Abstract
In recent years, European policy makers have ramped up their efforts to create a regulatory framework for improving sustainability in the financial system. We contribute to the on-going debate on Environmental, Social and Governance in the banking sector by providing an organic overview of the European policies put in place. The legislative framework is currently being enriched by policy makers and regulators that are carefully pursuing the objective of a more sustainable economic system, where financial institutions may act as catalysts. We also offer a comparison of the national level regulations for ESG practices in banking institutions and the related disclosure requirements.
Highlights
Environmental, Social and Governance (ESG) is currently one of the main focus areas for policy makers worldwide.In December 2016, the European Commission formed a high-level expert group (HLEG) to develop an overarching and detailed EU sustainable finance strategy
Sustainability 2021, 13, 12641 social and governance factors) by providing a critical assessment of the legislative framework proposed about ESG practices in Europe, comparing and contrasting the different policies proposed in different countries all over Europe, to expose their pros and cons and inspire further best practices for both policy makers and practitioners
Hernández et al [17] analysed the relationship between the adoption of ESG principles by banks and the impact on their financial performance
Summary
Environmental, Social and Governance (ESG) is currently one of the main focus areas for policy makers worldwide. The second goal is to improve financial stability by fostering the awareness about environmental, social and governance (ESG) issues while making investment decisions. It seeks to improve financial intermediaries’ disclosure obligations to end-investors in terms of sustainability risks and investment goals. In this regard, this paper aims to review the current legislative framework on ESG in Europe as related to banks. Sustainability 2021, 13, 12641 social and governance factors) by providing a critical assessment of the legislative framework proposed about ESG practices in Europe, comparing and contrasting the different policies proposed in different countries all over Europe, to expose their pros and cons and inspire further best practices for both policy makers and practitioners. The last section discusses and concludes by identifying room for improvement and offering suggestions to guide policy makers’ actions
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