Sustainable Finance, the Good, the Bad and the Ugly: A Critical Assessment of the EU Institutional Framework for the Green Transition
Quaderni del Dipartimento di Politica Economica Università Cattolica del Sacro Cuore Milano, 2019
Posted: 29 May 2019
Date Written: February 1, 2019
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
JEL Classification: G28, Q54
Suggested Citation: Suggested Citation