Financial Technology and Environmental Innovation Impact on CO₂ Emissions in Developed Countries

The rapid advancement of Financial Technology (FinTech) and Environmental Innovation has transformed economic and financial landscapes, raising questions about their impact on CO₂ emissions in developed economies. As developed nations aim for net-zero emissions, understanding how financial technology and innovation contribute to emission reductions is crucial. FinTech plays a significant role in promoting sustainable finance, enhancing green investments, and facilitating carbon credit trading through digital platforms, while environmental innovation fosters energy-efficient solutions and technological advancements for cleaner production processes.

This study empirically examines the relationship between FinTech adoption, environmental innovation, and CO₂ emissions in developed countries over the past decade. Using panel data from institutions such as the World Bank, IMF, and Global FinTech Index, we assess the impact of financial digitalization and green technological advancements on carbon emissions. The study employs descriptive statistics, correlation analysis, and panel regression models to quantify the influence of these factors on national emissions levels. Key variables include the FinTech Index, Environmental Innovation Index, GDP per capita, Renewable Energy Share, and CO₂ emissions per capita as the dependent variable.

Findings indicate that both FinTech adoption and environmental innovation have a significant negative correlation with CO₂ emissions, suggesting that increased financial digitalization and technological advancements in sustainability lead to lower emissions. Developed economies that have embraced **FinTech-driven sustainable finance solutions and R&D in green technologies** exhibit better environmental performance. The study underscores the importance of fostering FinTech-based green investments, digital carbon markets, and regulatory incentives to accelerate carbon reduction efforts.

Policy implications suggest that governments should integrate FinTech solutions in climate finance, promote digital carbon credit markets, and invest in sustainable innovations to achieve their climate targets. These findings contribute to ongoing policy discussions on using technological and financial innovation to combat climate change and transition toward a low-carbon economy.