Enhancing Transparency and Accountability in Sustainable Finance Through Blockchain Technology: A Systematic Review of the Literature

The connection between technology and sustainability has emerged as a hub for creative solutions in the quickly changing financial landscape. The financial industry is being asked to take on a more transformative role as the world community struggles with social injustice, resource depletion, and climate change [1]. The financial world needs to overcome the problems of adopting a more efficient and transparent financial system. Blockchain technology is a potentially revolutionary instrument that can completely transform financial transactions, especially in sustainable finance [2]. Sustainable finance emphasizes integrating ESG into sustainable investment decisions and corporate operations, marking a paradigm shift in the financial sector [3]. Sustainable finance aims to reallocate funds to endeavours and projects that benefit society and the environment and produce financial rewards [4].

The technology, which is a decentralized ledger that powers cryptocurrencies but goes far beyond them, is known as blockchain technology [5]. The disruptive force that could revolutionize the financial sector is blockchain, which is based on three fundamental principles: decentralization, immutability, and transparency [6]. Blockchain solves numerous problems with conventional financial systems by offering a transparent and safe record of transactions. Its decentralized structure gives blockchain its intrinsic transparency [7]. Stakeholders of the blockchain network have access to the same copy in the ledger, and modifications require consensus. Transactions cannot be changed and irreversible backwards after they are recorded. By doing this, fraud risk is decreased and financial data's credibility is increased [8]. Blockchain presents the idea of smart contracts, through self-executing with the terms of the promise clearly put into code [9]. In the context of sustainable finance, this automation has the potential to streamline complex procedures and guarantee that funds are distributed exactly [10]. So, it has been addressed as a transformative component in different areas, including finance.

A seminal whitepaper on Bitcoin introduced the concept of a decentralized and distributed ledger as a means of conducting secure, transparent, and tamper-resistant transactions [11]. Subsequent developments in blockchain technology have extended its applicability beyond cryptocurrencies, with an increasing focus on its potential to revolutionize traditional financial systems [12]. Numerous scholars have highlighted the key attributes of blockchain that contribute to its disruptive potential. Tapscott and Tapscott [13] emphasized decentralization, cryptography, and consensus mechanisms as foundational principles that enhance security and transparency. These features are particularly pertinent in the financial context, where trust and accountability are paramount. The relationship between blockchain technology and sustainable finance represents a natural evolution, aligning technological innovation with the ethical imperative of addressing global environmental and social challenges [14]. It is within this intersection that the potential for blockchain to enhance transparency and accountability in sustainable finance emerges. Blockchain's transparency arises from its distributed ledger, where every participant has real-time access to an immutable record of transactions [15]. In sustainable finance, this transparency can be leveraged to trace the flow of funds, ensuring that investments align with ESG criteria [16]. Burritt and Schaltegger [17] argued that blockchain's transparency can mitigate "greenwashing," where investments are portrayed as more sustainable than they are.

Smart contracts, self-executing pieces of code embedded in the blockchain, automate contractual agreements and hold the potential to revolutionize accountability in sustainable finance [18]. By encoding the terms of sustainable investments, smart contracts ensure automatic execution. This reduces the requirement for intermediaries and minimizes the risk of disputes if the predefined conditions are met [19]. Adopting blockchain technology in developing countries has several opportunities and challenges. The potential for blockchain to empower individuals in regions with inadequate access to traditional financial services [20]. In developing countries, where a significant portion of the population remains unbanked, blockchain's decentralized nature offers the promise of financial inclusion and access to capital [21], [22]. However, challenges persist in terms of infrastructure, regulatory frameworks, and public awareness [23]. The study by Marke et al. [24] on blockchain in the carbon market demonstrates how distributed ledger technology (DLT) can enhance transparency and streamline the issuance and trading of carbon credits. Similarly, Tapscott and Tapscott [13] present cases where blockchain is utilized in supply chain finance to ensure ethical sourcing and fair trade practices. Blockchain's inherent design, characterized by decentralization and DLT, has been touted as a solution to improve transparency in financial systems [25]. By creating an immutable and transparent record of transactions, blockchain minimizes the need for intermediaries and enhances trust among stakeholders. Empirical studies [26], [27] underscore the potential of blockchain in providing a transparent and auditable trail of financial flows, thereby fostering greater accountability.

ESG criteria have become integral considerations in sustainable finance. Blockchain technology offers a means to integrate ESG factors seamlessly into financial transactions and reporting [28]. Previous studies [29], [30] demonstrate how blockchain-based platforms can track and verify ESG metrics, allowing investors to make more informed decisions aligned with sustainability goals. The blockchain's capacity to encode “self-executing contracts”, or "smart contracts," opens up possibilities for process automation in sustainable finance [31]. Transparent and impassable agreements are made possible by these contracts, which enable the automatic fulfillment of predetermined terms. Some scholarly research [15], [32] argue that smart contracts improve accountability by streamlining transactions, lowering administrative expenses, and guaranteeing adherence to predetermined sustainability requirements. Blockchain has drawbacks despite its hailed advantages, particularly regarding scalability and energy usage [33]. Blockchain protocols' high energy consumption due to their computational complexity raises questions about their potential effects on the environment and could contradict the sustainability narrative [34], [35].

In this context, blockchain technology has emerged as a major component of sustainable finance, offering unique features that address some of the ancient challenges faced by traditional financial systems. DLT, sometimes known as blockchain, is a decentralized, unchangeable digital ledger that makes it possible to retain safe and open records of transactions [36]. Blockchain reduces costs, minimizes the risk of fraud, and increases transparency by enabling peer-to-peer transactions without the use of middlemen through the use of cryptographic algorithms and consensus mechanisms [37]. Existing literature suggests that while blockchain holds promise for enhancing transparency and accountability in financial systems, its deployment in sustainable finance faces various technical, regulatory, and institutional barriers. The major challenge is the scalability and interoperability of blockchain networks, particularly in the context of handling large transaction volumes and integrating with existing financial infrastructure [38]. Additionally, concerns related to data privacy, security, and regulatory compliance pose significant hurdles to the adoption of blockchain technology in financial applications [39]. Furthermore, the lack of standardized frameworks for evaluating the environmental and social impact of blockchain-based financial initiatives presents challenges in assessing their effectiveness and sustainability outcomes.

A thorough grasp of the current status of research in sustainable finance is urgently needed, given the increased interest in this area and the potential for blockchain technology. By synthesizing current information and identifying opportunities for further research and development, this comprehensive study aims to minimize this research gap. The primary objectives of this study are to identify and examine existing research on the utilization of blockchain technology in sustainable finance within the global context. The review process intends to solve the research question as: what are the key trends, challenges, and opportunities in blockchain technology for sustainable finance, considering prolific journals, authors, citations and countries, as well as its potential implications and recommendations for effective integration of blockchain technology in sustainable finance enhancing transparency and accountability? This study employs bibliometric analysis and proposes to assess the key trends, challenges, and opportunities related to the use of blockchain technology to promote transparency and accountability in sustainable finance. In addition, to explore the potential socio-economic, environmental, and governance implications of blockchain-based financial innovations in the global context and deliver insights for policymakers, practitioners, and researchers to facilitate the effective integration of blockchain technology into sustainable finance initiatives globally. However, there are several limitations inherent in this systematic literature review (SLR). First, the scope of the review is limited to studies published in academic journals, conference proceedings, and other scholarly sources. As a result, relevant insights from industry reports, whitepapers, and grey literature may not be fully captured. Second, the review focuses specifically on transparency and accountability, which may limit the generalizability of findings to other aspects of sustainability. Additionally, the rapidly evolving nature of blockchain technology and sustainable finance may result in some studies becoming outdated over time.

This study employed bibliometric analysis and SLR to solve the research problem. The research question is formulated based on the PICo method which is population (P), the interest of the study (I), and context (Co) [40]. Blockchain technology in sustainable finance is considered as population, transparency, and accountability are researcher interests, and the study is contextualized from a global perspective. This study employed the SLR methodology, guided by the PRISMA procedure created by Liberati et al. [41]. The SLR aimed to enable informed conclusions about the research questions with varying degrees of certainty [42]. The review process followed the "identification," "screening," and "included" phases of PRISMA, as illustrated in Figure 1.

Figure 1 shows the process of review planning, execution, and classification utilized in this study. The review process commenced with the formulation of research questions, followed by a systematic literature search using predefined inclusion and exclusion criteria. The execution phase involved guiding data collection and selection from reputable databases, including Google Scholar, Springer Link, and Dimensions. The classification phase employed analytical frameworks to evaluate the collected articles, encompassing temporal trends, citation analysis, keyword analysis, geographic distribution, and source analysis, thereby providing a comprehensive understanding of the literature.

In the first stage of the review protocol, the data extraction process occurred on August 5, 2024, from Springer Link, Dimensions, and Google Scholar databases, employing a precise set of search parameters meticulously defined beforehand. The study used search strings of "blockchain," "sustainable," "finance," "transparency," and "accountability" within the comprehensive dataset. The dataset under scrutiny comprises scholarly articles released during the timeframe spanning from 2018 to 2023, with a particular emphasis on those disseminated in reputable journals such as Sustainability, IEEE Access, Journal of Cleaner Production, Technological Forecasting and Social Change, Sensors, Applied Sciences, Energies, Electronics, International Journal of Production Research, Journal of Business Research, and Frontiers in Blockchain. Solely articles were considered in this search endeavor, and it is noteworthy to mention that all the chosen publications fall under the category of Open Access. The record identified from the Springer Link (N)=266, Google Scholars database (N)=304, and Dimensions database (N)=456. In total, 1026 articles were identified initially.

The initial screening was conducted to meet the inclusion requirements that were published in "English" and "journals." Articles from "2018–2023" were included through the use of automatic article screening features by study kind, language, report type, and publication date in "dimensions" and the “Google Scholar” database. Conference papers, book chapters, research notes, editorial comments, and unpublished data, including institutional reports and dissertations, are among the non-English publications and articles published during the time period under screening. The researcher removed 36 duplicate articles. After removing the duplicate articles, 534 articles were excluded due to document types, irrelevant articles, and language reasons.

Figure 2 shows the overall review process in the PRISMA chart. The review began with a comprehensive search of three databases: Google Scholar (n=304), Dimensions (n=456), and Springer Link (n=266), resulting in an initial pool of 1,026 articles. Duplicate entries (n=36) were subsequently removed, leaving 990 records for further evaluation. The records were screened based on predefined inclusion and exclusion criteria. Articles were excluded for reasons such as inappropriate document types other than research articles (n=233), irrelevance to the research topic (n=278), and language restrictions other than English language (n=23). This screening process narrowed the records to 456 for detailed assessment. The remaining 456 records considered an in-depth evaluation to ensure alignment with the study objectives and bibliometric analysis requirements. Among the eligible articles, 93 based on research questions and objectives were selected for synthesis. Finally, 78 articles were comprehensively analyzed and synthesized to the research findings.

After screening the relevant articles as per the research questions, 456 articles were included as eligible articles for bibliometric analysis. Among them, only 93 articles are included in the review process based on citation, objectives, and research questions. After a detailed study of the articles, 78 articles were used for the synthesizing process. Table 1 shows the inclusion and exclusion criteria of reviewed articles.

In this study, annual scientific production, most relevant sources, most relevant authors, country scientific production, most globally cited documents, and keyword analysis are considered as the major parts of this section.

Table 2 depicts the annual scientific output on blockchain technology in sustainable finance from 2018 to 2023. A marked rising trend is evident, with publications increasing from 4 in 2018 to 165 in 2023. This exponential growth, particularly post-2019, indicates increasing academic interest in blockchain's potential for enhancing transparency and accountability in sustainable finance.

Table 3 presents the most prolific sources ($ \geq$10 articles) on blockchain technology in sustainable finance. "Sustainability" leads with 194 articles, followed by "IEEE Access" 93. "Electronics" and "Energies" contribute 27 articles each, while "Applied Sciences" has 22. The varied range of journals highlights the topic's multidisciplinary nature, technology, business, and environmental research.

Table 4 presents authors with $ \geq$4 publications on blockchain technology in sustainable finance, exhibiting total articles and fractionalized counts. Leading contributors include Jayaraman R. and Salah K. with 8 articles, 1.39 fractionalized; Tanwar S. with 7 articles, 0.97 fractionalized; Kumar A. with 6 articles, 1.03 fractionalized; Kim S. with 5 articles, 2.2 fractionalized; and Yigitcanlar T. with 5 articles, 1.43 fractionalized. The fractionalized counts indicate varying levels of authorship contribution.

Table 5 and Figure 3 illustrate countries with $>$40 publications on blockchain technology in sustainable finance. China has 128 publications and India has 127 leads, followed by the USA with 86 articles. Significant contributions also come from South Korea with 58, Australia with 54, Italy with 50, the United Arab Emirates with 43, and the UK with 42 articles. This distribution demonstrates global interest in blockchain's role in sustainable finance, focusing on developed and developing regions across Asia, Oceania, Europe, and the Middle East.

Table 6 presents the most cited papers ($>$200 citations) on blockchain technology in sustainable finance enhancing transparency and accountability. Monrat AA (2019, IEEE Access) leads with 730 citations (121.67 annually, normalized TC 3.76), followed by Wang W (2019, IEEE Access) with 694 citations. Pournader M (2019) and Bodkhe U (2020) are also significant, with the latter showing rapid impact (500 citations, normalized TC 5.77). Other significant contributions include Chang Y (2019) and Perboli G (2018). The normalized TC scores adjust for publication year, providing insight into each paper's relative influence over time.

This keyword analysis highlights the focus on "blockchain", and “technology” emphasizing them as crucial tools for enhancing "transparency" and "accountability" in sustainable finance. Key themes include data-driven research, supply chain management, and governance, reflecting blockchain's potential to transform these areas through improved transparency and accountability. Table 7 reflects the article types and their numbers.

This section includes a discussion on the impact of blockchain technology on transparency, accountability, sustainable finance, sustainable performance, key challenges, and opportunities, and implications of blockchain-based financial innovations.

Blockchain technology is an emerging technology that can reform transparency and accountability [43]. The major feature of blockchain technology is that it is segregated and constant, making it more reliable for data safety and accessibility [44]. This feature makes this technology within the control of limited parties, minimizing third-party efforts and redundant alterations of data [16]. Blockchain's features also intensify other important issues like credibility and innovation in multiple sectors [45]. In supply chains, blockchain can ensure reliable and safe delivery of products between the transacting parties to prevent illegal activities [37]. In the medical sector, blockchain can provide data safety about patient and staff information, records, and many more [46]. In finance, blockchain can regulate financial transactions and reduce the prevalent risks [47]. Though numerous benefits surround blockchain technology, it possesses some challenges, such as scalability, privacy, interoperability, and energy consumption, which should be considered timely [48]. Moreover, the concerns about privacy and complexity require careful consideration [29]. Despite these challenges, blockchain technology provides sustainability, ensuring long-term progressive efforts for transparency and accountability across numerous domains [49]. A progressive increase in the use of blockchain technology is anticipated in the near future due to increased innovation and ongoing growth, which will transform the world of information exchange and business transactions [50].

Blockchain enhances transparency and accountability by creating immutable, time-stamped, and tamper-proof records of transactions. Each transaction is recorded on a decentralized ledger accessible to all stakeholders, ensuring real-time visibility and traceability. This eliminates the risk of data manipulation, promotes trust, and provides a clear audit trail. Such as blockchain can enable transparent supply chain tracking, ensuring that ethical practices are followed from production to consumption. By decentralizing trust and enabling independent verification, blockchain addresses systemic inefficiencies in transparency and accountability mechanisms.

Blockchain technology can reform sustainable finance by enhancing transparency and efficiency [43]. Its segregated and constant feature ensures the safety of financial transactions, reducing the prevalent financial risks [51]. Blockchain can also develop reliable financial instruments that support sustainability and impact investments [52]. For instance, blockchain can be used to find out the environmental and social impacts of projects, increasing investors' trust in their investments [48]. Likewise, blockchain can facilitate the creation of tokenized assets that represent sustainable projects, positively impacting the investments made by individuals and institutions [29]. Despite the apparent benefits of this technology, issues with scalability, interoperability, and complexity must be resolved to promote its ongoing use and innovation [48]. Similarly, concerns about confidentiality and data security need more considerations [53]. But such few challenges cannot deny the fact that blockchain technology holds a greater future in transforming the financial sector and enhancing long-term benefits [54]. With continuous research and progress, we can expect to see a gradual increase in applications of blockchain that will lead to a sustainable impact in the financial sector, particularly in investments [55].

Blockchain addresses inefficiencies in sustainable finance by rearranging processes such as carbon credit trading, green bond issuance, and impact investing. By tokenizing assets, blockchain ensures transparency in fund allocation and utilization, preventing issues like greenwashing. Decentralized ledgers enable investors to verify the environmental and social impact of their investments, fostering trust and confidence. Additionally, blockchain reduces transaction costs and speeds up cross-border payments by eliminating intermediaries. Through real-time reporting and verifiable data, blockchain supports sustainable financial instruments and ensures alignment with global sustainability goals, making sustainable finance more accessible, efficient, and accountable.

Blockchain technology may enhance sustainable performance by contributing to improving transparency, traceability, and efficiency [56]. Its unbreachable and decentralized nature ensures that the data are safe and can be accessed by all authorized parties [44]. This technology removes the role of intermediaries and reduces the risk of data manipulation or corruption [16]. Blockchain's transparency boosts the trustworthiness, accountability, and sustainability in supply chains, energy, finance, and other sectors [32]. For instance, in supply chains, blockchain technology can track the products from their beginning to the final consumer, enhancing transparency and ensuring that there have not been practices of any unethical activities [45]. In the energy sector, blockchain technology may help in the trading of renewable energy certificates by promoting clean energy adoption [37]. In the finance sector, blockchain technology can ensure secured transactions and reduce the risk of fraud, promoting a sustainable financial system [46]. However, blockchain technology for sustainable performance also has challenges for implementation. For it to be accepted and used globally, scalability, interoperability, and energy consumption issues must be addressed [47]. Furthermore, privacy and data security concerns should be addressed carefully [29]. Despite these challenges, blockchain technology contains huge potential for improving sustainability and enhancing organizational performance [57]. As research and development continue, there is always a possibility of more innovation and implication of blockchain technology that will bring positive change in human life through the way we produce, consume, and conduct business [50].

Blockchain drives sustainable performance by offering strong tools for tracking and verifying ESG metrics. Organizations can use blockchain to record energy usage, emissions, and waste data in real-time, ensuring transparency in sustainability reporting. This data can be securely shared with stakeholders, including regulators and investors, to validate performance claims. Blockchain also facilitates circular economy models by enabling the tracking of resources throughout their lifecycle. By ensuring reliable and transparent performance data, blockchain helps organizations align with long-term sustainability objectives and improve accountability.

The promise of blockchain technology to transform sustainable finance by encouraging accountability and transparency is becoming more widely acknowledged. This trend is highlighted by studies such as those by Hui and Loang [43], who highlight the pivotal role of blockchain and AI in boosting green finance, particularly in the renewable energy sector. However, challenges persist, including regulatory hurdles, technological limitations, and issues of digital access, which must be addressed to ensure scalable and practical implementation. Similarly, Kazachenok et al. [29] discuss the enhancement of green bond issuance through blockchain, which offers benefits like traceability and auditability but also faces significant regulatory and infrastructure challenges.

The adoption of blockchain in sustainable finance is also marked by efforts to improve ESG practices. Oncioiu et al. [16] note that ESG disclosure, facilitated by blockchain, significantly boosts financial transparency and governance, ultimately enhancing Return on Assets (ROA) and promoting sustainable practices. Nevertheless, the need for legislative harmonization remains a critical barrier to effective reporting and adoption across different jurisdictions. In developing regions such as Asia and Africa, the progress in sustainable finance initiatives is promising, as highlighted by Muhammad et al. [51]. These regions present opportunities for global collaboration and knowledge exchange, which could further drive the adoption of blockchain in promoting sustainability. However, the implementation of blockchain in these regions also highlights the importance of addressing local challenges, such as infrastructure and regulatory readiness, to fully harness the technology's potential.

Blockchain technology holds significant potential for socio-economic, environmental, and governance improvements, particularly in enhancing transparency and reducing inefficiencies. Jimoh et al. [45] demonstrate how blockchain can improve transparency and efficiency in Nigerian industries, suggesting that its careful application in government sectors could resolve longstanding trust issues through smart contracts. This aligns with findings from Rathore [37], who discusses blockchain's role in enhancing marketing transparency and efficiency, albeit with a call for ongoing research to maximize its potential in various sectors. Environmental implications are also a key area of interest. For instance, Chen [44] highlights blockchain's role in enhancing accountability in carbon markets, which is crucial for rapid decarbonization efforts. Similarly, previous studies [15], [52] discuss the potential of blockchain in democratizing green finance and improving cybersecurity, respectively, although they also acknowledge the challenges related to regulatory frameworks and the complexity of blockchain integration. Governance implications are another critical aspect. Lafarre and Van der Elst [47] examine how blockchain can enhance the efficiency of Annual General Meetings (AGMs) by lowering costs and speeding up decision-making processes. However, this raises legal questions about the coexistence of physical and blockchain-based AGMs, highlighting the need for further exploration of governance frameworks that can accommodate both models.

To facilitate the effective integration of blockchain technology into sustainable finance initiatives, several recommendations can be drawn from the literature. Policymakers should prioritize the development of regulatory frameworks that support blockchain adoption while addressing issues of privacy, security, and interoperability, as emphasized by Sedlmeir et al. [7] and Salah et al. [56]. Furthermore, cross-field collaboration, as suggested by Chen [44], is essential for leveraging blockchain's potential in addressing climate challenges and achieving rapid decarbonization. Practitioners, particularly in the finance and energy sectors, should focus on building scalable and practical blockchain applications that enhance transparency and efficiency. This requires overcoming technological hurdles and fostering partnerships, as noted by Hui and Loang [43] and Jimoh et al. [45]. Additionally, it is essential for continuous investigation to address the ongoing challenges related to smart contracts and data integrity, as highlighted by Rathore [37] and Javaid et al. [53]. Researchers are encouraged to explore the socio-economic, environmental, and governance implications of blockchain further, particularly in developing regions where the technology's impact can be transformative. Muhammad et al. [51] and Kazachenok et al. [29] suggest that future research should focus on the scalability of blockchain solutions and the creation of practical use cases that can be empirically tested. Moreover, interdisciplinary research that bridges technology, finance, and environmental studies could provide valuable insights into the holistic impact of blockchain in sustainable finance.

Blockchain technology has emerged as a transformative tool in sustainable finance, offering significant potential to enhance transparency and accountability. The findings from various studies indicate that blockchain's decentralized and immutable nature improves the traceability and verification of financial transactions, which is crucial for sustainable finance initiatives. Blockchain enables efficient carbon market management, green bond issuance, and ESG disclosures, all of which are vital components of sustainable finance. Furthermore, blockchain's influence is increased by integrating it with other technologies like AI and IoT, which improve data security, integrity, and operational effectiveness.

Despite its potential, the adoption of blockchain in sustainable finance faces several challenges. Regulatory hurdles, technological complexities, and the need for cross-sector collaboration are recurring themes across the literature. The success of blockchain in this domain hinges on addressing these challenges, particularly through the harmonization of legislative frameworks and the development of practical use cases that can demonstrate its value in real-world applications. The socio-economic, environmental, and governance implications of blockchain-based financial innovations are profound. Blockchain can democratize access to finance, support climate governance, and improve corporate governance by fostering greater transparency and accountability. However, these benefits must be balanced against the risks of reinforcing existing power dynamics or exacerbating inequalities if the technology is not implemented thoughtfully.

The study explores blockchain technology's potential in sustainable finance, emphasizing its ability to enhance transparency and accountability in operations like carbon credit trading and ESG reporting (Appendix Table A). It highlights the need for financial institutions to invest in infrastructure, training, and cross-sector collaboration to address scalability and interoperability challenges. Policymakers must develop harmonized regulations and standards to facilitate blockchain integration while mitigating risks like data privacy concerns. Academic research is vital for assessing blockchain’s real-world impact and addressing ethical implications. Interdisciplinary studies and updated curricula are crucial for preparing professionals to leverage blockchain for achieving SDGs.