Abstract
This paper is devoted to the investigation of environmental, social and governance investment (investment with ESG criterion) normative base in the context of standardization process in sustainable economy financing. Complexity of such standardization and the lack of commonly accepted regulations, indexes metrics are under discussions of scholars, which encourage the need for clear guidance in ESG investment. 651 sustainability rating products and more than 300 investment policy instruments in different countries show the need for classifying the ESG standards. The solution of this scientific and practical task is based on the developed ESG investment standards system classifications. Proposed classification incorporates such criteria as level of standards adoption, mandatory degree, sectorial specificity, degree of companies’ awareness of responsible activity, ensuring transparency and the benchmarks formation, creating the institutional support of the ESG investment standardization process in sustainable economy and making more grounded investment and regulatory decisions.
Highlights
In the “world of standards” (Brunsson & Jacobsson, 2000) and the “audit society” (Power, 1997), all stakeholders who take part in the responsible investment or investment in accordance with environmental, social and governance criterion (ESG investment) such as institutional investors, companies and their stakeholders, as well as regulators, are in the narrow space situation
The normative base of the ESG investment process, which is in the stage of formation, covers a significant number of regulatory documents of different degrees and order of importance
In order to solve this scientific and practical task, we create the institutional provision of the adoption of the most relevant standards, principles, methods and responsible activity tools for each investment process entities
Summary
In the “world of standards” (Brunsson & Jacobsson, 2000) and the “audit society” (Power, 1997), all stakeholders who take part in the responsible investment or investment in accordance with environmental, social and governance criterion (ESG investment) such as institutional investors, companies and their stakeholders, as well as regulators, are in the narrow space situation. Given the fact that the responsible investment is based on financial criterion, and on the basis of ethical, social, environmental or governing measures that are important in forming an investment portfolio (Kurtz, 2008), the number of standards and regulatory documents that adjust financial and sustainable activities of companies increase too. These standards play a crucial role in sustainable or “green” economy as clear guidance to make an investment and finance as a source of finance resources to environmental, social and other projects, labeled “sustainable”. A large set of standards in the responsible investment due to the existence of ESG criterion combinations in the course of standardization that requires classification regulation
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