Taxonomy of Sustainable Finance and ESG Principles

Abstract

In the context of intense external and internal economic and social changes, there is a high degree of uncertainty in the financial, commodity, stock and other markets both in individual countries and in the global economy. The consequences of these changes result in increase in the volatility of the exchange rate of domestic currencies of individual countries in relation to the leading world currencies, as well as local investment markets, real estate, business and other assets. The most important task of investors and companies, especially in times of uncertainty, is to make informed management decisions, its purpose is to increase the sustainability of business and investment in business projects. One of the strategies for increasing the sustainability of business and its sustainable development is traditionally compliance with ESG (Environment Social Governance) principles, the advantage of which is the combination and mutual influence in the areas of environmental, social and economic sustainability of activities. Since both enterprises themselves, countries, economies, societies and disclosure of information about them are in constant change, a unified classification system for identifying sustainable economic activity, or “taxonomy”, is important. World experience demonstrates, on the one hand, trends towards uniformity of the methodology and concept of the taxonomy of sustainable finance; on the other hand, the individual characteristics of the national economy of a country require adaptation of general concepts to its unique characteristics. Currently, Russian developments in the field of taxonomy of sustainable finance are actively developing, and in this article, research has been carried out on the steps taken in this direction in Russia and the world, and a simplified scheme for determining the areas that fall within the scope of various taxonomy terms has been proposed, modified taking into account Russian specifics.