The centrality of law for EU sustainable finance markets: Outlining a research agenda

Abstract

This article discusses how law shapes sustainable finance market creation in the European Union (EU). Although markets for environmental, social and governance (ESG) oriented investments have continued to grow, a gap has persisted between fund popularity and real-world impact. The EU has sought to address this through common legal standards for sustainable economic activities. However, there has been limited empirical examination of how industry applies these new measures and how they facilitate further market development. The article seeks to address this by proposing a research agenda for the examination of sustainable finance legislation through a ‘law as constitutive’ lens. The approach argues for an empirical inquiry that recognises the political and social conditions of market development, explored through interviews with market participants focusing on their experiences of legislation. The article explains how a ‘law as constitutive’ framing best suits the EU context when exploring the potential and limitations of the current policy approach.