TY - THES

T1 - Sustaining Prosperity

T2 - A Comprehensive Analysis of EU Regulations and their Ripple Effect on Corporate Capital in the Financial Landscape

AU - Becker, Silvester

N1 - no embargo

PY - 2024

Y1 - 2024

N2 - The effects of climate change are getting increasingly pervasive and it is evident that the global economy is not suited to fight it. The European Union (EU) has since its founding established itself as an advocate for future-orientated legislature and as the ruling example for ethics in politics, with its notable posing as the moral norm of democratic countries through its written down values per §2 TEU. (Manners, 2002) Similarly, they made the first step towards a more sustainable world when establishing a new and concise regulatory framework targeting the reorientation of capital flows into the direction of sustainable finance. With the creation of the European Green Deal, the EU is now providing an unparalleled piece of legislature for sustainability concerning its scope and the size of economy affected. In the course of the establishment of the Green Deal, many policies have been implemented and some are already showing their effects on the European economy. This thesis analyses how the new regulatory framework is affecting capital costs and investment decisions of firms located within the EU¿s legislation and how prepared the EU¿s companies are regarding the upcoming regulatory challenges. To achieve this, an overview and summary of the most relevant EU legislative documents is provided with a timeline to track upcoming regulatory responsibilities. The main focus lies on the new reporting obligations connected to the new Corporate Sustainability Reporting Directive (CSRD) and the regulatory framework to identify sustainable economic activities, also known as the EU Taxonomy. Understanding how different stakeholders like non-financial corporates, investors and banks are dealing with these new regulatory requirements and whether they impact stakeholder¿s financing decisions is essential to this analytical piece. To achieve this, 15 expert interviews have been conducted for this thesis. Through them, objective information and qualified opinions have been gathered on how capital providers and capital receivers are currently or should be operating with sustainability regulation in mind and on how they are or may be integrated in investment decisions. The findings of this thesis describe that the earlier sustainability aspects are adopted in the company strategy and the better the data availability is, the earlier cost savings occur and the easier it is to later implement new regulatory developments into company structure and decision-making. Capital providers also prefer their clients to act accordingly as data gaps provide challenges not only for sustainable investment decisions but also for a bank¿s risk management which will further affect how banks will be able to allocate capital. These findings are particularly significant with further regulatory developments like the Corporate Due Diligence Directive and the proposal for a Green Claims Directive, as they could have direct impacts on costs and capital.

AB - The effects of climate change are getting increasingly pervasive and it is evident that the global economy is not suited to fight it. The European Union (EU) has since its founding established itself as an advocate for future-orientated legislature and as the ruling example for ethics in politics, with its notable posing as the moral norm of democratic countries through its written down values per §2 TEU. (Manners, 2002) Similarly, they made the first step towards a more sustainable world when establishing a new and concise regulatory framework targeting the reorientation of capital flows into the direction of sustainable finance. With the creation of the European Green Deal, the EU is now providing an unparalleled piece of legislature for sustainability concerning its scope and the size of economy affected. In the course of the establishment of the Green Deal, many policies have been implemented and some are already showing their effects on the European economy. This thesis analyses how the new regulatory framework is affecting capital costs and investment decisions of firms located within the EU¿s legislation and how prepared the EU¿s companies are regarding the upcoming regulatory challenges. To achieve this, an overview and summary of the most relevant EU legislative documents is provided with a timeline to track upcoming regulatory responsibilities. The main focus lies on the new reporting obligations connected to the new Corporate Sustainability Reporting Directive (CSRD) and the regulatory framework to identify sustainable economic activities, also known as the EU Taxonomy. Understanding how different stakeholders like non-financial corporates, investors and banks are dealing with these new regulatory requirements and whether they impact stakeholder¿s financing decisions is essential to this analytical piece. To achieve this, 15 expert interviews have been conducted for this thesis. Through them, objective information and qualified opinions have been gathered on how capital providers and capital receivers are currently or should be operating with sustainability regulation in mind and on how they are or may be integrated in investment decisions. The findings of this thesis describe that the earlier sustainability aspects are adopted in the company strategy and the better the data availability is, the earlier cost savings occur and the easier it is to later implement new regulatory developments into company structure and decision-making. Capital providers also prefer their clients to act accordingly as data gaps provide challenges not only for sustainable investment decisions but also for a bank¿s risk management which will further affect how banks will be able to allocate capital. These findings are particularly significant with further regulatory developments like the Corporate Due Diligence Directive and the proposal for a Green Claims Directive, as they could have direct impacts on costs and capital.

KW - sustainability

KW - sustainable finance

KW - green finance

KW - EU Taxonomy

KW - CSRD

KW - ESG

KW - regulation

KW - regulatory framework

KW - Nachhaltigkeit

KW - Nachhaltige Finanzierungen

KW - Grüne Finanzierungen

KW - EU Taxonomy

KW - CSRD

KW - ESG

KW - Regulatorik

KW - Regulatorisches Rahmenwerk

M3 - Master's Thesis

ER -