Can Green FinTech Build Climate Justice?

By Laura Quinteros and Nick Bernards - 03 May 2023
Can Green FinTech Build Climate Justice?

Laura Quinteros and Nick Bernards review the landscape of green FinTech and offer some critical discussion of its limits and possibilities. This is the fourth post in a new EGG commentary series exploring how AI’s development is affecting economic, social and political decision-making around the world.

Meaningfully addressing the challenges posed by climate breakdown requires massive investments both in reducing emissions and in adapting to a changing climate. So far, despite considerable global efforts, the actual mobilization of climate finance has fallen far short of expectations, particularly in poor countries. These failures raise important questions as to the allocation of finance, as well as subsequent distributional and procedural questions with respect to climate justice -- who should pay for climate mitigation and adaptation, and who should decide how mitigation and adaptation take place?

One increasingly common response to these failures has been to turn to new financial technologies with environmental functions -- or, 'green FinTech’. The label ‘FinTech’ bundles together an array of different mobile and digital technologies applied to the delivery of financial services. Common examples range from mobile payment systems, crowdfunding and peer lending platforms, and alternative forms of credit data through to cryptocurrencies, automated investment advisory services (‘robo-advisers’), and online stock trading platforms.

‘Green FinTech’, by extension, is a loose term for the subset of these applications with expressly environmental aims. The Green Digital Finance Alliance (GDFA, 2022)-- a Geneva-based think tank launched by the UN Environmental Programme and Ant Group, gives the following definition: ‘Green fintech solutions are defined as technology-enabled innovations applied to any kind of financial processes and products all while intentionally supporting Sustainable Development Goals or reducing sustainability risks’. Notable examples include pay-as-you-go (PAYGO) electricity systems combining mobile money applications with off-grid solar photovoltaic (SPV) power generation, various efforts to apply blockchain or crypto-token systems to carbon credits and other emissions offsets, crowdfunding for clean energy projects, the deployment of satellite data and artificial intelligence to screen and verify carbon offsets, and automated investment screening. In recent years, green FinTech has gained growing attention from both financial regulators and environmental agencies as a potential means of responding to shortfalls of climate finance.

Our aim in this commentary is to review the landscape of green FinTech and offer some critical discussion of its limits and possibilities. We see a core tension with green FinTech projects: The basic promise of green FinTech applications is that they will enable the screening and financing of ‘green’ projects ‘at a distance’. They offer bundles of metrics, data, analytical tools, and payment infrastructures aimed at empowering investors to screen and verify ‘green’ projects quickly, cheaply, and remotely. Yet, these projects succeed or fail on their own terms (to say nothing of wider questions of climate justice) depending on how they are embedded with localized patterns of ownership, labour relations, and livelihoods -- precisely the complexities that, say, an AI programme scraping through satellite data is designed to remove. Moreover, they black-box vital and contested questions about how to reduce emissions or adapt to intensifying climate risks, and ultimately delegate decisions on those questions to software developers, investors, and automated programmes.

‘Green FinTech’: Merging climate finance and FinTech governance

Green FinTech bridges the landscapes of climate finance on one hand and the emerging governance of FinTech on the other. Both initiatives have come with some well-documented pathologies in practice.

Sarah Bracking and Benjamin Leffel point to the emergence of a regulatory architecture governing global climate finance which is increasingly polycentric, but also increasingly beholden to neoliberal logics privileging the interests of market actors. So far, the mobilization of climate finance through these arrangements has fallen well short of promises. As Table 1 shows, based on OECD data, the Paris Agreement pledge of USD 100 billion in climate aid annually has never come close to being met. Private finance was intended to provide a third of that 100 billion, but has only once reached half of that target.


Table 1: Climate finance provided or mobilized by donor countries, 2013-2019








Public bilateral (in USD billion)








Public multilateral (in USD billion)








Climate related export credits








Private finance (in USD billion)
















Private finance as percent of total








Source: adapted from OECD (2021).

Notes: no private sector data for 2015, as OECD implemented new measurement criteria, private finance figures from 2013-14 are not directly comparable to 2016-19

FinTech, meanwhile, has emerged as a key focus of financial regulators in recent years, particularly with respect to the promotion of ‘financial inclusion’ and poverty reduction. The World Bank and G20, together with a number of central banks and financial regulators in both Global North and South, have also increasingly promoted and coordinated targeted regulatory frameworks for FinTech applications aimed at promoting ‘access’ to finance for the ‘unbanked’. A loose network of central bankers in particular have promoted ‘regulatory sandboxes’ -- time-limited, product specific licenses for particular companies to conduct ‘experiments’ with ‘innovative’ practices and technologies.

There are important parallels to the promotion of private climate finance visible here. The turn to promoting FinTech betrays a similar emphasis on market-based solutions to social problems, and on mobilizing private investment. In practice, this has meant that many of the same problems have appeared with FinTech applications as with private climate finance. The actual rollout of FinTech applications has been uneven, with heavy investment driven by readily available venture capital concentrated on a few key markets, notably Kenya and India, and on more profitable services, notably high-interest lending predominantly to urban-dwelling, ‘less poor’ borrowers.

The promotion of green FinTech brings many of the same regulatory tools to bear on the problem of climate finance. For instance, the Financial Conduct Authority in the UK has run two iterations of the ‘Green Fintech Challenge’ in 2018 and 2021 -- rolling out a ‘regulatory sandbox’ exercise specifically targeted to FinTech start-ups ‘that will aid the transition to a net-zero economy’. The focus here, as with FinTech more broadly, is on creating an ‘enabling environment’ for FinTech experiments, in hopes of attracting private capital.

In sum, merging climate finance and FinTech regimes holds out the promise of breaking through some of the barriers to greater mobilization of climate finance. As we show in the next section using the example of PAYGO solar systems, this promise comes laden with significant tensions. The very features of green FinTech projects that make them potentially appealing to investors make them blind to important local dynamics which will determine their success or failure on their own terms, and threaten to undercut their viability as vehicles for climate justice.

Green FinTech in practice: Antinomies of PAYGO SPV electricity

In the context of the Global South, rural areas depict one of the main challenges for both public and private policies focused on universal energy access. Many rural households are scattered, have low and unpredictable incomes, and hence low energy demand. Central grid supply is thus often unprofitable for private suppliers and expensive for public ones facing fiscal constraints. Solar decentralized solutions are a key potential alternative for rural energy access, but the high upfront technology costs associated with both mini grid and stand-alone solar solutions remain a major challenge.

Against this backdrop, cutting-edge financial products relying on digital innovations are emerging and being deployed across different jurisdictions. For instance, PAYGO models coupled with mobile money for small-scale solar solutions are widely adopted energy access solutions in Southern countries. A digitally enabled PAYGO model allows users to pay for electricity in weekly, monthly instalments or when financially liquid using mobile payment platforms and enabled by machine-to-machine (M2M) technology incorporated in the solar solutions.

Many enthusiasts of digitally-enabled PAYGOs have been documenting the model’s benefits to users. These include success in delivering affordable solar power and fair repayment performance according to a number of evaluations of projects in different parts of in Sub-Saharan Africa. Yet other authors have noted that the overall picture is mixed. In many cases, PAYGO solar systems appear to be profit-led and guided by market logics rather than guided by companies’ supposed social vision. Measures of ‘success’ based on narrow measures of repayment rates and energy use risk missing out on key dynamics of power and exploitation. Lucy Baker describes the process as  converting rural energy use into a set of financial assets grounded in new forms of consumer indebtedness.

Cross and Neumark  document one such example: East Africa’s digitally-enabled, off-grid solar power diffusion, an adverse ‘infrastructure of inclusion’ in which final users are governed by new circles of data, capital and debt. Data generates inputs for modelling and optimizing PAYGO business alternatives that enable new connections. But it also sets the grounds for disconnecting those defaulting on agreed payments. This is because the digital infrastructure can remotely lock out or shut down systems. The possibility of remote disconnection is significant for users and businesses alike given high rates of default on one hand and the notable material and social costs associated with repossessing SPV systems on the other. The costs of disconnection could also be immense for vulnerable populations. This is particularly true in COVID-19 and post-COVID 19 scenarios, whereby the loss of radio, TV or mobile phone to stay informed, or the loss of light in tandem with falling ill could be excruciating.

Moreover, the dynamics of indebtedness and distancing implicit in PAYGO solar systems may also create new ecological costs. Disconnection without repossession risks exacerbating the existing hazards from solar e-waste. Previous studies have illustrated how toxic materials contained in PV films and batteries threaten local ecosystems. And in fact, there are limited incentives for operators to reclaim or recycle disconnected SPV kits. Additionally, the intensification of indebtedness in agrarian settings has often been associated with intensified exploitation and depletion of water and soil resources, for instance, in Cambodia and India.


In short, digital solutions to the need for clean energy risk creating or exacerbating localized social and ecological risks. Moreover, they create these problems precisely because they are designed around the priorities of investors, with limited input from targeted communities and indifferent to localized dynamics of power and exploitation. These concerns ultimately challenge the operationalization of widely adopted frames in the climate finance discourse, including ‘transformative change’ and ‘paradigm shift’ according to which climate finance delivers regime-altering, new and transformative socio-ecological interactions in addition to inflows of capital.



Laura Quinteros is a Bolivian energy scientist and a PhD Candidate in Global Sustainable Development at Warwick University. She is investigating governance structures, rationalities and power relations that emerge in solar projects funded via crowdfunding platforms in the Global South.

Nick Bernards is Associate Professor of Global Sustainable Development at the University of Warwick. He is author of A Critical History of Poverty Finance (Pluto, 2022) and The Global Governance of Precarity (Routledge, 2018).

Photo by RODNAE Productions

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