What is Green Fintech?

Research by: Daniel Broby and Zhenjia Yang

Executive Summary

This paper offers a comprehensive conceptual clarification and evaluative framework for the term “green fintech”. It addresses its increasing usage in policy, industry, and academic discourse. It argues that the ambiguity surrounding the term allows for potential greenwashing, undermining both environmental goals and market integrity.  The paper explicitly integrates the Dynamic Integrated model of Climate and the Economy (DICE) to support its evaluative framework

The authors define green fintech as:

“The implementation of climate objectives through the medium of financial technology. Utilizing the internet, it involves the integration of technology into finance for the allocation, oversight, and deployment of capital based on green criteria. It enhances the efficiency, accessibility, and scalability of sustainable financial activities, and conforms to regulatory or audit-based verification mechanisms.”

This definition is intentionally designed to exclude vague or unverified uses of digital finance that merely claim environmental benefits without demonstrable impact. It is created through a process of interpretive synthesis. This methodological approach draws from both content analysis and comparative review of existing definitions.

Based on this definition, the paper introduces a novel six-step litmus test to evaluate green fintech initiatives. This test operationalises the definition across three key domains: environmental contribution, technological innovation, and regulatory compliance. The six dimensions of the test are:

1. Measurable Environmental Objectives – The initiative must aim at defined outcomes such as emissions reduction or improved resource efficiency, aligned with frameworks like the Paris Agreement or the SDGs.
2. Technology-Driven Innovation – It must incorporate novel fintech tools (e.g., blockchain, AI) that facilitate scalable and transparent climate finance solutions.
3. Data-Driven Environmental Impact – The platform should provide verifiable, quantifiable metrics demonstrating its environmental performance.
4. Regulatory Compliance – The fintech product must comply with environmental and financial regulatory frameworks, including third-party auditability.
5. Ethical Data – Use It must handle consumer and operational data in line with data privacy and protection laws such as the GDPR.
6. Greenwashing Risk Mitigation – The claims made should be independently verifiable, supported by third-party certification or empirical assessment.

Each dimension is scored from 0 to 2, with a total score of ≥10 (out of 12) qualifying a platform as credible green fintech. This scoring framework enhances transparency, comparability, and replicability.

The study argues for incorporating the litmus test into regulatory taxonomies and ESG audit frameworks. Verifiability is emphasised as an ethical imperative, building on the literature that stresses the importance of moving beyond reputational signalling towards accountable climate action. The authors advocate for fintech-specific ESG disclosure standards and stress that innovation must be embedded in ethical and regulatory oversight to maintain legitimacy.

The paper fills an important gap by:

• Differentiating green fintech from broader categories like green finance or sustainable fintech.
• Integrating theories from environmental economics (externalities, carbon pricing), finance (capital allocation), and technology (digital infrastructure).
• Highlighting the use of Integrated Assessment Models (particularly the DICE model) to evaluate the environmental effectiveness of green fintech in economic terms.

In conclusion, the paper makes a substantive contribution to the literature by formalising a definition of green fintech and developing an evaluative tool that addresses risks of greenwashing. Its proposed litmus test provides a structured, transparent, and actionable framework for classifying and assessing green fintech initiatives. The framework offers guidance for regulators, investors, and developers alike in promoting credible climate-aligned innovation.

To cite this article: Broby, D., & Yang, Z. (2025). What is green fintech? Journal of Risk and Financial Management, 18(7), 379. https://doi.org/10.3390/jrfm18070379

To access the article: https://doi.org/10.3390/jrfm18070379

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