Scholarly record
REGULATORY REQUIREMENTS AND CHALLENGES OF IMPLEMENTING ESG REPORTING IN THE BANKING SECTOR: ROLE IN THE DEVELOPMENT OF SUSTAINABLE FINANCE
Abstract
The article examines the main challenges and current status of ESG reporting implementation in the banking sector, as well as the impact of banks on sustainable finance and sustainable development. It is proven that the development of ESG reporting contributes to ensuring transparency, accountability, and the integration of social, governance, and environmental aspects of banking institutions. The interaction between regulatory and normative acts in the field of ESG reporting is studied. The main international standards, frameworks, and global acts in the field of ESG reporting for banks are systematised, and the features of their application in the banking sector are identified. It is established that the current practice of ESG reporting by banks is shaped by both voluntary standards and mandatory regulatory requirements. The current status of ESG reporting implementation in banks is analysed, and the main challenges and stages of restructuring the bank's organisational and information systems for ESG reporting are identified. It is noted that the development of ESG reporting is accompanied by methodological, organisational, and informational challenges. It is proven that ESG reporting in the banking sector serves an informational, analytical, managerial, and regulatory function, allowing banks to achieve financial stability and reduce liquidity risks, thereby contributing to sustainable financing. It also helps improve the quality of risk management and strengthen the bank's trust and transparency with customers and investors. The advantages of implementing ESG reporting, the need for its gradual implementation, and the need to increase investments in ESG infrastructure and databases are identified. The results of the study are important for the further development of the theory and practice of ESG reporting and can be used to improve regulatory requirements for ESG reports, as well as to develop strategies for ESG indicators and their integration into financial reporting and bank processes.
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