№ 11/2023

№ 11/2023

Fìnansi Ukr. 2023 (11): 86–98https://doi.org/10.33763/finukr2023.11.086

In memory of Viktor Fedosov

RIAZANOVA Nadiia ¹

¹Kyiv National Economic University named after Vadym Hetman
OrcID ID : https://orcid.org/0000-0003-1419-1189

European vector of the sustainable development – the guideline for corporate and public finance in Ukraine

In the 21st century in the conditions of growing environmental and related social problems at the international level, the concept of sustainable (resistant to environmental and social risks) development was formulated. According to this concept, sustainable economic activity should be based on interrelated principles: the mandatory presence of positive environmental and social solutions, economic/financial feasibility of activity and governance adapted to the needs of sustainable development. The European Union (EU) has become a leader in the development of a sustainable economy/finance, the concept of sustainability has acquired the status of mandatory in EU countries when making financial and economic decisions. As a candidate for membership in the EU Ukraine should follow the vector of the EU sustainable development. The development of sustainable finance brings enormous opportunities and benefits for business and public finance, as it aims to finance the circular economy, renewable energy, resource and energy efficiency in all sectors of the economy, smart water management, as well as inclusiveness.
Problem Statement. Ukraine has already taken the first important steps in the development of sustainable finance – a number of general regulatory documents related to the sustainable development were adopted. In order to ensure the attraction of foreign investments in Ukraine, its corporate and public finances must be ready for the requirements of sustainable development.
Purpose. To investigate the concept of sustainable development, the key components of the EU sustainable development policy, and to formulate recommendations to the corporate and public finances, to ensure proper financing of the reconstruction of the country's economy according to the EU vector.
Methods. General scientific research methods.
Results. The financial sector plays a key role in sustainable development, and regulatory and legal provision of sustainable financing is of fundamental importance. In the EU, sustainable finance frameworks have already been formed and continue to be improved. The EU legislation has formulated six goals of sustainable economic activity, at least one of which must be met by a project/asset to be classified as sustainable: climate change adaptation; the sustainable use and protection of water and marine resources; the transition to a circular economy; pollution prevention and control; and the protection and restoration of biodiversity and ecosystems. Four criteria of environmentally sustainable economic activity are also defined – an economic activity can be recognized as environmentally sustainable if it: contribute substantially to one or more of the six environmental objectives; do no significant harm any of the environmental objectives; carried out in compliance with the minimum social safeguards; comply with technical screening criteria. There are the following pillars of development of sustainable finance in the EU: existence of a taxonomy of sustainable economic activity; proper disclosure of information about sustainable development; consideration of environmental, social and governance factors (ESG) during the provision of financial services and investment decisions; proper management of environmental (including climate) and social risks (ESRM);the use of special financial instruments – green and other labeled bonds and loans, which ensure the flow of finances into a sustainable economy; increasing the financial literacy of society in matters of sustainable development.
Conclusions. Ukraine's policy on the development of sustainable financing should be oriented towards the course of sustainable development officially approved by the EU. The concept of sustainable development should be integrated into the legislation of Ukraine. The corporate and public finance in Ukraine must provide the positive environmental and social solutions, economic and financial expediency and corporate governance adapted to sustainable development. This involves the use of the EU taxonomy of sustainable economic activity, proper disclosure on sustainable development, introduction of the concept of double materiality, environmental and social risk management into already existing risk management, as well as encouraging capital flows into projects with environmental and social advantages. The market for sustainable financing instruments – green bonds and bank loans – should develop. It is important to raise the awareness of financial services market participants in the issues of sustainable financing.

Keywords:ESG, double materiality, green bonds, green finance, greenwashing, climate physical risks, climate transition risks, municipal finance, nonfinancial reporting, sustainability disclosure, sustainable finance, taxonomy of sustainable activity

JEL: G18

RIAZANOVA N. . European vector of the sustainable development – the guideline for corporate and public finance in Ukraine / N. . RIAZANOVA // Фінанси України. - 2023. - № 11. - C. 86-98.

Article original in Ukrainian (pp. 86 - 98)

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