An analysis of the European sustainable investment regulation for new ways of entrepreneurship

Abstract

Entrepreneurs are often at the forefront of developing green technologies, circular economy models, and social enterprises. In addition, the European Union Regulation on sustainable investment aims to redirect capital flows toward environmentally sustainable activities. This paper aims to establish a conceptual and practical link between entrepreneurship and sustainable economic activities through a logical and mathematical analysis. More precisely, we investigate Regulation 2020/852 on sustainable investments, describing new ways to analyze this critical regulation to help entrepreneurs design new models adapted to regulation changes. The study follows a logical and quantitative approach, utilizing Boolean algebra and graph theory as the main tools of analysis. These tools were applied to a recent sustainable investments regulation to analyze the premises that led to some consequences and also to establish hierarchies. The results reveal the difficulty of meeting all the necessary conditions to classify an activity as environmentally sustainable and the identification of the most important articles by computing their centrality. These findings provide evidence of the existence of some mutually exclusive aspects that could be improved in the regulation, offering significant implications for entrepreneurs about critical aspects of regulation. These insights provide entrepreneurs with novel tools for assessing regulatory risk. Additionally, by identifying the most central articles, entrepreneurs can prioritize efforts in regulation compliance.