ESG indicators in sustainability reports – what is the role of financial institutions?
DOI:
https://doi.org/10.58423/2786-6742/2022-2-138-153Keywords:
sustainability, ESG indicator, profitability, reliabilityAbstract
The ESG approach means a corporate governance operation that takes into account sustainability goals, including environmental, social and corporate governance aspects, in decision-making. According to our survey, company executives consider the identification of the company they lead with an ESG approach to be an increasingly important factor. A significant part of the respondents believe that environmental risks will be decisive for their future success, and the role of the social component in the evaluation of companies has also increased in recent years. In our summary descriptive study, we present the main components of ESG assessments and examine the regulatory environment. We summarize the perceived or real benefits of changes in the valuation of companies, supplemented by other potential benefits. The main topic of our research is to measure the reliability of ESG valuation, as without reliable data we cannot adequately state the real profitability benefits. Our long-term goal is to make it clear to the regulatory community that the current evaluation and measurement criteria are unreliable. Taking into account the new CSRD directive, we make findings that help the legislators in the development of regulations related to the practical application of the directive. The basis of our research was the analysis of sustainability reports that meet the current requirements, and we also examined the practice of ESG qualifiers and then compared them with each other. We also examined the relationship between the ESG indices published by the raters and profitability. In this study, we aim to summarize the anomalies in the application of ESG indicators, focusing primarily on the regulatory environment. Our goal is also to present the new role that the up-and-coming start-ups, the businesses that use innovative tools, rating agencies, and investment service providers play in the financial market.
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