Greenwashing in the FinTech sector: the role of the EU Corporate Sustainability Reporting Directive (CSRD)

FinTech companies, along with other financial institutions, face increasing pressure to take the lead in promoting a more environmentally sustainable future. The EU lately incorporated Corporate Sustainability Reporting Directive (CSRD) which offers both possibilities and challenges. This study examines the most recent modifications to Environmental, Social, and Governance (ESG) standards, identifying potential shifts that could affect FinTech firms. The problem of "greenwashing," a tactic used by businesses to misrepresent themselves as environmentally conscious, is especially concerning. Through literature analysis, this study attempts to explain terms related to greenwashing. While greenwashing instances were revealed so far within the confines of traditional banking, this study ventures beyond, including FinTech firms. FinTech companies are the focus of analysis because they are expected to play a significant role in the increased regulatory scrutiny starting in 2024. The paper addresses the opportunities and challenges that financial technology companies may face as they navigate this complex field. Relevant stakeholders looking for deep insights into the relationship between financial technology and environmental responsibility will find great value in the research's conclusions. This paper adds to an ongoing conversation on sustainability and regulation, enhancing the discussion of ethical financial activities.