The Law of the Green Developmental State

The Law of the Green Developmental State: State Shareholders in Climate Governance (9/2019-8/2022)

PI : Mikko Rajavuori

Climate change is the one of the defining challenges of our time. Tackling that challenge requires a wide array of efforts from states, companies and civil society. This research project posits that states’ active market participation is an integral but neglected part of the climate change solution. More specifically, the project focuses on states’ ownership-based role as an emerging force in climate governance. State-owned enterprises, sovereign wealth funds and state development banks pursue innovative climate policies that can be seen to give rise to a new governance paradigm—the green developmental state.

To date, the ramifications of the green developmental state have primarily been analysed as a matter of either political economy or environmental politics. These traditions, however, often downplay the institutional inertia that national and international regulation imposes on active state presence in the markets. Against this backdrop, this research project analyses the operation, legal structure and legitimacy of the state as a climate-sensitive market participant across four very different legal regimes: international climate law, transnational corporate governance, EU competition law and national investment screening law. As the first systematic study on the legal underpinning of the GDS, the research develops a theoretical framework that identifies states’ active market participation as an underutilised policy entry-point for climate change mitigation and exposes broader normative changes that the growing state capitalism has for our understanding of sustainability regulation and the role of the state in the age of climate change.

The research is funded by the Academy of Finland (grant 324037).

Project publications

  • Mikko Rajavuori (2021, forthcoming). Divestment of Carbon-Intensive Assets. In Michael Mehling and Harro van Asselt (Eds.), Research Handbook of Climate Finance and Investment Law. Cheltenham, UK: Edward Elgar.