FinTech Is Only as Green as the Rules Governing It

On a single planet with finite resources, sustainably developing our industrial civilization is a pressing concern. This is, of course, a technological challenge that requires clean energy sources and better reuse of resources such as metals, biomaterials, and other minerals.

This is also a financial challenge, as determining how to direct capital toward sustainable activities is crucial to building a more resilient economy and society.

In parallel, FinTech (Financial Technology) companies are driving a wave of innovation in financial services, enabled by the convergence of mobile platforms, internet technology, and data analytics.

This is rapidly changing how financial services work, especially compared with the traditional financial system, which relies on antiquated infrastructure, in-person services, and slower, centralized operations.

FinTech-driven green-finance opportunities are increasingly shifting toward digital infrastructure that verifies climate claims, prices sustainability risk, routes capital, and reduces greenwashing.

However, FinTech innovations are not inherently sustainable. Effective green finance instruments work only when strong governance directs capital, enforces environmental standards, and limits regulatory arbitrage.

A new study by a researcher at the Saudi Electronic University examines how governance affects the effectiveness of green finance & FinTech, and develops a model to better predict this variable’s impact.

She published her findings in Scientific African¹, under the title “Investigating the Effects of the Green Economy and Fintech on Sustainable Development”.

Green Finance & International Governance

Data To Link FinTech To Sustainability

Other studies have discussed the link between FinTech and green development. For example, FinTech adoption in BRICS countries reduces pollution by facilitating cleaner energy financing and improving monitoring of urban emissions through digital platforms.

At the same time, automated lending systems and peer-to-peer financing may also exacerbate environmental pressures if deployed in weak regulatory environments.

So a more comprehensive understanding of how FinTech deployment affects sustainability was needed.

The study analyzed data from 30 developed and emerging countries over 1990–2024, sourced from international institutions such as the World Bank and the IMF. This period was selected to capture major global transitions, such as the diffusion of environmental regulation in the 1990s, the rise of digital finance after 2005 and the following rapid expansion of FinTech technologies, and the acceleration of climate commitments following the Paris Agreement (2015)

Sustainable development was captured through greenhouse gas emissions, the Environmental Performance Index (EPI), and the Human Development Index (HDI), while the green economy was measured by environmentally adjusted green GDP, renewable energy use, and forest coverage.

FinTech development was measured via digital payment penetration, peer-to-peer lending activity, and digital currency usage.

Data on institutional quality were captured via a composite index combining governance effectiveness and corruption control.

Control variables, including population, high-tech exports, and trade openness, were introduced to account for demographic, technological, and structural differences across countries.

Complex Correlations

Emerging economies must mobilize nearly USD 1.3 trillion annually to follow the climate trajectory defined at COP29–COP30. So the green transition appears closely conditioned by capital availability, regulatory stability, and the growing role of digital financial instruments.

This makes the efficient deployment of capital in green financing not just a question of optimization, but a critical policy goal.

The study found that all these variables are interconnected. For example, both governance quality and technological advancement are tightly correlated with the Environmental Performance Index (LEPI), as well as digital currency.

More interestingly, environmental performance is negatively correlated with digital payments and peer-to-peer lending. The researcher interprets this as reflecting predominantly poorer private and non-institutional financial systems that prioritize economic expansion over sustainability.

Another surprising finding is that human development is not a direct determinant of the environmental dynamics captured by LEPI; while important for human welfare, it does not directly affect sustainability.

Lastly, renewable energy resources had a slightly negative correlation with LEPI. This might be due to the duration of technological cycles, structural inertia within energy systems, or the continued prevalence of carbon-intensive sectors. Overall, renewable deployment is also tied to potentially environmentally harmful economic growth and may not be enough to improve sustainability on its own.

Source: Scientific African

Governance Matters

The study overall finds that the green economy and FinTech exert heterogeneous effects on sustainable development depending on institutional quality.

More precisely,  institutional quality structurally conditions the processes by which FinTech and drivers of the green economy influence environmental performance. Two “regimes” can be defined:

• A first regime with poor governance, where green growth alone fails to significantly reduce greenhouse gas emissions.
  • Digital payments and crowdfunding have a positive effect because they are less subject to government interference.
• A second regime with better governance through high-quality institutions.
  • In this regime, Digital payments and FinTech contribute to emission reductions, probably by making economic transactions more efficient and less energy-intensive.
  • Investments in the green economy begin to reduce greenhouse gas emissions.

As expected, changes in institutional quality, such as governance and corruption control, do not cause an immediate switch but a gradual evolution in how economic and technological variables affect environmental performance.

Once the critical threshold is crossed, the dynamics of emission reduction become faster and more pronounced, illustrating the need for deeper institutional commitments to effectively combat climate change.

However, the threshold for improvement is very low, so even a minimal improvement in governance can trigger the shift from the first ineffective regime to the second, more virtuous one.

Source: Scientific African

When Are FinTech Truly Green?

These results emphasize that FinTech and other technologies, like green energy, should not be expected to predict sustainability alone.

“The differentiated effects between low-governance and high-governance regimes support the argument that sustainability transitions follow nonlinear trajectories, with institutional robustness acting as a catalyst for green economic effectiveness.”

Only adequate governance, low corruption, and solid evaluations using the right metrics in deploying green policies can make them effective at improving environmental conditions and building a truly green economy. Without it, FinTech is at best an ambivalent technology when it comes to its impact on the environment.

This can put into question many of the green initiatives from financial companies. Besides intentional greenwashing, it can also happen that an otherwise good initiative is wasted or even has a net negative impact on the environment when mixed with poor governance.

And it also means that non-green financial technologies like anti-corruption or money laundering technologies could indirectly have a massive “green” impact, through the transmission mechanism of improved governance, suddenly lifting the efficiency of all green initiatives in a given region or country.

Investing In FinTech

MasterCard  Incorporated

MasterCard is a global leader in payments, alongside Visa (V ), the other part of the international credit and debit card duopoly.

Regarding green finance, MasterCard has also been a leader, deploying an embeddable carbon calculator that lets financial institutions estimate the carbon footprint associated with cardholder spending.

The company also offers many other “green” focused initiatives:

• Carbon-aware software and hardware optimization within its own technology infrastructure.
• 100% green energy to power its operations.
• The “Priceless Planet Coalition” for bringing together merchants, banks, communities, and consumers to help fund the restoration of 100 million trees.
• A Sustainability Innovation Lab for co-creating climate-conscious digital products and financial technologies with global business partners.

So for many enterprises and even governments, MasterCard is not just a payment system, but a key partner to build better green financial infrastructures.

At the same time, there is also only so much the company can do, as illustrated in this study, and its global reach also exposes it to fragmented regulation, data-governance requirements, and differing institutional conditions across markets, which might reduce the true impact MasterCard’s green initiative can accomplish.

From a business and investing point of view, other important topics besides green policies and its traditional core of payments are other technological innovations.

For example, MasterCard acquired for $1.8B BVNK, a B2B payments infrastructure company built to provide the stablecoin’s advantages to other companies. It is also at the forefront of deploying agentic pay (for AI agents)and AI-driven fraud detection.

Overall, investors in the company will want to monitor the progress the company makes on crypto, AI, and other technologies that are both a threat to incumbent actors like MasterCard, but also new growth opportunities after years of growth mostly from just expanding alongside the global economy.

Latest MasterCard  (MA) Stock News and Developments

Study Referenced

^{1. Sonia Sayari. Investigating the Effects of the Green Economy and Fintech on Sustainable Development. Scientific African. 5 August 2026. https://doi.org/10.1016/j.sciaf.2026.e03551}