Implementing ESG principles in the financial sector of Ukraine
The implementation of ESG principles is beginning in the financial sector of Ukraine, aimed at increasing the responsibility and sustainability of banking activities. Pervin Dadasheva, Director of the Financial Stability Department, outlined the National Bank's plans regarding the approval of requirements for the assessment of ESG risks during a roundtable at the National Association of Banks of Ukraine. She also noted that the current year will be decisive for evaluating banks' compliance with updated recommendations related to corporate governance considering ESG principles.
The National Bank of Ukraine recognizes the importance of the social component of ESG, especially in wartime, emphasizing the need for financial inclusion, the involvement of veterans, as well as support for security and the defense capability of businesses. This year, the approval of requirements for banks regarding the assessment of ESG risks is planned, which will be an important step towards forming a sustainable financial system.
Risk assessment and social initiatives
From autumn, banks are expected to start assessing clients from all sectors seeking loans under the 'Affordable loans 5-7-9%' program for compliance with environmental and social standards. The government is also working on developing requirements for the collection and disclosure of ESG reporting, which should subsequently be adhered to by both banks and their clients.
“We are moving in such a way that the financial sector has the opportunity to qualitatively and smoothly implement new requirements while maintaining the ability to support the economy with funding. We are ready to respond to feedback from financial institutions to achieve this goal”
Perwin Dadasheva
These initiatives reflect the growing attention to environmental and social aspects in Ukraine's financial sector.
The implementation of ESG principles in the financial sector of Ukraine is an important step towards ensuring sustainable development and responsible business conduct. It also reflects attention to social aspects, which is especially relevant in wartime conditions when support for various population groups, including veterans, becomes a priority. Involving banks in risk assessment based on ESG standards can contribute not only to strengthening financial stability but also to improving the overall socio-economic situation in the country.
As the National Bank of Ukraine sets the stage for evaluating ESG risks in lending, it's important to note that Ukrainian banks have recently intensified their focus on energy lending. This shift not only aligns with the new requirements but also highlights the growing significance of sustainable financing in the current economic landscape.