In 1992, at the Earth Summit in Rio de Janeiro, it was made clear that transforming private finance would be key to achieving sustainable development. Other initiatives would follow giving way to the field of sustainable finance. In 2006, the Principles for Responsible Investment was set up with nearly 1,500 signatories, from over 50 countries, representing US$60 trillion, the PRI has become the point of reference for institutional investors committed to responsible and long-term actions for incorporating Environmental, Social and Governance issues into investment practice. At Rio+20, the Natural Capital Declaration was signed by the CEOs of more than 40 financial institutions and demonstrated their commitment to the integration of natural capital considerations into private sector reporting, accounting and decision-making.
More recently, the EU Commission. Guided by the work of the EU Technical Expert Group on Sustainable Finance and the EU Platform on Sustainable Finance, has created a classification system of environmentally sustainable economic activities with the aim of scaling up sustainable investments and combating greenwashing of financial products that unduly claim to be sustainable, as well as minimum standards for the construction of EU Climate Transition Benchmarks and EU Paris-aligned Benchmarks.
Under the outlined policy frameworks, scholars play a crucial role in analyzing the intricate outcomes of sustainable finance-related legislation, exploring the integration of impact evaluations within different regulations, and grasping the extensive consequences of these laws for several fields such as accounting, finance, climate science, policy development, and scholarly research. Furthermore, the formulation and implementation of financial taxonomies and disclosure requirements might be swayed by divergent interests, resulting in actions by corporations, investors, or policymakers that are merely for show. Legislative actions are primarily aimed at preventing greenwashing; yet, the underlying reasons for the behaviors of corporations or sustainability service providers remain largely unexplored. This gap in understanding should be considered in the development and application of taxonomies and disclosure regulations intended to genuinely mitigate greenwashing.
Moreover, there is a noticeable lack of technical approaches to combat greenwashing. Nevertheless, the application of ‘precautionary principles’ is recommended as a norm in assessing data related to the different aspects of the Taxonomy, as highlighted in the EU’s climate benchmarks legislation. However, it is noted that greenwashing has evolved into a more intricate issue today, extending beyond mere mislabelling to include tactics such as diverting focus, diminishing attention, and altering the perception of time. The recent shifts in regulations and scholarly discussions prompt the necessity for the upcoming Special Issue. Its primary aim is to provide policymakers, regulators, financial entities, and investors with solid academic perspectives regarding the EU Taxonomy, including its enactment, application, and consequences, grounded in both empirical, quantitative, and qualitative analysis and centered around thought-provoking conceptual examination.
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