Myne Uddin, Abu Bakkar Siddik, Zhao Yuhuan, and Muhammad Abubakr Naeem examine the rise of advanced financial technologies (Fintech) and their impact on financial market dynamics and foreign direct investment. As Fintech companies create new solutions for sustainability and environmental efficiency, they are increasingly attracting attention from foreign investment funds, promoting more cost-effective practices that are in line with environmental goals. In addition, foreign direct investments (FDI) help speed up the transition to a more sustainable economy by providing the necessary capital for the adoption of clean technologies.
However, the combination of fintech investments and FDI can have negative environmental effects due to the short-term priorities of FDI-driven ventures which prioritize rapid expansion and cost-efficiency over sustainability. Fintech companies could be influenced to design less eco-friendly technologies to ensure access to FDI, and this would shift the focus away from sustainability. In addition, as previously mentioned by Gonzalo Hernandez ´ Soto (2024) in Latin America, FDI can lead to an increase in CO2 emissions in regions with less stringent environmental regulations due to the carbon leakage effect which is the reduction in emissions in one country being offset by an increase in a trading partner country.
These findings present policy challenges for governments to encourage investments that support and adopt green technologies. Additional regulation as well as tax incentives could be part of the solution. The private sector could also play a role by incorporating AI or blockchain technologies into more efficient green production processes. Finally, capacity-building initiatives and educational programs should be considered and receive large investments to enhance understanding of the benefits of environmental sustainability as well as develop the necessary skills to implement green strategies across all sectors.