The Eu’s 'Green' Finance. Can 'Exit', 'Voice' and 'Coercion' Be Enlisted to Aid Sustainability Goals?

45 Pages Posted: 26 Nov 2020

See all articles by David Ramos Muñoz

David Ramos Muñoz

Universidad Carlos III de Madrid

Elia Cerrato

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF)

Marco Lamandini

University of Bologna - Department of Business Law

Date Written: October 8, 2020

Abstract

Climate change is humanity’s defining problem for this century, and policymakers are trying to reform finance to aid in that goal. The flurry of activity is substantial, but is it enough? In this paper we assess the strength of the means chosen to make finance sustainable, by considering sustainability a “promise”, like the financial promise to pay a sum of money, or maximize profits, and comparing the means used to protect one and another promise, using the categories of “Exit”, “Voice” and “Coercion” to classify different legal tools. Current proposals are primarily based on transparency, and thus rely primarily on “Exit” mechanisms, and only for some instruments. Since progress is generally slow and hesitant on mechanisms relying on “Voice” and “Coercion”, and almost absent in relation to some instruments, we conclude that the current strategy is adequate for creating a market niche for green finance, but as it stands now it is not credible, as such, for the broader goal of greening financial markets as a whole.

Keywords: Sustainable finance, green securities, exit, voice and coercion mechanisms, EU Action plan

Suggested Citation

Ramos Muñoz, David and Cerrato, Elia and Lamandini, Marco, The Eu’s 'Green' Finance. Can 'Exit', 'Voice' and 'Coercion' Be Enlisted to Aid Sustainability Goals? (October 8, 2020). Available at SSRN: https://ssrn.com/abstract=3707409 or http://dx.doi.org/10.2139/ssrn.3707409

David Ramos Muñoz

Universidad Carlos III de Madrid ( email )

126, Getafe
Madrid, 28903
Spain

HOME PAGE: http://www.uc3m.es

Elia Cerrato (Contact Author)

Universidad Complutense de Madrid (UCM) - Colegio Universitario de Estudios Financieros (CUNEF) ( email )

Leonardo Prieto Castro, 2
Madrid, Madrid 28040
Spain

Marco Lamandini

University of Bologna - Department of Business Law ( email )

via San Giacomo, 3
Bologna, Bologna
Italy

HOME PAGE: http://www.diritto.unibo.it

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