Regulating Sustainable Finance and the Green Transition in the EU

Vasja Rant

Chapter 12 in Handbook of Environmental and Green Finance:Toward a Sustainable Future, 2024, pp 359-405 from World Scientific Publishing Co. Pte. Ltd.

Abstract: Sustainable finance developed according to market-based logic first, driven by risk and return considerations. However, rising social costs of sustainability problems and international sustainability commitments, particularly with respect to climate change, coupled with market failures of mainstream finance, point to a more regulated approach in the future. The European Union (EU) is at the forefront of these regulatory efforts. In the past few years, the EU developed a comprehensive sustainable finance framework in the context of a broader European Green Deal strategy. Its objective is to redirect private capital flows to finance the EU green transition using three building blocks: a science-based EU classification system (taxonomy) of sustainable economic activities, sustainability disclosure rules for non-financial and financial companies, and sustainability tools for designing financial products. Implementation of the EU sustainable finance framework will have substantial implications for the financial industry, policymakers, and research and may help shape international sustainability standards.

Keywords: Green and Impact Bonds; Green Banking and Financing; Green Finance in Europe; ESG Performance; Climate Change; Climate Justice; Green Mortgages; Sustainable Transition; Renewable Energies; Green Transition in The EU (search for similar items in EconPapers)
JEL-codes: Q01 Q5 Q56 (search for similar items in EconPapers)
Date: 2024
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