Building Legitimacy at the Fringes: A Qualitative Investigation of Renewable Energy Crowdfunding platforms

The significance of sustainability has proliferated across virtually every industry, including finance. The mobilisation of finance in order to meet the UN’s Sustainable Development Goals and bridge the financing gap towards green energy projects has resulted in an increase in investment products and instruments geared towards financing green projects, companies, and technologies that contribute to the fight against climate change. However, the higher transaction and lengthy processes associated with traditional finance systems has placed financial technologies (FinTech) in a significant role in mobilising finance for renewable energy projects. FinTech applications in green finance such as the implementation of robot advisors, blockchain technology, and crowdfunding platforms tend to operate on reduced cost, greater speed, fewer information asymmetries, and their operations conducted almost entirely through the Internet make them widely accessible to retail investors. A prominent marriage of Fintech and green finance is crowdfunding, as it enables sustainable entrepreneurs greater access to resources and financing, and consumers an opportunity to invest in sustainable projects with as little as €20. Green crowdfunding platforms present a fruitful avenue to get citizens involved in the energy transition, and to build lasting support for renewable energy projects. However, in spite of increased support by policymakers and significant contributions to financing various types of renewable energy, renewable energy crowdfunding platforms have remained niche and are met with various apprehensions on the consumers (or investor) side due to high risk and lack of transparency. Using institutional legitimacy theory as a theoretical lens, this thesis investigates the perceived barriers to building legitimacy across leading renewable energy crowdfunding platforms in the European and American market. Due to the nature of the investigated organisations, this research takes on a qualitative mixed method study to encapsulate the investor facing content with deeper insights from the platform management. In the first part, using a theoretically-informed qualitative content analysis of investor-facing communication, strategies surrounding communicating success factors through qualitative over quantitative methods emerged as prominent, coupled with frame-aligning and value-based rhetoric addressing the investor. These findings align with existing research surrounding the intricacies and difficult of framing impact investment from a marketing perspective, specifically the quantification of such a product. Informed by supplementary findings from interviews with the people behind the platforms themselves, barriers such as consumer perception of impact investment, the notion of crowdfunding, and the business model itself were revealed as perceived barriers to building legitimacy, often times tied to regulatory requirements. This study contributes to the investigation of legitimacy tied to sustainable crowdfunding and sheds further light on the challenges of defining of impact investment in an increasingly transformative financial environment.