THE CHANGING NATURE OF FINANCIAL REGULATION: SUSTAINABLE FINANCE AS A NEW EU POLICY OBJECTIVE

Abstract

In light of the myriad new measures implementing the Commission's Sustainable Finance Action Plan, this article examines whether sustainable finance can be considered an autonomous objective of financial regulation, and how this objective should be positioned relative to the traditional objectives of financial regulation: stability, market integrity, and consumer protection. Having assessed the measures that weave sustainable finance into the financial rulebook, the article finds that sustainable finance is not an autonomous objective of financial regulation yet, but that it has the potential to become one in the future, and that in case of a conflict between sustainable finance and the traditional objectives of financial regulation, the former should give way to the latter. The article concludes by identifying a novel trend. Pending stricter environmental, social and governance regulation, financial regulation has been instrumentalized to advance sustainable development by nudging companies to apply higher environmental, social and governance standards than legally required.