The ESG FinTech market continues to grow and 2024 saw the adoption of major regulations, like CSRD, that have increased the pressures on firms. However, was it a good year for the sector?
For Daniel Gadd, CEO of Position Green, 2024 was an important year for the ESG FinTech sector. “2024 was a pivotal year for ESG FinTech as the sector matured amidst increasing scrutiny. While regulatory challenges and political headwinds impacted broader ESG narratives, ESG fintech solutions proved their value. They helped companies navigate complex reporting requirements, mitigate risks, and unlock efficiencies in sustainability strategies.”
This sentiment was shared by others in the sector. Raimac Founder and CEO Frazer MacRae also described 2024 as a pivotal year for the sector, pointing to the increased interest and demand for sustainable financial products and services. He added, “FinTech solutions addressing social fairness and governance transparency saw increased adoption, particularly in areas like programmable payments, usage-based insurance, and digital wallets. Programmable payments, in particular, aligned well with ESG priorities by enhancing financial inclusion and providing transparent, auditable payment systems.”
The ESG FinTech market continues to grow as more countries look to establish more detailed regulations around ESG-related areas. A recent study from ResearchAndMarkets.com claims the ESG finance market was estimated at $7trn in 2024 and will reach $11.3trn by 2029. This offers a huge opportunity for FinTech companies to aid firms.
One of the biggest developments of 2024 was the increased regulation. Chiefly among these was the EU’s implementation of Corporate Sustainability Reporting Directive (CSRD), which brought significant changes to the ESG reporting that firms must complete. The regulation requires firms to complete annual sustainability reports, disclose information about their ESG practices and complete double materiality reports.
Other regulators around the world also issued updates to ESG-related regulations. For instance, the US’ Securities and Exchange Commission (SEC) implemented rules for public companies to disclose climate-related information in their annual reports, while Canada implemented mandatory climate disclosure requirements for large companies. The increased regulatory landscape is seeing more firms adopt platforms that can help streamline their compliance.
Mary Beighton, Director of People and Culture at Manchester-based Zuto, added, “In 2024 FinTechs faced greater pressure to implement and report on ESG policies. While many of us see that as a positive, it has brought challenges for some.
“Governments around the world have been introducing stricter carbon emissions and environmental sustainability regulations for businesses. These are issues, along with social impact, that are also becoming more important to customers and employees. As a result, they are higher on the agenda for boards and investors, and businesses have had to take a closer look at the way they operate.
“The requirement for PLCs and global brands to report on their ESG performance has helped to eradicate some of the greenwashing that has previously taken place. The ripple effect has been more organisations of all sizes genuinely integrating ethical practices into their operations.”
The trends that shaped ESG FinTech
As mentioned, one of the key trends for the sector in 2024 was the increase in regulatory compliance. Solutions that aligned with CSRD, ISSB and other emerging regulations helped drive adoption in the sector, Gadd explained. “Staying ahead of the compliance curve was a crucial success factor.”
Another trend Gadd noted was the integration of AI and automation to improve ESG data quality and identify hidden risks, while tools that generate credible emissions data, including Scope 3, and identify decarbonization pathways also gained traction. Similarly, there was a rise in demand for enhanced collaboration features and the platforms that allow multi-stakeholder engagement to support the need for oversight on shared supply chain risks.
On a final note, Gadd explained, “The consolidation of ESG and financial data into unified platforms marked a major step forward for the industry. Businesses are now starting to shift their focus beyond compliance; taking stock of the breadth of value creation opportunities that lie in their sustainable data. It was also a year of reckoning, separating the wheat from the chaff. While innovation remained strong, the sector experienced a “survival of the fittest” phase, with only the most impactful and credible platforms thriving. This shakeout set the stage for solutions that genuinely align with business needs, driving measurable sustainability outcomes.”
For Position Green, 2024 proved to be a strong year of growth. One of its most notable developments was the launch of its ESRS solution, which has attracted 300 new customers since its launch. The ESRS solution, which has received recognition from others in the financial sector, aims to be the all-in-one solution for ESRS reporting. Through the dashboard, users can leverage double materiality assessment tools, streamline disclosure reporting, generate sustainability reports and more.
Among its achievements this year include several new partnerships with companies including Ambient Enterprises and Fasadgruppen.
Gadd added, “At Position Green, we doubled our annual recurring revenue (ARR) to 183 MNOK (€15.6M), becoming the leading platform for CSRD/ESRS compliance. Our net revenue retention (NRR) of 128% and churn rate below 6% reflect the trust clients place in our solutions. Additionally, we expanded platform functionalities to offer broader integrations and industry-specific tools, allowing us to service each customer with the specific challenges they are facing.”
On a concluding note, MacRae noted that 2024 has helped to increase the talks around ESG FinTech and 2025 could be a big year for the sector. “2024 set the stage for ESG FinTech’s rise, with programmable payments emerging as a key driver of social and governance innovation. Looking ahead to 2025, the FinTech sector is well-positioned to deliver greater financial inclusion, transparency, and sustainability.”
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