Market Dynamics and Innovation in Sustainable Finance: Fintech’s Role in Increasing Competition and Avoiding Greenwashing

Faculty of Law, Stockholm University Research Paper No. 112

Konstantinos Stylianou, Marios Iacovides & Björn Lundqvist (eds), Fintech Competition: Law, Policy, and Market Organisation (Hart Publishing, forthcoming 2023)

22 Pages Posted: 2 Feb 2023

See all articles by Beatrice Crona

Beatrice Crona

Stockholm Resilience Centre; Global Economic Dynamics and the Biosphere Program

Marios Iacovides

Uppsala University - Department of Business Studies

Date Written: February 2023

Abstract

In this chapter, we make a first attempt at exploring the intersection where sustainable finance, fintech, and competition law and policy meet. We find that fintech can ensure that sustainable finance goes beyond greenwishing and avoids greenwashing, while at the same time supporting increasing competition. Fintech has this potential because it can enable better reporting, monitoring, data collection, supply chain transparency, crowdfunding, and microfinancing – all of which support true sustainability-related financing – and it can increase innovation, disrupt markets, help reduce barriers to entry and expansion, and challenge incumbents’ market power, thereby safeguarding and promoting healthy competition for sustainability solutions. In other words, fintech can help democratise sustainable finance. In order for this potential to be realised, policymakers must design regulation at an optimal level, balancing high standards with regard to sustainability with competition, whereas competition law enforcers must ensure competition in sustainability solutions is safeguarded by enforcing competition rules in a manner that takes into account the impact of businesses’ market conduct on parameters of sustainability such as climate change, biodiversity, and social justice. Strong enforcement of competition rules ought also to assist in avoiding the two ways we identify in which increased presence of fintech in sustainable finance would be problematic, namely by increasing possibilities for collusion or information exchange and by further strengthening the market power of BigTech companies.

Keywords: sustainability; sustainable finance; competition policy; environmental and social governance (ESG); greenwashing; finance gap; innovation; competition law; EU competition law; Article 101 TFEU; Article 102 TFEU; merger control; regulation; sustainable development; climate change;

JEL Classification: K21, K32, K33, K34, L40, L41, L42, L44

Suggested Citation

Crona, Beatrice and Iacovides, Marios, Market Dynamics and Innovation in Sustainable Finance: Fintech’s Role in Increasing Competition and Avoiding Greenwashing (February 2023). Faculty of Law, Stockholm University Research Paper No. 112, Konstantinos Stylianou, Marios Iacovides & Björn Lundqvist (eds), Fintech Competition: Law, Policy, and Market Organisation (Hart Publishing, forthcoming 2023), Available at SSRN: https://ssrn.com/abstract=4345906

Beatrice Crona

Stockholm Resilience Centre ( email )

Kräftriket 2B
Stockholm, SE-114 19
Sweden

Global Economic Dynamics and the Biosphere Program ( email )

Sweden

Marios Iacovides (Contact Author)

Uppsala University - Department of Business Studies ( email )

Box 513
Uppsala, SE-751 20
Sweden

HOME PAGE: http://katalog.uu.se/profile/?id=N10-1045

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