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Introducing the ESG reporting - benefits and challenges

Author

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  • Laurentiu Paul Baranga

    (Bucharest University of Economic Studies, Bucharest, Romania)

  • Elena-Ioana Tanea

    (Bucharest University of Economic Studies, Bucharest, Romania)

Abstract

Sustainable finance represents an important concern of the European Union lately, having an essential role in achieving the political objectives of the European Climate Pact. It is interpreted that it supports the sustainable development of economy, simultaneously reducing the pressures on environment and taking into consideration social and governance aspects. The scope of sustainable finance is to improve the financial sector in the context of fighting against climate changes. Considering this purpose, the ESG factors (Environmental, Social and Governance) must be considered in the decisional process regarding the investments of the financial entities, promoting long-term investments in sustainable economic activities and projects. There are many legislative actions at the European level, transposed into national legislation or with direct applicability in Romania for determining developing sustainable economies that beneficially impact the environment and climate changes. The action plan of the European Commission regarding developing a strategy for the sustainable finance contains ten initiatives grouped into three chapters: reorienting cash flow to a more sustainable economy, including sustainability elements in risk management, encouraging transparency and long-term vision.

Suggested Citation

  • Laurentiu Paul Baranga & Elena-Ioana Tanea, 2022. "Introducing the ESG reporting - benefits and challenges," Journal of Financial Studies, Institute of Financial Studies, vol. 13(7), pages 174-181, November.
    • Handle: RePEc:fst:rfsisf:v:13:y:2022:i:13:p:174-181
    DOI: 10.55654/JFS.2022.7.13.14
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    References listed on IDEAS

    as
    1. Broadstock, David C. & Chan, Kalok & Cheng, Louis T.W. & Wang, Xiaowei, 2021. "The role of ESG performance during times of financial crisis: Evidence from COVID-19 in China," Finance Research Letters, Elsevier, vol. 38(C).
    2. López Prol, Javier & Kim, Kiwoong, 2022. "Risk-return performance of optimized ESG equity portfolios in the NYSE," Finance Research Letters, Elsevier, vol. 50(C).
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    ESG; environment; social; governance; scoring.;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G41 - Financial Economics - - Behavioral Finance - - - Role and Effects of Psychological, Emotional, Social, and Cognitive Factors on Decision Making in Financial Markets
    • M14 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Corporate Culture; Diversity; Social Responsibility
    • Q50 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - General

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