Pacces, Alessio Maria. "Will the EU Taxonomy Regulation Foster a Sustainable Corporate Governance?". European Corporate Governance Institute. (1636502400)November 10, 2021. https://ecgi.global/...

EU securities regulation has established a taxonomy of environmentally sustainable financial activities that potentially supports sustainable corporate governance.  This paper argues that including environmental sustainability in EU mandatory disclosure aligns the incentives of institutional investors with the interest of their beneficiaries while fostering the efficient inclusion of sustainability in corporate governance.  Firstly, by standardizing the disclosure of environmental sustainability, the taxonomy can curb greenwashing.  Secondly, as the same standards define the sustainability preferences in recommending and marketing financial products, it is an efficient way to channel investor preferences.  Thirdly, sustainability disclosure prompts institutional investors to compete for sustainability-minded beneficiaries.

Posted on 14/11/21

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