Esg and fintech funding in the eu

FinTech, delineating financial technological innovation, altered the modus operandi of traditional banks and intermediaries and gave rise to alternative providers of financial services. At the same time, the increasing regulatory and market attention to environmental, social and governance (ESG) risks, changed the rules for traditional finance. This work analyses European FinTech firms during funding rounds from 2014 to 2022 to investigate the relationship between sustainability profiles and valuations. We find that ESG reporting is positively related to the amount of capital raised, as investors weigh in physical and transition risks in information asymmetries. Lower levels of trust in the relatively young FinTech niche are confirmed by the signalling role of mere ESG disclosure, while finer shades of ESG actual performance, such as rankings and certifications examined in this paper, remain of no impact.