Law. Human. Environment

Quality of legislation as a factor of green financing: A regulatory approach

Olena Lemishko, Tetiana Mirzoieva, Nataliia Shevchenko
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Abstract

The purpose of the study was to provide a theoretical explanation of the relationship between regulatory characteristics and the parameters of green finance flows. The methodology was based on an integrated approach that combined regulatory and comparative legal methods. It was shown that predictable, consistent, and stable regulation enhances capital mobilisation for environmental projects in developing countries, and green finance appears as a special regime of sustainable finance with targeted use of funds and enhanced reporting and verification. International taxonomies, disclosure standards, and green bond principles provide the infrastructure to limit greenwashing, while the gap between climate investment needs and actual flows can be explained by the impact of legal environment characteristics on regulatory risk and cost of capital. The Bangladesh and Indonesia case studies have shown that mandatory requirements with clear goals and reporting encourage green assets, while fragmented norms hinder the transformation of the financial sector. China and the United States of America demonstrated different models: a comprehensive taxonomy and coordinated regulation against the decentralised regulatory architecture of green banking. Ireland and Estonia illustrated how the implementation of European Union acts and coordination of institutions increase certainty and transparency. The level of green financing is concentrated: in 2021-2023, global flows amounted to approximately USD 1.3 trillion per year, and more than 60% of green bond issuance is concentrated in jurisdictions with formalised taxonomies and disclosure requirements. Ukraine combines an approach to European standards with significant gaps, and the case of Ukrenergo’s green and sustainability-linked bonds demonstrates the clash of well-thought-out regulatory design with high country risk. An agreed and predictable regulatory framework is a necessary prerequisite for the development of green finance, but its impact is realised only in conditions of institutional capacity and macroeconomic stability. The practical significance of the results lies in the possibility of their use by authorities, regulators, and market participants in improving the regulation of green investments

Keywords

legal architecture; legislative support; regulatory risk; taxonomy; environmental impact; financial regulations; regulatory indicators

Suggested citation
Lemishko, O., Mirzoieva, T., & Shevchenko, N. (2026). Quality of legislation as a factor of green financing: A regulatory approach. Law. Human. Environment, 17(2), 54-77. https://doi.org/10.31548/law/2.2026.54
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