Growth of Green Investments Through FinTech Innovations

1. Introduction

A serious ecological degradation occurring worldwide and the brisk economic growth occurring around it made “Green Growth” a high priority economic agenda in most of the nations around as they continue to expand their economy rapidly (He et al., 2020). “Green Growth” acts as a part of economic development that is environmentally sustainable, which ensures economic development alongside the environmental protection. In recent times due to unpredictable and complicated global economic scenario, there is a hindrance to this objective because of environmental deterioration, ecological devastation and compromised sustainable growth (Ghosh, 2022). In 1987, the United Nations Brundtland Commission put forth the concept of sustainable development, which was defined as “meeting the requirements of the present without jeopardising future generation’s needs” (UN, 1987). Resulting over 140 nations have included sustainable growth targets in their agendas (UN, 2022).

Innovating environmental friendly products, managing trade-offs between optimal product & service performance, and improving social & environmental benefits are all made possible by sustainability. Saunila et al. (2018) state that increasing green innovation and attracting green investment should be industries' top priorities. Green innovation spans a broader variety of activities, such as the development of new notions, goods & services, processes or organizational structures to address environmental concerns. The term “Green Investment” is quite wide. It might be viewed as a standalone notion, a component of a bigger investing subject, or even closely related with other investment strategies that provide the financial resources required for green innovations.

In order for the country to move towards an economy which is financially sustainable along with exceptional economic growth, financial technology development is expected to be crucial. It gives retail investors ways to look into and invest in goods that support the twin goals of high-quality economic growth and sustainability of the environment (Nenavath and Mishra, 2023). The financial crisis that hit the world in 2008 made an emerging pattern in the financial industry focusing on the business model associated with digitalisation and FinTech (Pawłowska et al., 2022). Fintech is a multidisciplinary phrase that refers to the integration of two well-developed fields, namely financial technology and financial markets (Gupta et al., 2023). The Financial Stability Board (FSB) defines FinTech as “financial innovation brought about by technology that creates new business models, applications, processes or products that have a significant impact on financial markets, financial institutions or the way financial services are enhanced” (FSB, 2016). In accordance with the UN SDGs, the World Bank along with other global development institutions is promoting FinTech as an important facilitator for inclusive of finance along with alleviating poverty (UNSGSA, 2018). By offering social bonds and green bonds, financial market has created a way for financing environmentally and socially conscious projects which are least preferred by conventional businesses. The major setback for this green initiative is the lack of ability to attract investors. FinTech helps to overcome this limitation by offering a platform for green investors and also by bringing household savings to the economy. FinTech with artificial intelligence has developed into a significant field of study, due to AI’s increasing multidisciplinary interactions and integration with machine learning, data science, finance and economics. From very recent years, the next generation artificial intelligence has undergone a rapid development with its applicability to a wide range of applications in finance (Cao, 2022). With the popularity of tools like ChatGPT, Google Bard, etc., which is growing in demand, provided a wider scope for green investment through FinTech.