave of greentechs being introduced constantly and the greentech community is incredibly supportive and welcoming. It certainly feels like there’s a lot of momentum right now, which is great.
And finally, what are your plans for the rest of 2021?
2021 is all about building the platform, growing our user base and getting information in people’s hands to help demystify green investing.
We’re crowdfunding right now and continuing to test the beta app. We’ll release in the App Store in spring and then we’ll launch on Android later this year.
We’ll also be making a big announcement very soon about a new feature being developed on the platform that we are really excited about. Watch this space!
Sustainable finance is rightly getting more attention now than it ever has before, but there is a real danger of mass greenwashing – where financial services firms overstate their positive environmental practices, or in the worst cases mislead people about their impact. The mass repurposing of funds to include sustainable terminology in recent years is testament to this.
Sugi is trying to combat this by providing retail investors with standardised and transparent data that assesses the actual impact of investments against a consistent set of metrics – with Open Finance at the heart of the solution.
This space holds significant potential to change consumer behaviour, with the view that it will create a virtuous cycle that then drives more sustainable investment decisions from the top.
The challenge, as ever, is with the data. Today it is difficult to measure the full spectrum of ESG and two models that attempt to do so are rarely the same. This makes it hard to surface insights with any real confidence – and we know from research that trust is an important aspect when it comes to user adoption.
Whether by regulatory push or industry pull, the sooner ESG data is aligned and surfaced in a consistent way, the better for solutions like Sugi, and ultimately consumers.