The European Union’s legal framework for green finance and policy implications for Vietnam

Amid increasingly severe climate change, green finance has become an important instrument for directing capital toward environmentally sustainable economic activities and supporting the transition to sustainable development. This study analyzes the European Union’s green finance legal framework, in which law shapes market behavior through three core pillars: the EU Taxonomy, sustainability disclosure requirements, and market-based instruments for steering green capital flows. Using legal analysis, synthesis, and comparative methods, the study examines the structure, major characteristics, and development trends of this regulatory framework. The findings highlight the role of common green classifications, standardized disclosure, accountability, and market instruments in reducing information asymmetry and greenwashing. The study draws policy implications for Vietnam concerning taxonomy development, disclosure obligations, technical criteria, regulatory coordination, and the mobilization of capital for green transition.