Sustainable finance, the good, the bad and the ugly: a critical assessment of the EU institutional framework for the green transition

Lorenzo Esposito, Ettore Giuseppe Gatti () and Giuseppe Mastromatteo
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Ettore Giuseppe Gatti: DISCE, Università Cattolica

No dipe0004, DISCE - Working Papers del Dipartimento di Politica Economica from Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE)

Abstract: The transition to a green economy is arguably the most important economic transformation of the next decades. To be completed it requires the mobilization of astounding resources, a flow of technological innovation and a whole series of new rules going from technical standards to financial regulation. Given the resources it needs, the transition, to be credible, requires a full engagement of the financial system. On this regard we analyze the policy set-up of Europe, the most advanced area on the issue. We identify a three-layer functioning of the EU project for transition. The first one (“green products”) is fully compatible with the present financial system. A second layer entails changes in the business model and organization of financial operators but it can be phased in with minor overhauls. Finally, there is a third layer, largely incompatible with the present financial system, yet crucial to achieve transition. We show that, according to the same EU analysis, the transition needs a total change in the financial landscape and therefore it is, rebus sic stantibus, intrinsically unfeasible. We suggest ways to escape the dilemma that connects financial stability and green economy.

Keywords: climate change; sustainable finance; EU (search for similar items in EconPapers)
JEL-codes: G28 Q54 (search for similar items in EconPapers)
Pages: 38
Date: 2019-02
New Economics Papers: this item is included in nep-ene, nep-env and nep-knm
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Citations: View citations in EconPapers (5)

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