Environmental, Social, and Corporate Governance Factors Toward a Green Finance Framework

European institutions have a significant impact on economic financing. Despite the growing prevalence of market-based finance in serving the financing needs of European enterprises, banks will remain important in their traditional lending, intermediary functions, and investment responsibilities. Accountability is crucial for this pivotal position. The process of funding the future economy begins promptly. European institutions are committed to creating a resilient financial system and economy. The long-term viability of the European economy, with regard to its environmental, economic, and social dimensions, depends on the stability and effectiveness of the financial system. Finance is deemed viable only when it actively promotes and facilitates sustainable development activities at every stage while taking into account all relevant considerations. This chapter focuses mostly on environmental sustainability in the framework of a two-degree economy. The European Business Federation (EBF) will handle the other sustainability components individually. This chapter provides a thorough analysis of the role of banks and their capacity to promote sustainable economic development. The goal is to shift toward an economy that restricts global warming to 2 degrees Celsius while also assessing risks in all industries. The chapter is targeted at the general audience, sustainability specialists, and politicians. Moreover, the chapter serves as a basis for the European Banking Federation’s sustainable finance activities. In conclusion, this chapter proposes techniques for removing these barriers and adapting legal and regulatory structures to tackle environment and climate change (ECC) problems.