Green crowdfunding removes banks as the middleman, allowing investors to make transactions online and send funds directly to their chosen project.
"There is significant evidence of the business benefits of adopting a purpose-beyond-profit approach”
It can offer an attractive alternative finance option for small and medium-sized enterprises, which often have difficulty raising larger sums of money from banks.
Some overseas banks have recognised the benefits of jumping onto the crowdfunding bandwagon. Deutsche Bank, for example, now offers its own sustainable crowdfunding platform, Made for Good.
From 1997 - 2016, Made for Good lent $US380 million to over 150 microfinance institutions and alternative financial services companies.
There is significant evidence of the business benefits of adopting a purpose-beyond-profit approach, aligning social, environmental and financial goals and supporting local communities including enhanced brand value and reputation, customer satisfaction, innovation and better financial performance.
In addition, IMD has found that a “strong and well communicated Corporate Purpose can impact financial performance by up to 17 per cent” providing yet another benefit for financial service providers considering venturing into the green space.
Europe has a strong environmental mindset and investment in green technologies. In the Netherlands Oneplanetcrowd is leading the charge in sustainable crowdfunding platforms.
Since its launch in 2012, the company has reportedly raised €20 million from more than 25,000 active investors across more than 175 projects.
However, the interest extends beyond Oneplanetcrowd. According to the Netherlands Enterprise Agency, €11.5 million was raised for sustainable energy projects through Dutch crowdfunding platforms last year, 10 per cent of the total sustainable energy market.
The maturity of the Dutch crowdfunding industry demonstrates the potential economic benefits if banks and crowdfunding platforms worked together.
In Australia, we have taken the first step with the Senate passing the Corporations Amendment (Crowd-sourced Funding) Bill 2016 which allows companies access to crowd-sourced funding.
However the bill introduces a large number of eligibility requirements not easily met by smaller investors.
More work needs to be done in order for Australia to catch up on an international scale.
Our policymakers need to play a greater role to speed up market enablers like regulations around crowdsourcing platform failures or disclosure and dispute resolution rules.
They can also take advantage of being a latecomer to the game and use this opportunity now to analyse and reflect on the Netherlands’ success.