Sustainable finance and ESG; risk, management, regulations and implications for financial institutions

Mochlasin,M.Ag., Dr. (2024) Sustainable finance and ESG; risk, management, regulations and implications for financial institutions.

	Text 11. Book review Sustainable finance.pdf Download (72kB)
	Text 11. Book review Sustainable finance.pdf Download (72kB)

Abstract

Sustainable development has become a crucial topic in the 21st century due to climate change and environmental degradation, which has led to efforts to implement sustainable development initiated by the Sustainable Development Goals (SDGs) and the Paris Agreement. This has also become an important subject due to the increasing global awareness of environmental, social and financial aspects (Riegler, 2023). Remarkably, the banking sector, as a financial institution, is consistently required to develop standards and practices by integrating sustainability criteria into their business strategies under the comprehensive global development framework (Kashi and Shah, 2023). Currently, the demand for sustainable business practices is rapidly increasing, and implementing sustainable banking strategies can become a competitive advantage to enhance customer loyalty (Mishra and Sant, 2023). However, approximately 60% of banks have not effectively implemented climate risk stress testing, and most financial institutions are still in the early stages of climate risk framework development (European Central Bank, 2022). On the other hand, this can substantially affect the reputation of banks (Guti
errez-Ponce and Wibowo, 2023). Changing business practices through strategies more oriented towards environmental, social and corporate governance (ESG) factors and offering sustainable products is one way to achieve sustainable finance. ESG for banks represents an investment in intangible assets, which may not yield quick profits in the short term but can become a critical foundation for sustainable bank operations and development in the medium and long term (Ji et al., 2023). This presents an exciting challenge in the widespread implementation of ESG policies due to

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