Abstract

This Chapter studies legislative initiatives around sustainable finance deriving from the Action Plan: Financing Sustainable Growth (also called ‘Sustainable Finance Action Plan’, ‘Action Plan’ henceforth), published by the European Commission (‘Commission’) in 2018 (Communication 2018/97). I evaluate various instruments proposed in the Action Plan, using a reflexive law approach coupled with insights from business ethics and epistemology (De Bruin, 2013, 2015). I point to the challenges such an approach encounters, and offer suggestions how to address them. Reflexive law approaches to legislation (Farber 1994, Hess 1999, Orts 1994, Farmer & Teubner 1994) acknowledge the limits of law as an instrument to realize social or political goals, and stress the need to encourage self-reflection and transparency among stakeholders through procedural rather than ‘command-and-control’ legislation. Typical reflexive law instruments involve disclosure, reporting, and labelling. Examining the Action Plan, I show that the main legislative instruments it puts forward are reflexive. I use empirical and theoretical work that challenges the effectiveness of some of these instruments. Drawing on recent work from behavioural economics I suggest that these problems may be overcome once we integrate more fully in reflexive law what it means for people ‘reflectively’ to recruit evidence and gather knowledge, and once we appreciate the value knowledge has over and above mere belief. My argument here is not so much to the effect that more interventionist regulatory tools are needed (they are dearly needed, but that is not the point here). Rather I argue that once a regulator opts for a reflexive law approach, a richer notion of information should be deployed. I call this ‘epistemic’ instead of ‘reflexive’ law. The Chapter gives some background information about the Action Plan, introduces the core ideas of reflexive law, shows how the Action Plan is reflexive law par excellence, considers the challenges, and offers a few modest suggestions.