Disclosure required in the EU taxonomy: a communication model

Abstract This paper aims to develop a communication model based on the European Commission's EU Taxonomy Regulation (Regulation 2020/852) to address information asymmetries between non-financial companies, financial institutions, financial advisors, and investors, ultimately improving transparency in sustainable investment decisions. The study applies communication theory tools to construct a multi-step communication model that illustrates how information about sustainability is exchanged under the EU Taxonomy. This process can amplify information asymmetries, hindering informed investment choices. This paper introduces a novel communication model applied to the EU Taxonomy Regulation, offering a original perspective on addressing information asymmetries in sustainable finance. The proposed model offers insights for policymakers and financial advisors on improving communication and transparency, enhancing the clarity and reliability of sustainability information for investors.