IMPLEMENTATION OF ESG PRINCIPLES BY NON-BANK FINANCIAL INSTITUTIONS: TRENDS AND PERSPECTIVES
Abstract
The article is devoted to the issues surrounding the utilization of ESG principles within the framework of future development of financial institutions, encompassing non-banking financial institutions. The objective prerequisites for introducing ESG principles at various management levels, given the backdrop of escalating global challenges that will also impact financial institutions, have been outlined. Among the main threats, the probability of (geo)political heterogeneity, large-scale cyber threats, quantum breakthroughs, organic or synthetic biothreats, global depression, deterioration of the climate situation, have been highlighted. It has been established that in developed countries, society increasingly demands that financial institutions be socially and environmentally responsible, primarily associated with the necessity for a more refined selection of investment objects. It has been substantiated that the growing significance of ESG for non-banking financial institutions is associated with: increasing interest in non-banking financial products centered around ESG principles; expanding incorporation of ESG elements into investment approaches; existing collaboration and alliances with other institutions and organizations; growing regulatory influence. The approaches of various state and supranational regulators and institutions to implementing ESG practices in the operations of non-banking financial institutions have been examined. It has been clarified that a specific foundation and guideline for insurers are the Principles for Sustainable Insurance (PSI) - a financing initiative of the UN Environment Programme (UNEP FI). The approaches to implementing ESG principles at different stages of the value chain of financial product creation have been analyzed. The competitive advantages that open up to financial institutions when implementing ESG principles in their activities have been outlined. It also has been found that some forward-thinking non-banking financial institutions are using ESG to achieve the broader goals of innovating, identifying new markets and launching differentiated products.
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