ESG Regulatory Convergence and Policy Diffusion Across the Mediterranean

Environmental, social, and governance (ESG) regulatory frameworks are undergoing rapid expansion across the Euro-Mediterranean region, driven by European Union legislative initiatives including the Sustainable Finance Disclosure Regulation, the Corporate Sustainability Reporting Directive, and the Carbon Border Adjustment Mechanism. This chapter examines how EU-originated ESG norms diffuse across Mediterranean and MENA economies through trade conditionality, financial market integration, and regulatory emulation, analysing the convergence trajectories, institutional barriers, and equity implications of this policy diffusion process. A four-phase diffusion model is developed alongside a comparative regulatory framework spanning sustainability reporting, green finance, carbon pricing, and ESG data infrastructure challenges in South Mediterranean countries.

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