REGULATORY VULNERABILITIES OF ENVIRONMENTAL BUSINESSES: EVIDENCE FOR A REGULATORY GOVERNANCE MODEL

Abstract

Environmental markets have gained increasing economic relevance while simultaneously becoming more exposed to regulatory vulnerabilities and illicit financial flows. This study hypothesized that such vulnerabilities arise less from the absence of legal instruments than from the limited integration of environmental, financial, and institutional mechanisms. The study aimed to identify these vulnerabilities and propose an explanatory model of regulatory governance. A qualitative, exploratory, and analytical approach was adopted, based on a critical narrative review and documentary analysis, supported by thematic content analysis. The findings revealed regulatory fragmentation, limited financial traceability, reduced interoperability, and insufficient institutional coordination. An exploratory application to the Brazilian regulatory framework showed asymmetric integration across the dimensions analyzed. As its main contribution, the study proposes the Environmental Markets Regulatory Governance Explanatory Model (MEGRNA), structured around environmental, financial, and institutional dimensions. The findings indicate that the preventive capacity of environmental markets depends on the functional integration of these regulatory subsystems.