Sustainability Reporting of Banks as Public Interest Entities: A Comparative Analysis of the EU and Ukraine
DOI:
https://doi.org/10.58423/2786-6742/2024-5-342-356Keywords:
sustainable development, reporting, banks, public interest enterprises (PIE), EU, Ukraine, transparency, ESG, Corporate Social Responsibility (CSR)Abstract
With escalating climate change and environmental degradation, the imperative for sustainable practices in all sectors of the economy, including banking, is becoming increasingly urgent. In response to these challenges, combating climate change has become a central theme, requiring global efforts to reduce carbon emissions and transition to renewable energy sources. International organizations such as the Network for Greening the Financial System (NGFS) and the United Nations General Assembly have highlighted the urgency of addressing these issues, stressing the need for immediate action.
In the context of Ukraine, the integration of environmental, social and governance principles (ESG) into banking practice has gained popularity in recent years. Although Ukrainian banks have made some progress in ESG reporting, challenges remain, including limited resources and the regulatory framework. Despite voluntary disclosure, there is no standardised approach to ESG reporting, which affects the depth and completeness of reporting. By comparison, European Union (EU) banks operate within a robust regulatory framework that emphasizes transparency and environmental responsibility.
The article examines the crucial role of sustainable development in the banking sector of Ukraine, especially against the background of global challenges such as climate change and environmental degradation. It carefully examines the trajectory of environmental, social and governance (ESG) principles in Ukrainian banking practice, shedding light on the successes achieved, as well as on the ongoing obstacles. By carefully analyzing the legal framework and comparing it with the established EU standards, the study reveals an idea of a number of opportunities and obstacles that Ukraine faces on its way to the development of sustainable financing. The study of bank sustainability reporting through a comparative analysis between the EU and Ukraine is important for promoting transparency, improving risk management, facilitating informed decision-making, stimulating market transformation and promoting international cooperation in the search for sustainable financing. Ultimately, the article highlights Ukraine's great potential for synchronizing with international sustainable development goals, attracting socially responsible investments, and becoming a key player in advocating for sustainable finance at both the regional and global levels.
References
Vovchenko, O. (2023). Esg-strategy as the basis of sustainable development risk management in banks. Economy and society, (50). https://doi.org/10.32782/2524-0072/2023-50-85 DOI: https://doi.org/10.32782/2524-0072/2023-50-85
Global Footprint Network. (б. д.). Dutch Overshoot Day April 1st. https://www.footprintnetwork.org/
NGFS scenarios: Purpose, use cases and guidance on where institutional adaptations are required (An explanatory note). (2024). https://www.ngfs.net/sites/default/files/medias/documents/ngfs_guidance_note_on_the_scenarios.pdf
ESG index of transparency of Ukrainian companies 2020. (b. d.). Professional Association of Corporate Governance (PACU), Center for CSR Development, Center for International Private Entrepreneurship. https://csr-ukraine.org/wp-content/uploads/2021/12/Index-2020.pdf
Oliinyk, L. (2019). Development of corporate social responsibility in the banking sector of Ukraine. Finance, accounting, banks, (1), 57–67. https://doi.org/10.31558/2307-2296.2019.1.6 DOI: https://doi.org/10.31558/2307-2296.2019.1.6
Bortnikov, G., & Lyubich, O. (2022). ESG RISK MANAGEMENT IN UKRAINIAN BANKS. FINANCIAL AND CREDIT ACTIVITY: problems of theory and practice, 6(47), 19–33. https://orcid.org/0000-0002-9339-4242
Makarenko, I., Sukhonos, V., V. Zhuravlyova, I., Legenchuk, S., & Szołno, O. (2020). Sustainability reporting assessment for quality and compliance: the case of Ukrainian banks’ management reports. Banks and Bank Systems, 15(2), 117–129. https://doi.org/10.21511/bbs.15(2).2020.11 DOI: https://doi.org/10.21511/bbs.15(2).2020.11
Bodnar, O. A., & Salyuk, S. V. (2021). Formation of corporate social responsibility of the banking sector during the pandemic. Modern Economics, (29), 17–23. https://doi.org/10.31521/modecon.V29(2021)-03 DOI: https://doi.org/10.31521/modecon.V29(2021)-03
Shymanska, O., & Hdal, I. (2023). Practical aspects of the corporate social responsibility implementation (on the example of the domestic banking sector). Innovation and Sustainability, (4), 98–107. https://doi.org/10.31649/ins.2023.4.98.107 DOI: https://doi.org/10.31649/ins.2023.4.98.107
Makarenko, I., & Makarenko, S. (2020). Auditor’s verification of a management report: implementation of European experience in Ukrainian banks in crisis conditions. Accounting and Financial Control, 3(1), 1–10. https://doi.org/10.21511/afc.03(1).2020.01 DOI: https://doi.org/10.21511/afc.03(1).2020.01
Riso, A. (2021). Which Role for the Prudential Supervision of Banks in Sustainable Finance? У D. Busch, G. Ferrarini & S. Grünewald (Ред.), Sustainable Finance in Europe. EBI Studies in Banking and Capital Markets Law. Palgrave Macmillan. https://www.econbiz.de/Record/sustainable-finance-in-europe-corporate-governance-financial-stability-and-financial-markets-busch-danny/10012596872 DOI: https://doi.org/10.1007/978-3-030-71834-3_9
Matos, P. (2020). ESG and Responsible Institutional Investing Around the World (A Critical Review). CFA Institute Research Foundation. http://rflr-esg-and-responsible-institutional-investing.pdf DOI: https://doi.org/10.2139/ssrn.3668998
Padilla Flores, E. (2021). Triple Bottom Line Reporting in Cambodia. Journal of Accounting, Finance, Economics, and Social Sciences, 6(2), 9–18. https://www.researchgate.net/profile/Edman-Flores/publication/377528556_Triple_Bottom_Line_Reporting_in_Cambodia/links/65aaa021ee1e1951fbc22f24/Triple-Bottom-Line-Reporting-in-Cambodia.pdf DOI: https://doi.org/10.62458/jafess.160224.6(2)9-18
Nunes, C., & Fernandes Ferreira, L. (2022). Non-Financial Reporting: A Comparative Analysis With a Focus on the Combat Against Money Laundering – Evidence From Major European Banks. Modern Regulations and Practices for Social and Environmental Accounting, 28. https://www.igi-global.com/chapter/non-financial-reporting/301798 DOI: https://doi.org/10.4018/978-1-7998-9410-0.ch009
Bonifácio Neto, J., & Branco, M. C. (2019). Controversial sectors in banks’ sustainability reporting. International Journal of Sustainable Development & World Ecology, 26(6), 495–505. https://doi.org/10.1080/13504509.2019.1605546 DOI: https://doi.org/10.1080/13504509.2019.1605546
Policy on the development of sustainable financing for the period until 2025. (2021). National Bank of Ukraine. https://bank.gov.ua/ua/news/all/politika-natsionalnogo-banku-ukrayini-schodo-rozvitku-stalogo-finansuvannya-na-period-do-2025-roku
Rating of Ukrainian banks. (b. d.). Ministry of Finance - everything about finance: news, exchange rates, banks. https://minfin.com.ua/banks/rating/?date=2024-01-01
Amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups, DIRECTIVE No. 2014/95/EU (2014, November 15). Official Journal of the European Union, (L 330/1). https://eur-lex.europa.eu/eli/dir/2014/95/oj
Amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, DIRECTIVE № 2022/2464 (2022, December 16). Official Journal of the European Union, (L 322/15). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:32022L2464
The Commission adopts the European Sustainability Reporting Standards. (b. d.). Finance. https://finance.ec.europa.eu/news/commission-adopts-european-sustainability-reporting-standards-2023-07-31_en
Sustainability-related disclosure in the financial services sector. (b. d.). Finance. https://finance.ec.europa.eu/sustainable-finance/disclosures/sustainability-related-disclosure-financial-services-sector_en
Cosma, S., Venturelli, A., Schwizer, P., & Boscia, V. (2020). Sustainable Development and European Banks: A Non-Financial Disclosure Analysis. Sustainability, 12(15), 6146. https://doi.org/10.3390/su12156146 DOI: https://doi.org/10.3390/su12156146
Annual Report 2023. Danske Bank Group. (b. d.). https://danskebank.com/-/media/danske-bank-com/file-cloud/2024/2/danske-bank---annual-report-2023.pdf?rev=6d0eedfde5644c54b075199dfd935b1c&hash=6677B59A69F50AC53FB16185C2C32596
Annual and sustainability report 2023. Handelsbanken. (b. d.). https://www.handelsbanken.com/tron/xgpu/info/contents/v1/document/72-169032
Sustainability Report 2022. Nordea. (2023). https://www.nordea.com/en/doc/nordea-sustainability-indices-2022.pdf
Report on the progress of the JOINT STOCK COMPANY "FIRST UKRAINIAN INTERNATIONAL BANK" for 2021-2022. (b. d.). https://apim.pumb.ua/api/assets/pumb/1877670b-148a-4322-b5d5-31d61cde32bc/fuib-cop-2021-2022-ua.pdf
SUSTAINABLE DEVELOPMENT REPORT 2020. JSC "UKRGASBANK". (b. d.). http://www.ukrgasbank.com/upload/file/ugb_report_2020.pdf
Management report. Separate financial statements together with the independent auditor's report for the year ended 31 December 2022. JOINT STATE COMPANY "STATE SAVINGS BANK OF UKRAINE". (b. d.). https://www.oschadbank.ua/finansova-zvitnist
Lin, Y., Chesnut, K., Saliba, E., & Gantz, J. (2022). Banking in 2035: three possible futures. The Economist Group. https://impact.economist.com/perspectives/sites/default/files/banking_in_2035_three_possible_futures_briefing_paper.pdf
Downloads
Published
Issue
Section
License
Copyright (c) 2024 Inna Makarenko, Yuliia Serpeninova, Roman Fominov, Serhii Makarenko
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.
Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons CC BY-NC License.
