FINANCING THE GREEN TRANSITION: THE ROLE OF BANKS IN IMPLEMENTING ESG STANDARDS AND MANAGING SUSTAINABILITY RISKS
DOI:
https://doi.org/10.59864/Oditor72503MSKeywords:
sustainable finance, ESG, climate risks, banking sector, green bonds, green loansAbstract
The banking sector plays a key role in mobilizing capital necessary for implementing the green transition and achieving sustainable development goals. The integration of environmental, social, and governance (ESG) criteria into banking processes represents a central mechanism for directing financial flows toward sustainable economic activities. The European Union has established a regulatory framework encompassing the EU Taxonomy, the Sustainable Finance Disclosure Regulation (SFDR), and the guidelines of the European Banking Authority (EBA), with the aim of enhancing transparency and improving the management of sustainability risks. The objective of this paper is to analytically examine the role of banks in implementing ESG standards and managing sustainability risks. The study is based on a qualitative analysis of regulatory documents and relevant academic literature. The results indicate that the integration of ESG criteria leads to changes in credit risk management and enables banks to actively contribute to the green transition through sustainable financial products.
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