Does the use of ESG scoring in FinTech platforms enhance ethical financial decision-making, or does it create new forms of bias?
DOI:
https://doi.org/10.61173/c7d12x14Keywords:
ESG, FinTech, sustainable finance, algorithmic bias, ESG ratings, greenwashing, financial technology, ethical investing, data transparency, corporate governanceAbstract
The paper explores how ESG rating frameworks are embedded into FinTech tools such as AI-driven investment systems, credit-assessment algorithms, and automated portfolio managers. While ESG adoption supports more responsible and sustainable investing by improving transparency, accountability, and long-term risk oversight, several significant obstacles still persist. These involve inconsistencies between ESG ratings among providers, a lack of data quality, algorithmic bias, and increasing risk of greenwashing. Empirical evidence shows that the data divergence in ESG and incomplete disclosures may result in making misinformed financial decisions and reinforcing structural disparities, especially in the case of emerging markets. It finds that despite the revolutionary promise of ESG-based FinTech to financial sustainability, it requires better standardisation, reliability of data, and clear algorithmic regulation to reduce bias and deliver genuinely ethical financial results.
References
Abdelghafar, M. E., & Shohieb, S. (2025). AI-driven sustainable finance: Computational tools, ESG metrics, and global implementation. Future Business Journal, 11, 209. https://doi. org/10.1186/s43093-025-00610-x Alqudah, M. Z., Sierra-García, L., & Garcia-Benau, M. A. (2024). Influence of ESG among Jordanian fintech businesses: The moderating role of sustainable finance technology. Discover Sustainability, 5, 496. https://doi.org/10.1007/s43621-024- 00712-6
Assael, J., Carlier, L., & Challet, D. (2023). Dissecting the explanatory power of ESG features on equity returns by sector, capitalization, and year with interpretable machine learning. Journal of Risk and Financial Management, 16(3), 159. https:// www.mdpi.com/1911-8074/16/3/159
Bangura, S., Chitamba, A. C., & Duma, P. T. (2025). Social Entrepreneurship as an Approach to Green Transition in BRICS+ Countries: a comprehensive literature review. International Journal of Advanced Business Studies, 4(6), 115-132. https:// www.besra-journals.net/index.php/ijabs/article/view/157
Ben Ali, A., & Chouaibi, J. (2024). Mediating effect of ESG performance on executive incentive compensation-financial performance relationship: evidence from MENA banking sector. Corporate Governance: The International Journal of Business in Society, 24(2), 439-461. https://www.emerald.com/cg/ article/24/2/439/1230503
Berg, F., Koelbel, J. F., & Rigobon, R. (2022). Aggregate confusion: The divergence of ESG ratings. Review of Finance, 26(6), 1315–1344. https://doi.org/10.1093/rof/rfac033
Bouattour, A., Kalai, M., & Helali, K. (2024). The non-linear relationship between ESG performance and bank stability in the digital era. Humanities and Social Sciences Communications, 11, 1445. https://doi.org/10.1057/s41599-024-03876-8
Cesarone, F., Martino, M. L., Ricca, F., & Scozzari, A. (2023). Managing ESG ratings disagreement in sustainable portfolio selection. arXiv. https://arxiv.org/abs/2312.10739
Christensen, D. M., Serafeim, G., & Sikochi, A. (2022). Why is corporate virtue in the eye of the beholder? The Accounting Review, 97(1), 147–175. https://doi.org/10.2308/TAR-2019-
Cikovic, K. F., Milkovic, M., & Hajdek, M. (2024). The Intersection Of Artificial Intelligence And Green And Sustainable Insurance: A Prisma Compliant Analysis And Literature Review. Economic and Social Development: Book of Proceedings, 20-28. https://www.researchgate.net/ profile/Andrea-Figueira/publication/387213959_Literature_ Review_Sustainable_Human_Resource_Management/ links/676409d78cfcdf077fe5695e/Literature-Review- Sustainable-Human-Resource-Management.pdf#page=25 EL‐Ghaylany, I., Ed‐Dafali, S., Hussainey, K., & Adardour, Z. (2026). FinTech‐Driven Corporate Sustainability Performance: A Systematic Review, Practical Insights, and Future Research Agenda. Business Strategy and the Environment. https:// onlinelibrary.wiley.com/doi/abs/10.1002/bse.70686
Galeone, G., Ranaldo, S., & Fusco, A. (2024). ESG and fintech: Are they connected? Research in International Business and Finance, 69, 102225. https://doi.org/10.1016/j.ribaf.2024.102225
Gao, M., & Liang, K. (2025). Fintech, carbon emissions, and divergence in corporate ESG ratings. Finance Research Letters, 108642. https://www.sciencedirect.com/science/article/pii/ S1544612325018963
Giakoumelou, A., Salvi, A., Bekiros, S., & Onorato, G. (2024). ESG and fintech funding in the EU. Research in International Business and Finance, 69, 102233. https://doi.org/10.1016/ j.ribaf.2024.102233
Habib, A. M. (2025). Fintech and Sustainability: Perspectives from Emerging Markets. In Trends and Challenges of Electronic Finance: Perspectives from Emerging Markets (pp. 103-118). Singapore: Springer Nature Singapore. https://link.springer.com/ chapter/10.1007/978-981-96-3304-3_7
Hamdouni, A. (2025). From ESG to financial stability: AI-driven fintech adoption. International Journal of Financial Studies, 13(4), 234. https://doi.org/10.3390/ijfs13040234
He, B., Jie, W., & He, H. (2024). Green innovation, fintech, and sustainability. Resources Policy, 91, 104856. https://doi. org/10.1016/j.resourpol.2024.104856 Horobeţ, A., Mnohoghitnei, I., Belaşcu, L., & Croitoru, I. M. (2023). ESG reporting and capital market investors: insights from the global technology and Fintech industries. Studies in Business and Economics, 18(2), 178-195. https://sciendo.com/2/ v2/download/article/10.2478/sbe-2023-0031.pdf Israel, J. S. J., William, A. J. P., Mishra, P. K., & Vasudevan, M. (2026). Machine Learning Approaches to Support Corporate Environmental Governance through Accurate Emission Forecasting, Carbon Offset Allocation, and Green Fund Optimization. Recent Innovations in Chemical Engineering. https://www.benthamdirect.com/content/journals/rice/10.2174/0 124055204424228251125044111
Kotsantonis, S., & Serafeim, G. (2022). Four things no one will tell you about ESG data. Journal of Applied Corporate Finance, 34(1), 50–58. https://doi.org/10.1111/jacf.12441
Li, Z., & Yang, Z. (2024). ESG rating disagreement and corporate productivity. arXiv. https://arxiv.org/abs/2408.13895
Liu, H., Yao, P., Latif, S., Aslam, S., & Iqbal, N. (2022). Green financing, fintech, and energy efficiency. Environmental Science and Pollution Research, 29, 1–14. https://doi.org/10.1007/ s11356-021-16949-x
Liu, Z., & Li, X. (2024). The impact of bank fintech on ESG greenwashing. Finance Research Letters. https://doi.org/10.1016/ j.frl.2024.105199
Luan, X., & Wang, X. (2023). Open innovation, enterprise value and the mediating effect of ESG. Business Process Management Journal, 29(2), 489-504. https://www.emerald.com/bpmj/article- Dean&Francis ISSN 2959-6130 abstract/29/2/489/258147 Magar, A. Digital Green: How Fintech is Revolutionizing Sustainable Finance. Harnessing Fintech and Artificial Intelligence for Promoting Green Finance and Sustainable Development, 248. https://www.researchgate.net/profile/Ravi- Gupta-43/publication/402060604_Harnessing_Fintech_and_ Artificial_Intelligence_for_Promoting_Green_Finance_and_ Sustainable_Development/links/69b6486ff5cc681fca5f6587/ Harnessing-Fintech-and-Artificial-Intelligence-for-Promoting- Green-Finance-and-Sustainable-Development.pdf#page=258
Mahdi, I. B. S., Bouaziz, M., & Abbes, M. B. (2024). Does financial technology matter in the relationship between CSR and banks’ financial stability? A quantile regression approach. Environmental Science and Pollution Research, 31(1), 1226- 1243. https://link.springer.com/article/10.1007/s11356-023- 31179-z Meiling, L., Yahya, F., Waqas, M., Shaohua, Z., Ali, S. A., & Hania, A. (2021). Boosting sustainability in healthcare sector through Fintech: analyzing the moderating role of financial and ICT development. INQUIRY: The Journal of Health Care Organization, Provision, and Financing, 58, 00469580211028174. https://journals.sagepub.com/doi/ abs/10.1177/00469580211028174
Mohammad, K. U., Hussain, M. M., & Adnan, N. U. H. (2025). Risk-taking channel of monetary policy and the role of ESG and political instability: evidence from South Asia. International Economics and Economic Policy, 22(3), 49. https://link.springer. com/article/10.1007/s10368-025-00674-8
Monday, A. (2025). Corporate Social Responsibility and Financial Risk Management: Evidence from Listed Firms in Nigeria. Review of Finance, Economics and Social Sciences, 1(1), 1-17. https://refess.org/index.php/refess/article/view/1 Najaf, K., Kee, H. W., Singh, J., Gultom, N. D., & Chin,
A. (2025). Board characteristics and ESG performance: An evidence from Malaysia. Journal of Sustainable Finance & Investment, 15(1), 105-144. https://www.tandfonline.com/doi/ab s/10.1080/20430795.2024.2401360
Omar, B., & Habiba, L. K. (2025). Artificial intelligence in sustainable finance: Mapping ESG integration and risk detection frameworks. International Journal of Accounting and Economics Studies, 12(8), 878-886. https://www.researchgate.net/profile/ Omar-Boutahir/publication/399117415_Artificial_Intelligence_ in_Sustainable_Finance_Mapping_ESG_Integration_and_Risk_ Detection_Frameworks/links/6971edaf52773b62239c8c76/ Artificial-Intelligence-in-Sustainable-Finance-Mapping-ESG- Integration-and-Risk-Detection-Frameworks.pdf
Roy, J. K., & Vasa, L. (2025). Financial technology and environmental, social and governance in sustainable finance: a bibliometric and thematic content analysis. Discover Sustainability, 6(1), 148. https://link.springer.com/ article/10.1007/s43621-025-00934-2
SD, N. and Sankari, S.S., 2026. Structural Gender Bias in Credit Scoring: Proxy Leakage. arXiv preprint arXiv:2601.18342. https://arxiv.org/abs/2601.18342
Serafeim, G. (2021). ESG: Hyperboles and reality. Harvard Business School Research Paper Series Working Paper, 22-031. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3966695
Suri, G. K., & Sadriwala, N. (2025). Using Artificial Intelligence for Sustainable Accounting Practices: A Data-Driven Approach. In Intelligent Systems for Sustainable Infrastructure: AI Solutions Shaping a Green Future: Leveraging AI Innovations for Eco Friendly Infrastructure and Environmental Resilience (pp. 171-186). Cham: Springer Nature Switzerland. https://link. springer.com/chapter/10.1007/978-3-031-95240-1_9
Tamura, Y. (2024). How Can We Promote Impact/ESG Investing?-Clarifying the Skeptical Reasons and Benefits of Addressing Impact & ESG Investing in the Age of Artificial Intelligence (Doctoral dissertation, Massachusetts Institute of Technology). https://dspace.mit.edu/handle/1721.1/156010
Trotta, A., Rania, F., & Strano, E. (2024). Exploring the linkages between FinTech and ESG: A bibliometric perspective. Research in International Business and Finance, 69, 102200. https://www. sciencedirect.com/science/article/pii/S0275531923003264
Tsang, A., Wang, K. T., Wu, Y., & Lee, J. (2024). Nonfinancial corporate social responsibility reporting and firm value: International evidence on the role of financial analysts. European Accounting Review, 33(2), 399-434. https://www.tandfonline. com/doi/abs/10.1080/09638180.2022.2094435
Xu, J. (2024). AI in ESG for financial institutions: An industrial survey. arXiv preprint arXiv:2403.05541. https://arxiv.org/ abs/2403.05541
Yang, X., Li, Z., Qiu, Z., Wang, J., & Liu, B. (2024). ESG performance and corporate technology innovation: Evidence from China. Technological Forecasting and Social Change, 206, 123520. https://www.sciencedirect.com/science/article/pii/ S0040162524003160
Zhou, J., & Lei, X. (2025). ESG rating uncertainty and corporate financial misconduct. Journal of Business Research, 189, 115092. https://www.sciencedirect.com/science/article/pii/ S0148296324005964
Downloads
Published
Issue
Section
License
Copyright (c) 2026 by the authors.
This work is licensed under a Creative Commons Attribution 4.0 International License.
