Analyzing the role of regulation in shaping private finance for sustainability in the European Union

Abstract

This paper examines the effect that the EU Action Plan on Sustainable Finance has on mobilizing private finance for sustainable-purpose companies. Our results suggest that the EU regulation has substantially augmented the influx of private financial capital into companies with sustainability purposes situated in EU countries subject to the regulation. This is valid mostly for companies whose purpose addresses environmental issues, while companies focused on social issues did not find a significant increase in financial attractions. Our findings contribute to understanding the role of policies to facilitate the transition of private finance towards sustainable development.