Ensure access to affordable, reliable, sustainable and modern energy for all. This is an extract from Finextra's The Future of ESGTech 2022 report.

Focus target 7.a: By 2030, enhance international cooperation to facilitate access to clean energy research and technology, including renewable energy, energy efficiency and advanced and cleaner fossil-fuel technology, and promote investment in energy infrastructure and clean energy technology.

The topic of clean energy is staggeringly colourful and broad. To demonstrate how access to robust ESG data can help financial services players and fintech firms support the UN’s seventh SDG, we will home in on one area – specifically, the potential of waste. This is a grossly underutilised source of renewable energy and has great potential to support countries with their green transitions.

In Azerbaijan, the Islamic Development Bank (IsDB) supported a Waste-to-Energy Project with a €377.5 million loan to accelerate the decarbonisation of the economy in the Greater Baku region. The project funded a waste-to-energy plant able to treat 500,000 tons of municipal waste and use it to generate 230 gigawatt-hours (GWh) of electricity per annum.

In order to empower more projects like this, it is vital that we are able to track waste around the world and direct finance toward converting it into renewable energy. To do this, robust data is key.

Managing and qualifying waste data, however, can be time consuming and may not answer key questions about the types, location, and amounts of material. First, we must overcome inaccuracies and data vacuums that are hindering greater resource recovery around the globe. Seeking to meet this challenge is Topolytics, which leverages mapping and machine learning (ML) tools to create a ‘WasteMap’ for clients. The solution helps firms regain traceability over supply chains, production processes, and serves to unlock the true value of solid waste – which in this context, is clean energy.

Once the sources of waste are identified via data, financial institutions can better support waste-to-energy projects. Since issuing the world’s first ever climate awareness bond in 2007, for instance, the EIB has issued more than €30.8 billion under the instrument.

According to a 2020 IsDB report, the proceeds have helped finance 160 renewable energy and energy efficiency projects all over the world. Once again, these investments are guided by ESG data.

It should be noted that a feedback loop exists between clean energy and data. Not only do we need data to gain access to clean energy, but the more data we harness, the more we need clean energy to ensure it is stored sustainably. In 2018, the electricity needed to support our data infrastructure was equal to approximately 1% of global consumption, revealed the World Development Report. While this is having big environmental consequences, the figures do seem to be plateauing as a result of more sustainable data storage.

The report goes on to note that “the establishment of new data centres depends on a stable investment climate for private sector investors, combined with the availability of low-cost reliable sources of clean energy.” Indeed, access to green energy is increasingly becoming a factor in investors’ decisions of where to expand data infrastructure. Real estate investment trust company, Equinix, for example, seeks markets with favourable renewable energy policies when selecting a location for new data centres.

Evidently, the mission of achieving the UN’s seventh SDG of affordable and clean energy by harnessing data is a complex one. The more information we have, the better we can guide investment; but the more demand it places on financial institutions and fintechs to use renewable energy sources to store it.

ACTION FOR 2022: Track waste and direct finance toward converting it into renewable energy.