FROM CORPORATE SOCIAL RESPONSIBILITY
TO THE ESG-PRINCIPLES
OF DOING BUSINESS – A WAY TO CLIMATE FINANCE
Climate change risks are the most important not only from the social point of view but also in terms of investment decision making. In light of recent changes on financial market we can witness a shift from the concept of corporate social responsibility to the ESG-Principles which are being used for the purpose of assessing nonfinancial risks and results of related projects. Using this approach companies can disclose their environmental, social and governance risks – show to the investors and creditors how attractive they are. In this article we have tried to represent the best practicies used by german companies in order to comply with their obligations in the above mentioned areas (environmental, social and governance).
We can use different tools and mechanisms for the purpose of combating the climate change and reducing GHG emission. First of all we are talking about various forms of environmental taxation (especially carbon taxation) aimed at compensating negative externalities. But in fact, this tool has limitations in mobilizing climate finance. Hence, financial market has introduced a set of financial instruments with the purpose to collect more than 120 trillion USD needed to limit the global warming by 2 degrees Celsius.
The most important tool developed by the investment bankers are the climate (green) bonds – special instruments aimed at energy efficiency improvement, GHG reduction and renewable energy production. But in order to get an access to climate finance the companies should use new approaches in accounting, reporting and verification of nonfinacial results – a key to climate finance.
According to the Association Agreement with the EU Ukraine should implement by 2017 the so called Emission Trading Scheme with the purpose to reduce the GHG emissions and improve energy efficiency of the economy. This step will bring not only the negative consequences, but also a wide range of opportunities to receive additional assets in form of certified emission reductions.
[Download PDF version] Keywords: climate risks, financial results, Paris Climate Agreement, ESG-Principles, corporate social responsibility. | CORPORATE FINANCE
Garlytska Diana candidate for PhD
Sushchenko O.M. PhD, associate professor SHEI «Kyiv National Economic University named after Vadym Hetman» Department of Finance
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