Regulating the Green Transition and Sustainable Finance in the European Union

53 Pages Posted: 13 May 2022

See all articles by Vasja Rant

Vasja Rant

School of Economics and Business, University of Ljubljana

Date Written: May 7, 2022

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 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, policy makers and research and may help shape international sustainability standards.

Keywords: sustainable finance, green transition, European Green Deal, EU taxonomy, sustainability disclosures

JEL Classification: G18, G28, Q01, K32

Suggested Citation

Rant, Vasja, Regulating the Green Transition and Sustainable Finance in the European Union (May 7, 2022). Available at SSRN: https://ssrn.com/abstract=4108232 or http://dx.doi.org/10.2139/ssrn.4108232

Vasja Rant (Contact Author)

School of Economics and Business, University of Ljubljana ( email )

Kardeljeva pl. 17
Ljubljana, 1000
Slovenia
+38615892740 (Phone)

HOME PAGE: http://www.ef.uni-lj.si/person/Vasja-Rant

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