The Role of Financial Technology in Advancing Environmental Sustainability – A Critical Review

Financial Technology (FinTech) has emerged as a revolutionary tool for advancing environmental sustainability by restructuring capital mobilization, improving risk management, and facilitating environmentally responsible economic processes through financial systems. Digital innovation can more effectively finance sustainable initiatives by automating the issuance, trading, and management of green financial instruments, while reducing transaction costs and market-entry impediments for FinTech. Online financial products such as mobile banking, online investment platforms, and financial applications can expand access to sustainable finance for institutional investors, small and medium investors, and underserved communities, and enable inclusive green growth. Other aspects in which FinTech has played a central role in improving are transparency, efficiency, and accountability in environmental and financial markets. The digital high-tech infrastructure can be deployed to enhance the integrity of carbon and environmental markets, including easier transaction tracing, fraud mitigation, and stable monitoring of emissions and sustainability performance. The instant data collection and automatic verification instruments improve the assessment of conditions and enable a more efficient response to climate through a market-oriented approach. At the same time, analytics driven by artificial intelligence improves the quality of environmental, social, and governance (ESG) information by enabling proper scoring, risk assessment, and compliance controls, enabling informed decision-making, and reducing the risk of information asymmetry and greenwashing. FinTech may play a facilitating role in the transition to the circular economy by financing resource-efficient, waste-reducing, and lifecycle-oriented business models and by enhancing supply chain visibility through digital tracking and data integration.