Institutions

Climate finance can only scale if market participants trust that “green” claims are verifiable and comparable. This chapter explains why greenwashing has become a binding constraint on climate finance credibility, and why standards and regulations are the primary institutional response. It reviews the main international frameworks shaping climate finance markets, including the EU’s disclosure and taxonomy architecture, the global baseline emerging from ISSB climate reporting standards, and the market-led governance of green bonds through ICMA and CBI rules. It then compares how these frameworks are applied in major jurisdictions—China, the US, the EU, and the UK—highlighting differences in classification, disclosure mandates, and enforcement intensity. Finally, the chapter synthesizes influential academic research on the economic effects of standards, with emphasis on labeling credibility, information asymmetry, pricing and investor demand, and the role of verification and enforcement in limiting greenwashing and improving market discipline.