The Impact of EU Regulations on the Financial Sector and Enterprises in the Context of Sustainability

The Impact of EU Regulations on the Financial Sector and Enterprises in the Context of Sustainability

Magdalena Zioło, Anna Spoz
Copyright: © 2023 |Pages: 22
DOI: 10.4018/978-1-6684-7620-8.ch003
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Abstract

Being aware of the advancing climate change, the European Union for several years has taken initiatives to promote the concept of sustainable development. Due to the scale and complexity of the activities carried out, this process, apart from public funds, requires the involvement of private capital. Therefore, it became necessary to develop and implement tools that support making investment decisions. To help investors choose the right projects and encourage them to allocate capital to more sustainable assets, the European Union takes steps to create a financial system that supports sustainable development. The EU established a legislative package on investors' and asset managers' disclosure of information on sustainable investments and sustainability risks, and the taxonomy. The purpose of the latter is, inter alia, providing clarity and a common understanding of what can be considered “sustainable” and fighting against the so-called greenwashing. The aim of this study is to analyze the impact of legal regulations on the activities of financial sector entities and enterprises.
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Sustainable Finance As A Tool For Implementing The Concept Of Sustainable Development

For several years, the European Union has been taking comprehensive actions aimed at implementing the concept of sustainable development and transition to a safe, climate-neutral, climate change-resistant and more resource-efficient economy. Funding is crucial to achieve these goals, and the financial sector can play a key role in channeling funds towards sustainable projects. Traditional finance, based solely on economic perspective, does not meet the needs of modern entities. Currently, business decisions should not only be based on the economic calculation of the project's profitability, but also take into account the interests of a wide range of stakeholders (owners, employees, business partners, regulators), and refer to social and environmental issues. This involves the development of the concept of sustainable finance, which considers environmental, social and governance (ESG) aspects when making investment decisions in the financial sector, leading to more long-term investments in sustainable economic activities and projects.

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