Green FinTech and Corporate Decarbonization: The Role of Digital Financial Innovation in Driving ESG Performance and Low-Carbon Transition

Abstract

The urgent global transition toward low-carbon and sustainable business models has placed unprecedented pressure on corporations to improve environmental, social, and governance (ESG) performance. Parallel to this, rapid advances in Financial Technology (FinTech) have transformed capital markets, financing mechanisms, data analytics, and disclosure systems. The convergence of sustainability and financial innovation has led to a new domain known as Green FinTech, encompassing digital technologies such as blockchain, AI-based ESG analytics, carbon-tracking platforms, peer-to-peer green lending, and digital green bonds. This paper investigates the role of Green FinTech in facilitating corporate decarbonization and ESG transformation. It synthesizes existing literature to identify mechanisms through which FinTech tools support green financing, enhance environmental transparency, reduce information asymmetry, and incentivize low-carbon investments. A conceptual model is developed linking Green FinTech adoption to corporate ESG performance through mediators such as access to green capital, carbon disclosure quality, stakeholder pressure, and innovation capability. The paper also outlines an empirical methodology using secondary corporate ESG datasets and FinTech development indices across emerging markets, with a focus on India. Key contributions include clarifying the construct of Green FinTech, identifying causal pathways to corporate decarbonization, and proposing a future research agenda integrating sustainable finance, digital transformation, and environmental economics.

Introduction

Climate change has intensified global pressure on corporations to adopt low-carbon and sustainable business models, driven by frameworks such as the Paris Agreement and the UN Sustainable Development Goals. This shift has led to the concept of corporate green transformation, which involves strategic, technological, and organizational changes aimed at decarbonization and responsible resource use.

At the same time, Financial Technology (FinTech) has rapidly transformed financial systems through technologies like AI, blockchain, big data, and digital platforms. Beyond efficiency and inclusion, FinTech has evolved into Green FinTech, which applies digital financial innovation to support green finance, ESG reporting, climate-risk management, and low-carbon investments. Tools such as blockchain-based carbon trading, AI-driven ESG analytics, digital green bonds, and carbon tracking platforms help address key challenges in green finance, including information asymmetry, high transaction costs, unreliable ESG data, and green-washing.

Corporate decarbonization includes reducing Scope 1, 2, and 3 emissions, shifting to renewable energy, improving efficiency, and developing green products and supply chains. While prior research has examined FinTech, green finance, and ESG performance separately, the direct link between Green FinTech and corporate decarbonization remains underexplored—especially in emerging economies like India, where FinTech adoption is rapid but green investment faces capital constraints and evolving regulations.

The literature review spans four areas: green finance, FinTech innovation, ESG performance and decarbonization, and the emerging Green FinTech field. It highlights Green FinTech’s potential to enhance transparency, mobilize green capital, improve ESG data quality, reduce financing costs, and increase stakeholder pressure for sustainability.

The study identifies key research gaps, including limited firm-level empirical evidence, lack of standardized measures of Green FinTech adoption, insufficient focus on emerging markets, and weak integration of ESG disclosure as a mediating mechanism. To address these gaps, the study aims to conceptualize Green FinTech, develop a theoretical and empirical framework, and examine its role in driving corporate decarbonization, grounded in Institutional Theory, Resource-Based View, Stakeholder Theory, and Innovation Diffusion Theory.

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Copyright

Copyright © 2026 Megha Kumari, Dr. Dhanjay Yadav , Dr. Ankush Goyal . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.