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The transition towards a sustainable, low-carbon and resource-efficient global economy will require huge amounts of investments, and private finance is increasingly singled out as the solution. But in contrast to the increased reliance on finance to solve the climate crisis stands a number of deep-seated challenges in the so-called ‘sustainable finance’ system, where short-term investment horizons and poor sustainability reporting continue to prevent the effective allocation of private assets to green projects. In response, the EU Taxonomy was adopted on 18 June 2020 as the world’s first official system to define and classify a list of green investments. By creating a common reporting language for companies, investors and consumers, the tool is designed to increase transparency, protect against greenwashing, and steer capital to sustainable activities. The so-called ‘gold standard’ for sustainable investments has been given key role in improving practices on the continent and is already influencing the development of similar standards around the world. This highlights that, what Europe decides to label as ‘green’ has consequences way beyond its borders and can establish long-lasting path dependencies in the global governance of finance and sustainability. In this thesis, I explore the Taxonomy’s potential for changing norms for sustainable finance. With climate change governance as point of departure, I assess the strengths and weaknesses of the Taxonomy against five normative institutional strategies. I pay particular attention to how the tool’s normative standing was affected by the Complementary Climate Delegated Act (CDA), which defined gas and nuclear power as ‘green’ under the Taxonomy framework. The case study is explored through qualitative methods, by means of document analysis and 13 interviews with expert representatives from key stakeholder groups to the Taxonomy. I argue that, by establishing a common language and reporting methodology, the Taxonomy held initial promise in terms of promoting discursive shifts, defining and promoting norm-related identities, mobilising pride and shame, mobilising transnational networks and shifting forums. Its status as the ‘gold standard’ was severely hampered by the CDA however, which triggered powerful acts of de-legitimation by key stakeholders against what has been termed the single biggest act of greenwashing in history. The Act left the normative potential of the Taxonomy severely reduced, limiting its normative potential to the promotion of ‘weak’ rather than a ‘strong’ form of sustainability and alienated climate scientists and civil society along the way. Its primary road to influence now depends on its ability to ratchet up climate ambition and win back legitimacy over time, whereby a norm for truly sustainable investing might gain ground.

As part of the effort at making a climate neutral economy, the EU has developed a sustainable finance taxonomy to steer capital flows towards sustainable activities, connecting financial and environmental elements of sustainability in a new way. Here we study how the taxonomy regulation, affects the field of construction. The research builds on institutional theory and empirical material from interviews and annual reports. This is done to establish a broad understanding of the field structure, and how the organisations in the field respond. The taxonomy presents new challenges and barriers. It is concluded that even though the purpose of the regulation is to motivate companies to document their sustainable activities and develop more sustainable businesses, the company responses have so far been diverse, to some extent reluctant and for some even evasive. The taxonomy will change notions of sustainability, but it is likely that it will enter a heterogeneous rather than a uniform direction. As part of the effort at making a climate neutral economy, the EU has developed a sustainable finance taxonomy to steer capital flows towards sustainable activities, connecting financial and environmental elements of sustainability in a new way. Here we study how the taxonomy regulation, affects the field of construction. The research builds on institutional theory and empirical material from interviews and annual reports. This is done to establish a broad understanding of the field structure, and how the organisations in the field respond. The taxonomy presents new challenges and barriers. It is concluded that even though the purpose of the regulation is to motivate companies to document their sustainable activities and develop more sustainable businesses, the company responses have so far been diverse, to some extent reluctant and for some even evasive. The taxonomy will change notions of sustainability, but it is likely that it will enter a heterogeneous rather than a uniform direction.

We aim to study how retail investors scrutinize sustainability information on EU Eco-label for financial products and adjust their investment decisions when information about the label and sustainability shares is altered or framed differently. To do so, we will be employing discrete choice experiment methodology within an online survey. Research Questions: 1. What is the overall preference of an average retail investor for a fund being compatible with EU taxonomy regulatory standards? 2. How does additional information on the EU taxonomy regulation, indicating standardized ESG-compatibility standards, affect retail investor preferences? (emphasis frame / saliency treatment) 3. How do different ways of information transmission (i.e., EU label vs. specific information on the “sustainability share” of the investment product) affect investor preferences for these attributes and do people differentiate between sustainability signals even if they convey qualitatively identical information? (equivalence frame) 4. Additionally: Do socioeconomic background, experience with financial investments and stated sustainability attitudes affect investor’s preferences for the EU taxonomy compatibility given the different dimensions of information presented to them?

Purpose: The paper explains critical changes to investment funding occurred over the past fifteen years in the European Union and explores the added value that National Development Banks create for sustainable finance. The delivery of the European Green Deal and the recovery from the Covid-19 pandemic require an unprecedented scale of resources. The need to adopt a new sustainable investment approach and adjust the operation of the financial system has become inevitable. Existing research has underlined the role national development banks play in counter-cyclical measures and promotion of the government’s public policy goals. However, their standing in the sustainable finance landscape has enjoyed less attention so far. The paper, therefore, looks at how the remit of the Banks has evolved and assesses their progress and further development needs in relation to promoting sustainable finance. Design/Methodology/Approach: The research has followed a two-phase design. The first phase has included the examination of the operational setting of National Development Banks and their impact on overcoming market failures and improving access to finance. The second phase concentrated on drawing a comparison between the new regulatory requirements, in particular the European Green Deal, the EU Taxonomy Regulation and the functioning of the National Development Banks. The methodology has included a detailed literature review, desk research, data collection and re-assessment of earlier surveys, which has been used for prescriptive comparative analysis and cluster analysis. Findings: The paper concludes that National Development Banks, despite their common goals and mandates, demonstrate important variations in terms of government involvement in strategic direction and decision-making and the Banks’ actual contribution to national policy goals. The outcome confirms the hypothesis that recent changes to the EU strategic and regulatory framework only require minor amendments to the direction of NDB investments. Their original setup and objectives are already in accordance with the new expectations and they invest mostly in economic sectors that the new taxonomy system classifies as sustainable. Practical Implications/ Originality/Value: This is important for the scholarly discourse on the essential conditions for sustainable finance. Meanwhile, the results provide usable guidance for development banks/funding agencies in Europe, too. The paper offers a solid ground for continued explorations of the European financial sector, whereas the recently adopted Digital Finance Package could further widen the agenda of the research direction. Prispevek pojasnjuje ključne spremembe financiranja naložb v Evropski uniji v zadnjih petnajstih letih in proučuje dodano vrednost nacionalnih razvojnih bank za trajnostno financiranje. Za izvajanje evropskega zelenega dogovora in okrevanje po pandemiji covida-19 so potrebna sredstva v doslej nepredstavljivem obsegu. Neizogibna je tudi potreba po sprejetju novega trajnostnega naložbenega pristopa in prilagoditvi delovanja finančnega sistema. Obstoječe raziskave poudarjajo vlogo nacionalnih razvojnih bank pri sprejemanju proticikličnih ukrepov in spodbujanju vladnih javnopolitičnih ciljev, vendar je bil njihov pomen za trajnostno financiranje doslej prezrt. Prispevek zato preučuje razvoj pristojnosti bank ter ocenjuje njihov napredek in nadaljnje potrebe v zvezi s spodbujanjem trajnostnega financiranja. Raziskava je potekala v dveh fazah. Prva faza je vključevala preučitev operativnega okolja nacionalnih razvojnih bank in njihovega vpliva na premagovanje tržnih pomanjkljivosti in izboljšanje dostopa do financiranja. Druga faza se je osredotočila na primerjavo med novimi regulativnimi zahtevami, zlasti evropskim zelenim dogovorom, uredbo EU o taksonomiji in delovanjem nacionalnih razvojnih bank. Uporabljena metodologija je vključevala podroben pregled literature, teoretične raziskave, zbiranje podatkov in pregled obstoječih raziskav, kar je bilo podlaga za primerjalno analizo in analizo po skupinah. Prispevek ugotavlja, da nacionalne razvojne banke kljub skupnim ciljem in pooblastilom izkazujejo pomembne razlike glede vključenosti vlade v strateško usmerjanje in odločanje ter dejanskega prispevka bank k ciljem nacionalne politike. Rezultat potrjuje hipotezo, da nedavne spremembe strateškega in regulativnega okvira EU zahtevajo le manjše spremembe pri usmerjanju naložb nacionalnih razvojnih bank. Njihova prvotna zasnova in cilji so že v skladu z novimi pričakovanji, vlagajo pa predvsem v gospodarske sektorje, ki jih nova taksonomija uvršča med trajnostne. Navedeno je pomembno za znanstveni diskurz o bistvenih pogojih za trajnostno financiranje, obenem pa rezultati zagotavljajo uporabne smernice za razvojne banke/finančne agencije v Evropi. Prispevek ponuja konkretno podlago za nadaljnje proučevanje evropskega finančnega sektorja, medtem ko bi lahko nedavno sprejeti sveženj o digitalnih financah raziskave še dodatno razširil.

The need for a quick and radical green transition gives a key role to the financial system as the main source to fund the change. This debate also involves the development of banking regulation tools able to serve the transition. Building on previous works, we propose a method to weight banks’ assets that combines conventional financial risks and environmental risks to calculate prudential capital requirements, and we apply it to the EU Taxonomy’s technical screening criteria to build an environmental risk indicator based on the buildings’ energy consumptions. We show how to calculate the tool endogenously for the taxonomy sections related to buildings (new construction, purchase of building, renovation), thus proving its immediate enforceability, using data from the Lombardy’s housing stocks. Finally, we conduct a stress test for the Italian banking system showing that our proposal would be an effective incentive for the banks to fund the green transition of the construction sector. Disclaimer: The views expressed are those of the authors and do not involve the responsibility of the Bank of Italy or RSE.

We develop the first top-down method to estimate the greenness of financial portfolios, in terms of alignment to the EU Taxonomy for sustainable activities. We also develop a method to estimate, at the same time, the portfolio exposure to climate transition risk. We provide sector-level, standardized and transparent coefficients for both estimates, based on definitions of greenness and transition risk that are applicable across countries. We analyse the portfolios of Euro Area investors in 2020, based on the confidential Securities Holdings Statistics of the European Central Bank. We find that, overall, the greenness of Euro Area investors' portfolios is lower than their exposure to transition risk (1.3% vs. 5.5%). Across financial institutions, we estimate greenness and exposure to transition risk, respectively, at 1.4% and 6.1% for investment funds, at 0.3% and 1.7% for banks and at 1.2% and 5.0% for insurers. Our analysis also shows that investors with large amounts invested in green activities can have at the same time large exposures to transition risk.

Die EU-Kommission möchte mit unterschiedlichen regulatorischen Maßnahmen privates Kapital für die Nachhaltigkeitstransformation der Wirtschaft mobilisieren. Ziel der Studie ist es, die Auswirkungen dieser regulatorischen Entwicklung auf die mittelständische Wirtschaft zu untersuchen. Neben den direkten Folgen wie z.B. neue Berichtspflichten werden die indirekten Folgen für mittelständische Unternehmen wie beispielsweise neue Informationsbedarfe von Kunden und Finanzpartnern untersucht. The EU Commission seeks to mobilize private funds for the sustainability transformation of the European economy through several regulatory measures. This study investigates the impact of this regulatory development on the German Mittelstand, i.e., owner-managed companies. Apart from direct effects, such as new reporting obligations, we investigate indirect effects, such as new informational needs of business customers and financial partners.

Mit den Sustainable Development Goals und dem Pariser Klimaschutzabkommen hat sich die Politik international auf gemeinsame Nachhaltigkeitsziele, besonders auf die Begrenzung der globalen Erderwärmung bis 2030 auf deutlich unter 2°C gegenüber dem vorindustriellen Wert, geeinigt, woraufhin auch die EU eine nachhaltige Entwicklung auf europäischer Ebene bestrebt. Mit dem Sustainable Action Plan, dem Green Deal, der EU- Offenlegungsverordnung und EU-Taxonomie werden eine klimaneutrale sowie ressourcenschonende Wirtschaft verfolgt und entsprechende Maßnahmen gesetzt. Diese betreffen u.a. die Immobilienwirtschaft – darunter die Planung und Projektentwicklung – auf welche nahezu 40% der CO2-Emissionen zurückzuführen sind, weshalb sie einen wesentlichen Wirtschaftssektor zur Erreichung der Klimaziele bildet. Das Forschungsziel der gegenständlichen Masterarbeit ist es, die Auswirkungen des Green Deals, der EU-Offenlegungsverordnung und der EU-Taxonomie der EU auf die Projektentwicklung und Planung von Neubauten darzulegen. Zu diesem Zweck werden mithilfe einer wissenschaftlichen Literaturanalyse zunächst die Grundlagen ermittelt. Ergänzend zu dieser theoretischen Diskussion wird eine qualitative empirische Forschung durch leitfadengestützte ExpertInneninterviews durchgeführt, um die aus der Literaturanalyse erhobenen Auswirkungen mit Praxiserfahrungen zu komplementieren. Die Untersuchungsergebnisse zeigen, dass bei der Planung und Projektentwicklung von Neubauten einige Anforderungen der technischen Bewertungskriterien der EU-Taxonomie sowohl bautechnische Maßnahmen als auch Berechnungen und Analysen erfordern, welche den Standard übersteigen, Mehrleistungen sind und/oder aufgrund mangelnder Daten und Marktentwicklungen nicht durchgeführt werden können. Entsprechend den erforderlichen Mehrleistungen einer EU-taxonomiekonformen Planung sind Veränderungen im Leistungsbild von ArchitektInnen wahrzunehmen, wodurch das Erfordernis einer Anpassung von diesem sowie der Honorare besteht. Bei der Finanzierung von Immobilienprojekten, welche keine EU-Taxonomiekonformität nachweisen können, wird künftig ein erschwerter Zugang zu Finanzierungen erwartet. Darüber hinaus ändert das Ziel eines Neubaus mit EU-Taxonomiekonformität besonders die Planungsmethode und den Planungsprozess, da die Nutzung digitaler Tools und eine integrale Fachplanung als notwendig gesehen werden, um alle erforderlichen Bestandteile der technischen Bewertungskriterien zu berücksichtigen. With the Sustainable Development Goals and the Paris Agreement on Climate Change, international policymakers have agreed on common sustainability goals, especially limiting global warming to well below 2°C in comparison to pre-industrial levels by 2030, upon which the EU is striving for a sustainable development at European level as well. With the Sustainable Action Plan, the Green Deal, the Sustainable Finance Disclosure Regulation and EU Taxonomy, a climate-neutral as well as a resource-efficient economy are pursued whilst corresponding measures are set. These measures pertain to the real estate industry, including planning and project development, which accounts for almost 40% of CO2 emissions. Therefore, it is an essential economic sector for achieving the climate targets. The research objective of this master thesis is to display the impact of the Green Deal, the EU Disclosure Regulation and the EU Taxonomy on project development and planning of new buildings. For this purpose, the fundamental knowledge is determined by a scientific literature analysis. In addition to the theoretical discussion, qualitative empirical research is conducted through guided expert interviews to complement the effects gathered from the literature analysis with practical experience. The results of this research show that in the planning and project development of new buildings, several requirements of the technical screening criteria of the EU taxonomy require structural measures and calculations as well as analyses that exceed the standards, are additional services and/or cannot be carried out due to a lack of data and market developments. According to the required additional services of an EU taxonomy compliant project, changes in the performance profile of architects are to be recognized, whereby the requirement of an adjustment of this as well as the fees exists. Financing real estate projects, which cannot prove any EU taxonomy compliance, are expected to be more difficult to access the financial fundings in the future. Furthermore, the objective of a new building with the EU taxonomy conformity changes the planning method and the planning process, since the use of digital tools and an integral specialized planning are becoming necessities to meet all required components of the technical screening criteria. Abweichender Titel laut Übersetzung der Verfasserin/des Verfassers Masterarbeit Wien, FH Campus Wien 2022

The EU Taxonomy seeks to identify those sustainable economic activities, thereby supporting climate change mitigation and adaptation. Recent legislation underpinning the EU Taxonomy, such as the Non-Financial Reporting Directive (NFRD) and the Sustainable Finance Disclosure Regulation (SFDR), highlight the urgency for academic contributions that might shed light on its operationalisation. At this embryonic stage in the Taxonomy’s lifecycle, there is potential for the academic community to contribute to understanding its implications. Hence, we undertake a thematic analysis of predominantly, but not exclusively, professional literature to prioritise potential empirical research or conceptualisations that might offer insights for finance and accounting professionals, regulators, policymakers, investors and businesses. Our literature search is limited to literature that makes explicit reference to the Taxonomy between 2018 and 2021. We find that little is understood on how investors or businesses intend to disclose against the taxonomy or on the challenges associated with disclosure. With sustainable finance emerging in Ireland, we propose an exploratory study of this sector’s readiness to operationalise the taxonomy and offer a conceptual framework based on co-evolution theory (Foxon, 2011) bounded by three initial conditions: [1] skills and capability and [2] access to ESG data and [3] regulatory alignment.

The article provides an overview of the most important current EU initiatives contributing to sustainable finance. After an introduction on how the concept of sustainability entered the domain of European policy, the definition of sustainable finance from the EU perspective is discussed, as well as its relationship to the concept of green finance. After outlining the need for sustainable finance to achieve EU and international policy goals, the article provides a discussion of sustainable finance from a theoretical perspective, taking into account already existing perspectives from literature. A brief overview is given of what the EU could theoretically do to foster sustainable finance. The article then proceeds with an overview of the most important existing EU initiatives to foster sustainable finance: the Action Plan on financing sustainable growth adopted in March 2018, the EU Emissions Trading System and EU financial support contributing to sustainable finance. Finally, the article provides a discussion of the challenges and political implications of current sustainable finance policies for the EU, followed by conclusions. Der Artikel gibt einen Überblick über die wichtigsten aktuellen EU-Initiativen, die zu einer nachhaltigen Finanzierung beitragen. Nach einer Einführung in der Frage, wie das Konzept der Nachhaltigkeit in die europäische Politik aufgenommen wurde, wird die Definition des Begriffs „nachhaltige Finanzierung“ aus der EU-Perspektive sowie dessen Zusammenhang mit dem Konzept der „grünen Finanzierung“ erörtert. Weiterhin wird dargelegt, warum ein nachhaltiges Finanzwesens notwendig ist, um die klima- und umweltpolitischen Ziele der EU und der internationalen Gemeinschaft zu erreichen. Der Artikel beinhaltet eine Debatte über nachhaltige Finanzierung aus theoretischer Sicht, wobei bereits bestehende Sichtweisen aus der Literatur berücksichtigt werden. Es wird ein kurzer Überblick darüber gegeben, was die EU theoretisch tun könnte, um nachhaltige Finanzierung zu fördern. Anschließend wird ein Überblick über die wichtigsten bestehenden EU-Initiativen zur Förderung eines nachhaltigen Finanzwesens gegeben: der im März 2018 angenommene Aktionsplan zur Finanzierung nachhaltigen Wachstums, das EU-Emissionshandelssystem und die finanzielle Unterstützung durch die EU, die zu einer nachhaltigen Finanzierung beitragen. Schließlich beinhaltet der Artikel eine Diskussion über die Herausforderungen und die politischen Auswirkungen der derzeitigen Politik für nachhaltige Finanzierung in der EU, gefolgt von Schlussfolgerungen.

Our work consists in an exploration of the integration of sustainability in the financial sphere, with a particular focus on capital markets and its actors, centered on the following research question : “are financial markets putting a price on the positive sustainable and environmental performance of firms?”. Our research is carried out within the theoretical framework of asset pricing, which is currently at the crossroads of two major revolutions. On the one hand is the sustainability revolution, which brings a challenge to these actors in the form of a massive global systemic risk which can only be compared in its possible global impact to the threat once posed by weapons of mass destruction. As financial actors are starting to understand the economic threats – amongst others – that represent climate action failure, biodiversity loss, extreme weather events and environmental disasters, financial markets will inevitably change. The five essays in this PhD dissertation represent an attempt, using the most reliable data at hand, to start understanding how these financial markets could be evolving. On the other is the data revolution bringing both massive and constant flows of new forms of data to financial market actors, which are dealt with through constant improvements in computational power and the corresponding highly demanding statistical and machine learning methods needed to analyze these continuously growing datasets. The first step of our work consists in exploring how practitioners, academics and regulators are trying to define what constitutes sustainable finance and allows us to understand how consensus on this central issue has still not been reached to date. In a second step, we then look at climate-aligned firms – companies that originate more than 75% of their turnover from climate-aligned activities – and analyze how capital markets have been financing both traditional and climate-aligned US and EU firms in the last decades. This analysis allows us to understand that corporate bond markets have a much larger role to play in financing these firms than stock markets. In a third step, we then choose to focus our attention on corporate bond markets and on the very specific challenge of building reliable financial datasets on traditional corporate bonds, green corporate bonds and bonds that are issued by climate-aligned firms. In a fourth step, using this detailed data treatment procedure, we apply traditional asset pricing methodologies to a dataset of both traditional bonds and climate bonds going from 2005 to 2019, finding some differences between these two products. Finally, our last step constitutes an attempt to understand, with these same datasets, how newly developed factors and machine learning methods could also be used to price corporate bonds and to differentiate traditional bonds from climate bonds., Notre travail consiste à étudier l’intégration des problématiques de développement durable dans la sphère financière en se focalisant principalement sur les marchés de capitaux et leurs acteurs et en se posant la question de recherche suivante : « est-ce que les marchés financiers mettent un prix sur les performances responsables et environnementales des entreprises ? ». Notre recherche est effectuée dans le cadre théorique de l’évaluation des actifs financiers, cadre théorique qui fait actuellement face à deux révolutions majeures. D’une part, la révolution « durable », qui pose une problématique nouvelle aux acteurs financiers sous la forme d’un risque systémique global qui ne peut être comparé dans son impact potentiel qu’à la menace que représentait les armes de destruction massives. Alors que les acteurs financiers commencent à comprendre le risque économique - entre autres – que représenterait un échec à atténuer le changement climatique, la perte de biodiversité, les évènements climatiques extrêmes et les catastrophes naturelles correspondantes, les marchés financiers vont inévitablement changer. Les cinq essais de cette thèse doctorale représentent une tentative, en utilisant les données les plus fiables disponibles aujourd’hui, de comprendre comment ces marchés financiers peuvent être en train d’évoluer. De l’autre, la révolution des données apportant des flux massifs et constants de nouvelles formes de données aux acteurs des marchés financiers, traitées à l’aide d’ordinateurs dont la puissance augmente constamment ainsi que de nouvelles méthode très exigeantes de traitement statistiques et de machine learning avancées nécessaires à l’analyse de ces bases de données grandissantes. La première étape de notre travail consiste à explorer comment les praticiens, les académiques et les régulateurs essaient de définir ce que constitue la finance responsable et nous permet de comprendre qu’un consensus sur ce sujet n’a toujours pas été atteint à ce jour. Dans une seconde étape, nous observons les entreprises climatiques – ces entreprises dont 75% du chiffre d’affaire provient d’activités alignées avec les objectifs climatiques de la conférence de Paris – et analysons comment les marchés de capitaux financent les entreprises traditionnelles et climatiques aux Etats-Unis et en Europe sur les dernières décennies. Cette analyse nous permet de comprendre que les marchés obligataires ont un rôle plus important de financement pour ces entreprises que les marchés des actions. Dans une troisième étape, nous choisissons de nous concentrer sur le marché des obligations d’entreprise et sur la problématique spécifique de construire une base de données financière fiable sur les données des obligations d’entreprise américaines, sur les obligations vertes et les obligations climatiques. Une quatrième étape consiste, en utilisant cette base de données, à appliquer les méthodes d’évaluation d’actifs classiques sur une base de données d’obligations d’entreprise traditionnelles et climatiques entre 2005 et 2019, et nous trouvons certaines différences entre ces deux produits. Finalement, une dernière étape consiste en une tentative de comprendre, en utilisant cette même base de données, comment de nouveaux facteurs et de nouvelles méthodes d’analyse de machine learning peuvent également être utilisés afin de mieux expliquer et de prédire le rendement des obligations d’entreprises et différencier les obligations d’entreprise traditionnelles et climatiques.

The demand for digital financial services has risen significantly over recent years. The COVID-19 pandemic has accelerated this trend and since the focus has shifted towards economic recovery, digital lending has become central. Digital credit products exploit traditional and alternative financial and non-financial data to provide access to finance for households and micro, small and medium enterprises (MSMEs). While it makes lending more inclusive for underserved or unserved households and firms, its increasing influence also brings forth challenges that need to be addressed by policy-makers and regulators in order to guarantee well-functioning credit markets and broader financial systems that foster sustainable economic development. A central concern is the adverse effect of digital lending on the stability and integrity of credit markets (and potentially the wider financial systems). The rise in non-performing loans, even before the COVID-19 crisis, has been associated with an increase in digital credits. New players with little experience enter the market and exploit regulatory arbitrage, but often these players have no (or only a partial) obligation to report to respective systems for sharing credit information or to supervisory bodies, which introduces severe vulnerabilities. In addition, the low entry threshold of digital financial products, due to their convenience and simplicity for customers, provides fertile ground for exploitative financialisation. Underserved households and MSMEs with limited financial literacy may be lured into taking up unsuitable and unaffordable digital credits, leading to over-indebtedness and bankruptcy. The last challenge arises from significantly shorter loan maturities in MSME lending if current forms of digital lending are scaled up. This is problematic, as firms need loans with longer maturities to realise productivity-enhancing medium- and long-term investments, many of which include complementary investments in labour, thereby contributing to an improvement in job quality. Governments and regulators need to strike a balance between leveraging the potential of digital lending for inclusive finance and economic recovery from the COVID-19 crisis, and mitigating associated risks. In particular, they should, together with providers of technical and financial development cooperation, consider the following: - Fostering the integrity of (digital) credit markets. Regulators should establish specific licenses and regulations for all digital financial service providers, and introduce obligatory reporting requirements to supervisory bodies and national systems for sharing credit information. - Preventing exploitative financialisation. Regulators need to require digital lenders to present the costs and risks of their loan products in a manner comprehensible to consumers with little financial literacy, and extend consumer protection policies to digital financial services. - Ensuring availability of loans with longer maturities. Development finance institutions and other national and international promoters of (M)SMEs should assist local banks in the provision of longer-term loans, e.g. by offering respective funds or partial credit guarantees. - Establishing regulatory sandboxes. Regulators should launch regulatory sandboxes to test legislation in a closed setting and to learn about risks without hindering innovation., Briefing Paper

This research analyzes the motives and future of the Nordic green bond market from an underwriter perspective. Threefold motives for being active in the Nordic green bond market are found. There are monetary gains, corporate social responsibility, and an opportunity to receive and maintain legitimacy. Several important factors for the future of the Nordic green bond market are identified. The EU Taxonomy will have a major impact on this market, and is the most important factor for the future of it. Further, sustainability-linked bonds enable the transition of various sectors towards sustainability and are an important factor for the development of the Nordic bond market in general. Experts that possess roles within green bond underwriting and green bond investing have been interviewed. Stakeholder theory, corporate social responsibility and legitimacy theory have been implemented in this research with the aim of analyzing the motives and future of the Nordic green bond market. By doing that, this research contributes to a broader theoretical discussion in the area of sustainable finance.

The market for social financial instruments is rapidly growing. The issuance of social bonds, for instance, reached $149.4 billion in 2020, showing an extraordinary growth of 720% compared to 2019 (ADB, 2021, p. 14). By providing capital for certain types of investments associated with positive social impacts, these instruments are intended to close funding gaps that hamper the realisation of social goals, as laid down, for instance, in the 2030 Agenda for Sustainable Development. In addition, social finance might set incentives for enterprises to engage in more sustainable business models that would give them access to social financial instruments potentially associated with a lower cost of capital. However, the magnitude of the potential contribution to society of social finance is a matter of debate. This paper focuses on an important challenge for social finance that concerns the plurality of existing definitions of social investments. The paper provides an overview of the definitions followed by market participants, describes the EU taxonomy for sustainable activities as a potential standard in this context, and discusses implications for development policy., Discussion Paper

The EU Taxonomy is a new regulation produced to set a European standard for sustainable investments and to allocate capital for a sustainable transition. The Taxonomy aims to regulate several sectors, one of which is the real estate sector. Due to it functioning as a classification system, the EU Taxonomy will play an essential role for companies seeking financing. This thesis explores how Swedish and Baltic real estate companies intend to work with sustainable finance given this new regulation. Semi-structured interviews were conducted with companies within the real estate sector and government agencies from Sweden and the Baltic countries, in order to get a holistic view of the situation in these regions. Through research it has been found that the EU Taxonomy will continue to encourage the work with sustainability for companies even though there are some uncertainties with the regulation as of now. Current financial instruments, such as green bonds, are likely to continue to be emitted but will probably be connected with the EU Taxonomy. New financial products will be developed with the help of the Taxonomy. There are however differences in attitudes and actions regarding sustainable financing in Sweden and the Baltics. Sweden has come further with green financing, but the interest is high in the Baltics and sustainable financing is likely to evolve in the region in the near future. The research finds that there is a concern that smaller companies will have difficulties to keep up the pace of sustainability given the Taxonomy, especially if they recently have begun their work with sustainability. Even though the EU Taxonomy has received criticism for not including green building certifications, the general attitude is positive in that the Taxonomy will imply a common and cross-border definition of the term “sustainability”. EU-taxonomin är ett nytt regelverk framtaget för att sätta en europeisk standard för hållbara investeringar och allokera kapital för en grön omställning. Taxonomin syftar till att reglera flera sektorer, varav fastighetssektorn är en av dem. Genom att fungera som ett klassificeringssystem så kommer EU-taxonomin att spela en central roll när företag ska finansiera sig. I denna uppsats undersöks hur svenska och baltiska fastighetsbolag kommer att arbeta med hållbar finansiering givet detta nya regelverk. Uppsatsen innehåller semistrukturerade intervjuer med fastighetsbolag och myndighetspersoner från Sverige och Baltikum för att få en överskådlig bild av situationen i nämnda regioner. Studien finner att EU-taxonomin kommer driva på hållbarhetsarbetet hos företag även om det initialt råder vissa oklarheter med regelverket. Befintliga finansiella instrument såsom gröna obligationer lär fortsätta emitteras men kommer troligtvis kopplas samman med EU-taxonomin. Nya finansiella produkter kommer att utvecklas med hjälp av taxonomin. Det finns emellertid skillnader när det kommer till hållbar finansiering mellan Sverige och Baltikum. Sverige har kommit längre vad gäller grön finansiering men intresset är högt i Baltikum och gröna finansieringslösningar lär växa i regionen inom en snar framtid. Undersökningen finner att det finns en oro för att företag av mindre storlek kommer att ha svårigheter att följa med på hållbarhetsresan i linje med taxonomin, särskilt om de nyligen påbörjat sitt hållbarhetsarbete. Trots att taxonomin har fått kritik för att inte inkludera miljöcertifieringar så är den sammantagna attityden positiv eftersom att EU-taxonomin kommer innebära en gemensam och gränsöverskridande definition av begreppet “hållbarhet”.

Insufficient ESG information has been identified as a barrier in the transition towards a climate-neutral economy. This topic recently gained new interest, with the EU Commission implementing an action plan to finance sustainable growth. For the first time, the EU Commission has introduced a taxonomy that classifies whether or not an economic activity is sustainable - a potentially substantial addition to the field of ESG reporting. Financial market participants are initially targeted by the demands of disclosing taxonomy alignment of all affected activities. Due to the significant mandate that financiers hold as intermediates, their perspective on ESG disclosure is key to sorting out the complexity of non-financial transparency. The purpose of this thesis is to identify financiers’ current challenges within ESG reporting, and to indicate how the EU taxonomy will impact this context. A qualitative study was carried out with an aim to gather the perspectives of Swedish banks that provide portfolio management. 20 interviews with industry professionals were held, in order to illuminate internal obstacles and viewpoints in the banks’ operative businesses. The empirical data was thematically analyzed and discussed in regard to the Swedish finance industry as a whole. The findings present that the current challenges with ESG reporting firstly lie in a lack of comparability and clarity in the disclosure process. Secondly, there are difficulties with integration due to the tensions that underlie the financial purposes of most businesses. Despite the fact that shorter-term challenges are expected to remain with the taxonomy, mainly in the form of access to data and communication, the taxonomy is generally received as a long-awaited common language. The taxonomy contributes with standardization and structure to this setting and shows promise of integrational effects due to its activity-centered focus. Although the satisfaction of information needs will not entail change in itself, it is deemed necessary to obtain transparency in order for a subsequent environmental transition to take place. Bristfällig ESG-information har identifierats som ett hinder i omställningen mot en klimatneutral ekonomi. Detta område har på sistone mötts av ett ökat intresse, i och med EU Kommissionens handlingsplan för att finansiera hållbar tillväxt. Mer specifikt introduceras för första gången en taxonomi, vilken klassificerar hur en ekonomisk aktivitet skall bedömas som hållbar - ett potentiellt signifikant tillägg till ESG-redovisning i stort. Initialt omfattas finansmarknadsaktörer av kraven att redovisa berörda aktiviteters överensstämmelse med taxonomins gränsvärden. I och med det betydande mandat som finansiärer innehar som intermediärer, är deras perspektiv på ESG redovisning mycket betydelsefullt i förståelsen av komplexiteten som kringligger icke-finansiell transparens. Syftet med denna studie är att identifiera finansiärers nuvarande utmaningar inom ESG redovisning, samt att indikera hur EU taxonomin kommer påverka dessa aktiviteter. En kvalitativ studie har genomförts med syftet att ansamla perspektiven av svenska banker som tillhandahåller portföljförvaltning. 20 intervjuer hölls med individer verksamma inom branschen, för att kunna identifiera interna hinder och synvinklar från bankernas operativa verksamhet. Den empiriska datan analyserades sedan tematiskt och diskuterades i förhållande till den svenska finansindustrin i stort. Resultaten visar att de nuvarande utmaningarna inom ESG-redovisning härleds dels till en brist på jämförbarhet och klarhet i redovisningsprocessen, och dels till svårigheter att integrera arbetet i och med intressekonflikter som underbygger de finansiella syftena av företag. Trots faktumet att vissa svårigheter på kortare sikt väntas kvarstå med införandet av taxonomin, framförallt inom datatillgång och kommunikation, så mottar branschen taxonomin som ett efterlängtat gemensamt språk. Taxonomin bidrar med standardisering och struktur till redovisningslandskapet, och dess aktivitetsfokus visar på lovande integrationsmässiga effekter. Tillfredsställandet av informationsbehov innebär visserligen inte någon förändring i sig, men upprättandet av förhöjd transparens ses som direkt nödvändigt för att möjliggöra en efterföljande transition mot mer hållbara industrier.

By developing a taxonomy for sustainable investments, the EU Commission has created the first standardized criteria for climate-friendly economic activities.To achieve the goal of climate neutrality by 2050, firms and investors must be well informed of which investments avoid greenhouse gas emis- sions and can thus be categorized as sustainable. The present report investigates to what extent the EU taxonomy achieves this goal. The study reaches the conclusion that the criteria are compatible with a path to climate neutrality in some economic sectors, such as the automotive sector. However, in others, such as the emission-intensive basic materials sector, the cri- teria are insufficient. Thresholds that are too low carry the risk of a carbon lock-in, the entrenchment of emission-intensive technologies and structures. Instead, the EU taxonomy should offer incentives for innovations in decarbonizing the economy. This can be achieved by setting different thresholds for new investments and existing assets, as the EU taxonomy already does in the buildings sector., DIW Weekly Report

Mit einer Taxonomie für nachhaltige Investitionen schafft die EU-Kommission erstmals einheitliche Kriterien für klimaverträgliche Wirtschaftsaktivitäten. Um das Ziel der Klimaneutralität bis 2050 zu erreichen, soll Unternehmen und Investoren damit Orientierung gegeben werden, welche Investitionen mit der Vermeidung von Treibhausgasemissionen im Einklang stehen und als nachhaltig eingestuft werden können. Der vorliegende Bericht untersucht, inwiefern die Taxonomie diesem Ziel gerecht wird. Die Studie kommt zu dem Ergebnis, dass die Kriterien zwar in einigen Wirtschaftszweigen wie dem Automobilsektor kompatibel mit einem Pfad zur Klimaneutralität sind. In anderen Bereichen, vor allem der emissionsintensiven Grundstoffindustrie, sind die Kriterien aber bisher nicht ausreichend. Zu schwache Schwellenwerte bergen die Gefahr eines „Carbon-Lock-In“, der Zementierung von emissionsintensiven Technologien und Strukturen. Stattdessen sollte die Taxonomie Anreize für Innovationen in die Dekarbonisierung der Wirtschaft bieten. Dies kann durch das Festlegen von unterschiedlichen Schwellenwerten für Neuinvestitionen und für die Bewertung bestehender Unternehmenswerte geschehen, wie es die Taxonomie im Bereich Gebäude bereits vorsieht, DIW Wochenbericht

Einer Schätzung der Europäischen Kommission zufolge, sind zur Erreichung der Pariser Klimaziele 180€ Milliarden jährlich zusätzlich notwendig, um die Entwicklung zu einer Zukunft ohne fossile Brennstoffe zu erreichen und den Klimawandel abzuschwächen. Green Bonds, deren Erlöse zweckgebunden zu Finanzierung ökologisch nachhaltiger Projekte sind, stellen ein immer häufiger genutztes Instrument dar, um diese zusätzlichen Milliarden zu finanzieren. Die Technische Expertengruppe für nachhaltige Finanzen hat einen EU Green Bond Standard erarbeitet, welcher das Marktwachstum durch Harmonisierung und Standardisierung fördern soll. Dieser Standard ist Diskussionsobjekt dieser Arbeit, unter zur Hilfenahme eines qualitativen Assessments zwischen bestehender Markpraxis und den vorgeschlagenen Änderungen, sowie praktischer Erkenntnisse aus der Anwendung des Sustainable Financing Framework der Oesterreichischen Kontrollbank und Aktiengesellschaft. According to an estimate by the European Commission, in order to achieve the ambitious but urgently needed goals set within the Paris Agreement, an additional annual funding of €180 billion is needed. Green Bonds, that have their proceeds bindingly invested in only environmentally sustainable projects, represent a more and more frequently used financial instrument to help financing these billions. But in order to grow and gain impact, a standardization of the diversifying Green Bond market is needed, that is why the Technical Expert Group on Sustainable Finance has worked on an EU Green Bond Standard. This standard will be discussed in this paper by using a qualitative assessment between existing market practice and the proposed standard, accompanied by practical insights from the application of OKB’s Sustainable Financing Framework.

The EU Taxonomy is the first standardised and comprehensive classification system for sustainable economic activities. It covers activities responsible for up to 80 percent of EU greenhouse gas emissions and may play an important role in channelling investments into low-carbon technologies by helping investors to make informed decisions. However, especially in transition sectors much depends on the stringency of the technical performance thresholds that the Taxonomy applies to economic activities that are not yet "green". This paper shows that for several sectors, the thresholds are not yet on track to support the transition towards climate neutrality. To this end, we analyse a large-scale public consultation with detailed responses to the specific thresholds from a variety of stakeholders. Two distinct use cases of the Taxonomy complicate the use of a single threshold for emission-intensive sectors: For new investments, criteria need to be stricter than for current activities of companies. We also argue that for the sectors not covered by the Taxonomy, there is a need to differentiate between low-emissions activities and high-emission activities that are incompatible with a low-carbon future.