What role for fintech in climate change? Interview with Chris Peacock

Can fintechs have a meaningful role in fighting climate change? Many people believe so, which makes sense. ESG and fintech is a great combination. If you believe that one of the premises of the emergence of fintech is to do things differently. For the better. You know, not destroying the planet in the process is a good start. Fintech Review asked a few questions to Chris Peacock from AQUAOSO about the role of fintech in climate change.

Tell us more about AQUAOSO. What is your elevator pitch?

Recently named to Fast Company’s Next Big Things In Tech list, AQUAOSO is a climate fintech company. We expose the financial impacts of climate change for the agricultural finance sector.

Based in Denver, AQUAOSO empowers farm credits, commercial ag lenders and investors, and food and beverage companies. We do so with unique data and risk management through a state-of-the-art data acclimation platform. It integrates previously siloed datasets and best-of-breed climate risk data with the company’s unmatched water data.

Climate change

AQUAOSO recently launched GIS Connect. It was in response to the drastic financial impacts climate change continues to impose on the agricultural finance sector. It is emerging as a specialized fintech tool for financial institutions leading the way to digitize the industry. The data and risk management software uses a process called data acclimation to expose the financial impacts of climate change. It does so by displaying first-party and parcel data with integrated physical and material risk data. As well as the company’s proprietary water data in a map-based format.

With GIS Connect, farm credits, investors and commercial agriculture lenders can easily identify and better understand climate risks associated with their loans or investments. It also helps to streamline a process not previously manageable with disparate datasets and better connect with borrowers. Financial institutions now have the opportunity to create long-term resilience for their business in the face of our changing climate. That is thanks to technological breakthroughs like these,

What is your background and what is the story behind the company?

Having worked in the water space for more than two decades, I uniquely understand that water is our planet’s most precious resource.

Deeply passionate about water rights, I began my career in water over 20 years ago when I started a water rights marketing and consulting firm. Since launching that organization, I’ve held several leadership positions at companies focused on drinking water, wastewater and reclaimed water engineering as well as the water utility market. I also served as author, editor and publisher of a boutique publishing company serving the water industry and founded The Water Innovation Project, a leadership hub and idea accelerator with a mission to transform the way the world values water through innovation and collaboration. Over the years, I gained in-depth expertise in water industry analysis and research, agriculture, water market and policy design, and water law.

Leveraging that distinct experience, I launched AQUAOSO in 2016. My vision was to build a platform upon which buyers and sellers can trade rights to water. California became the poster child for raising awareness around drought and water scarcity. Meanwhile, we became a water-centric company raising awareness among lenders and investors about the potential financial impacts of water on land value and farming operations. Due to the fact that we recognize that climate risk encompasses water risk and that creating a water and climate resilient future are one and the same, we recently incorporated other important climatic data, such as wildfires, tornadoes and hail, into the platform to drive smarter decision-making.

We’ve significantly grown in the past few years. Evolving from six employees at the beginning of 2020 to 16 full-time employees today. Now, most of our customers — based in Arizona, California, Colorado, Idaho, Kansas, Montana, Oregon and Washington — work in the agriculture space, and our data acclimation tool, GIS Connect, is tailored to the data integration and decision-support needs of our customers. We recently completed a $2-million seed funding round. We will leverage that funding to accelerate our vision of building a water and climate resilient future.

How is fintech becoming a major part of the climate change solution?

Climate change ESG

By fusing climate and financial technology together, climate fintech tools are helping fill the gap for financial institutions by bringing macro and micro-level datasets together.

Entirely too often, first-party, parcel and critical climate risk data is siloed, expensive, and time-consuming and difficult to access. It is making it highly difficult for ag professionals to do their due diligence when making financial decisions. Modern fintech solutions like AQUAOSO’s GIS Connect help to unlock this previously siloed and difficult-to-access data. It enables organizations to better understand how real-world implications might hurt their portfolios at a very granular level. Today’s fintech tools can uncover new links between datasets and close loans faster. But also improve borrower relationships, comply with constantly changing regulations and gain efficiencies while driving deeper insights. Using fintech for data collection and management in risk management creates a more sustainable agricultural industry in the face of a constantly changing climate.

What are the main challenges for ESG to be more central in fintech?

For agriculture professionals, the main challenges preventing environmental, social and corporate governance (ESG) from taking on a more central role in fintech involve an organization’s ability to track portfolio footprints.

Businesses and financial institutions are increasingly monitoring and considering the environmental impact of carbon footprints when making investment decisions. But that isn’t the only portfolio footprint to consider in agriculture. From water and soil health to endangered species zones, risk mitigation and more, a myriad of factors all play a role in the sustainability of an agricultural portfolio.

Helping farms around the globe adapt to the impacts of climate change can significantly reduce greenhouse gas emissions. Also, land use and soil quality are closely linked to a farming operation’s long-term sustainability. Monitoring these impacts can be challenging due to siloed data, lacking data access and a dearth of environmental reporting support. However, strategies like data acclimation make it simple for ag finance professionals to draw value from data and pursue the right climate risk mitigation strategies.

With the ability to track and assess these metrics, agriculture professionals can build more sustainable lending portfolios. Whilst preparing for a diversifying risk landscape that may be implemented in the years to come. Farmers need to adapt to the changing climate. And financial institutions can help them adopt more sustainable farming practices for water and soil quality or endangered species zones.

Any innovation in fintech more broadly that you are really excited about?

Technology will continue to evolve the ways we use and think about climate data. For example, new innovations in fintech are enabling financial institutions to finally bring the agriculture industry into the digital world and understand climatic risks in portfolios.

By seamlessly integrating key loan and investment data with previously siloed environmental and risk data — and digitally displaying it all on a single geospatial view — new fintech tools unify datasets needed for due diligence, risk management, asset and land valuation, appraisals, and more. With digitized information, users can gain new insights by using map data visualization. Combined with other interactive tools, they gain a more holistic view of their investments. By zooming in and out of borrower parcels and farming regions, adding and removing layers of data, and generating risk scores and PDF reports, ag finance institutions are able to stay nimble and competitive in a constantly changing financial landscape.

Through the unification and secure integration of the right datasets, fintech solutions are helping bridge the gap between what the tools are capable of and the information provided. Only by acclimating all available data can ag lenders and investors make decisions that take the complete picture into account. The result being to mitigate overall portfolio risk.

Any plans for the future or product roadmap you want people to know about?

Our new GIS Connect tool not only empowers farm credits and commercial ag lenders with the ability to effortlessly understand their portfolios in terms of dollars, current loans, acres, risk between crop types, risk scores and more, but it also helps users:

  • Streamline and accelerate due diligence.
  • Support ESG and executive reports.
  • Decrease data entry, redundancy and errors.
  • Increase efficiency and decrease costs with collaborative workflow management.
  • Complete multiparcel searches.
  • Securely integrate data with third-party data sets.
  • Add notes and attachments to maps, reports and custom data fields.
  • Simply compare and discover cohorts of suppliers, borrowers and sales.
  • Monitor changes over time on a digital map to make truly informed investment decisions.

While our software can’t solve the problem of creating more water for the planet, it does help decision-makers manage what water is available to us. As AQUAOSO continues to grow and evolve, we will continue to remain hyper-focused on developing the right tools for financial institutions to understand climate risks in their portfolios.