Current Approaches to Sustainable Financing in the Banking Sector of Ukraine

Abstract

The article examines contemporary approaches to sustainable finance in the banking sector of Ukraine under conditions of financial system transformation, post-war economic recovery, and integration into the European economic space. The purpose of the study is to assess current approaches to sustainable finance in the largest banks of Ukraine based on a comparative analysis of their ESG practices and to determine the level of sustainable finance development. The subject of the study is the theoretical and practical aspects of the implementation of environmental, social, and governance (ESG) principles in the activities of banking institutions. The methodological framework of the study is based on general scientific and specific methods, including analysis and synthesis, comparative analysis, systematization, and generalization, as well as content analysis of official bank documents and reports. A qualitative approach was applied to assess the level of sustainable finance development, based on defined criteria such as the presence of ESG strategies, the level of ESG integration into lending activities, the development of green financial instruments, and the degree of institutionalization of ESG practices. Based on the official statistical data of the National Bank of Ukraine, it was established that during 2022-2025 the Ukrainian banking sector significantly strengthened its resource, capital, and financial base, thereby creating favourable conditions for the wider implementation of sustainable finance principles. The comparative analysis of contemporary approaches to sustainable finance in Ukraine and the European Union countries demonstrated the gradual convergence of domestic banking practices with European ESG regulatory standards, while confirming the need for further harmonisation of the regulatory framework, development of standardised ESG reporting, and deeper integration of ESG principles into banking activities. The results of the study indicate a significant differentiation in the level of sustainable finance development within the Ukrainian banking sector. It has been established that leading banks demonstrate a high level of ESG integration, reflected in the systematic incorporation of environmental and social criteria into lending processes and the active development of green financial instruments. At the same time, the majority of banks are at an intermediate stage of ESG implementation, characterized by the presence of separate initiatives and the gradual formation of institutional support. The study identifies key strengths, including the institutionalization of sustainable finance and the development of the social component, as well as major limitations related to insufficient ESG integration into lending and the uneven development of environmental financial instruments. The practical implications of the research cover the activities of banking institutions, regulatory authorities, and other financial market participants, and can be used in the development of sustainable development strategies, improvement of ESG risk management policies, and formation of an effective sustainable finance model. Conclusions indicate that sustainable finance in the Ukrainian banking sector is at an active stage of formation and requires further development. It is substantiated that its advancement should be achieved through deeper integration of ESG principles into banking processes, expansion of green financial products, and strengthening of institutional and regulatory frameworks, which will contribute to enhancing the resilience of the financial system and ensuring sustainable economic development.