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Broadly associated with environmental, social and governance (ESG) principles in financial markets, sustainable finance has sprawled into an array of European rule-making, fund disbursement and economic oversight. Much sustainable finance scholarship, however, has been of a technical nature, assessing the impact and viability of instruments for climate neutrality, without studying associated political dynamics and policy processes. This Special Issue opens up the realm of European sustainable finance for political and policy analysis. In this introduction, we discuss the definitional features of EU sustainable finance and its importance for debates on European integration and governance. First, we propose to understand the regulatory and fiscal attempts to ‘make finance sustainable’ as both an emergent policy regime and a contested political project. Second, we introduce a threefold analytical approach inspired by Hugh Heclo’s classic distinction between puzzling and powering, adding a third category of profiting to underline the politico-economic dimension. Third, we place EU sustainable finance within debates over the kind of state-market relations that supranational policy-making processes are facilitating. We argue that the ambiguity of EU sustainable finance consists of its reinforcement of a longer tradition of governance through financial markets, combined with new forms of state intervention in the financial marketplace.
Mertens et al. (Mon,) studied this question.