Who benefits from public sustainable finance in the EU?

At this critical juncture in the climate crisis, public sustainable finance is increasingly recognised as crucial to addressing society's socio-ecological challenges. However, we still know surprisingly little about its actual implementation. This paper examines the EU Just Transition Mechanism (JTM), a pioneering sustainable finance policy aimed at alleviating the costs of the transition to a sustainable economy. I present a political economy framework to analyze who benefits from these investments and why, highlighting the role of bureaucratic departments with different types of expertise and interests. Based on original data collection, I show substantial regional variation in allocation of the JTM to 1) employment, 2) equality, and 3) carbon neutrality. Moreover, a substantial part of the JTM is not used for any of these three areas. Regression analysis further reveals that allocation to employment projects is more likely when a 'Social Affairs' department is involved, while 'Environmental Affairs' departments are linked to carbon neutrality. Overall, this paper contributes to our understanding of who benefits from public sustainable finance in general.