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{"id":23006,"date":"2026-10-08T09:45:54","date_gmt":"2026-10-08T06:45:54","guid":{"rendered":"https:\/\/modecon.mnau.edu.ua\/?p=23006"},"modified":"2026-10-08T09:45:54","modified_gmt":"2026-10-08T06:45:54","slug":"esg-transformation-of-ukraines-banking","status":"publish","type":"post","link":"https:\/\/modecon.mnau.edu.ua\/en\/esg-transformation-of-ukraines-banking\/","title":{"rendered":"Pakhnenko O., Zakharkina L., Nikonova I. ESG Transformation of Ukraine\u2019s Banking Sector under Institutional Convergence of Sustainable Finance Policies"},"content":{"rendered":"

[vc_row][vc_column][vc_column_text]<\/p>\n\n\n\n
JEL Classification:<\/strong> G21; G28; O16; Q56<\/span><\/i><\/td>\nDOI<\/b>: https:\/\/doi.org\/10.31521\/modecon.V58(2026)-29<\/a><\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

[\/vc_column_text][vc_column_text]Pakhnenko Olena, <\/b>PhD (Economics), Associate Professor of the Department of Financial Technologies and Entrepreneurship, Sumy State University, Sumy, Ukraine<\/span><\/p>\n

ORCID:<\/strong> 0000-0002-4703-4078<\/span><\/a>
\ne-mail: <\/strong>o.pakhnenko@biem.sumdu.edu.ua<\/span><\/a><\/p>\n

Zakharkina Liudmyla, <\/b>PhD (Economics), Associate Professor of the Department of Financial Technologies and Entrepreneurship, Sumy State University, Sumy, Ukraine<\/span><\/p>\n

ORCID:<\/strong> 0000-0003-1002-130X<\/span><\/a>
\ne-mail: <\/strong>l.zakharkina@biem.sumdu.edu.ua<\/span><\/a><\/p>\n

Nikonova Inna, <\/b>student,<\/span> Sumy State University, Sumy, Ukraine<\/span><\/p>\n

ORCID:<\/strong> 0009-0001-6844-6290<\/span><\/a>
\ne-mail: <\/strong>nikonovainna706@gmail.com<\/span><\/a><\/p>\n

ESG Transformation of Ukraine\u2019s Banking Sector under Institutional Convergence of Sustainable Finance Policies<\/b><\/p>\n

Abstract. Introduction. <\/em><\/strong>The institutional convergence of sustainable finance policies is changing the role of banks in allocating financial resources and requires environmental, social and governance factors to be incorporated into strategy, risk management, lending, portfolio monitoring and public disclosure. For Ukraine, this process is shaped by the need to align with the EU Taxonomy, CSRD, ESRS and European prudential requirements while financing economic recovery under wartime and post-war constraints.<\/span><\/i><\/p>\n

Purpose<\/i><\/b>. The study aims to deepen the theoretical foundations of the ESG transformation of Ukraine\u2019s banking sector and to substantiate its functional and institutional model under the convergence of Ukrainian and EU sustainable finance policies.<\/span><\/i><\/p>\n

Results.<\/i><\/b> It was established that institutional convergence should be assessed not by the number of adopted regulations but by the extent to which ESG requirements change internal banking processes. A sequential institutional chain was substantiated: European standards \u2013 national regulation \u2013 internal bank policies \u2013 ESG data \u2013 risk assessment \u2013 financial decisions \u2013 disclosure \u2013 regulatory and market control. A functional ESG transformation model comprising five interrelated contours was developed: regulatory and strategic, informational, risk-related, product and financing, and reporting and control. The analysis identified systemic gaps in taxonomy-based classification, standardisation and verification of borrower data, portfolio-level ESG assessment, and measurement of the environmental and social effects of financing. The PrivatBank case confirmed a gradual shift from declarative commitments to operational practices. In 2025, more than 600 enterprises received UAH 11.3 billion for energy independence, while 12.1 thousand small and medium-sized business clients obtained UAH 24.5 billion under international support programmes. However, limited disclosure of the share, sectoral composition and risk profile of sustainability-aligned assets remains a sector-wide constraint.<\/span><\/i><\/p>\n

Conclusions.<\/i><\/b> Effective ESG transformation requires coordinated development of regulation, data infrastructure, risk-based supervision, sustainable financial instruments and verification mechanisms. The proposed model presents ESG transformation as a complete management cycle in which regulatory requirements are converted into data flows, risk assessments, financing parameters and verifiable reporting. This approach strengthens the capacity of banks to serve as an institutional channel for the sustainable recovery of Ukraine\u2019s economy while reducing greenwashing risks.<\/span><\/i><\/p>\n

Keywords:<\/i><\/b> ESG transformation, banking sector, sustainable finance, institutional convergence, ESG risks, banking regulation, sustainability reporting, greenwashing.<\/span><\/i><\/p>\n

References<\/b>:<\/strong><\/p>\n

    \n
  1. Bondarenko, L. (2025). ESG banking in Ukraine and the world: Challenges and latest trends. Economy and Society, 72. https:\/\/doi.org\/10.32782\/2524-0072\/2025-72-15.<\/span><\/li>\n
  2. Zhytar, M. O. (2024). Sustainable financing and green banking in Ukraine. Economy and Society, 62. https:\/\/doi.org\/10.32782\/2524-0072\/2024-62-66.<\/span><\/li>\n
  3. Muzyka-Stefanchuk, O. A., & Dubko, A. S. (2024). Sustainable banking activity as a subject of financial and legal regulation. New Ukrainian Law, 2, 80\u201387. https:\/\/doi.org\/10.51989\/NUL.2024.2.10.<\/span><\/li>\n
  4. Vovchenko, O. S. (2023). ESG strategy as a basis for sustainability risk management in banks. Economy and Society, 50. https:\/\/doi.org\/10.32782\/2524-0072\/2023-50-85.<\/span><\/li>\n
  5. Shulga, N., & Omelenchuk, V. (2024). ESG risks of banks. Foreign Trade: Economics, Finance, Law, 133(2), 101\u2013119. https:\/\/doi.org\/10.31617\/3.2024(133)06.<\/span><\/li>\n
  6. Solovii, I. P., & Panchyshyn, Y. V. (2025). Development of an integrated ESG assessment of social and environmental risks for financial institutions. Economy and Society, 81. https:\/\/doi.org\/10.32782\/2524-0072\/2025-81-152.<\/span><\/li>\n
  7. Kryklii, O. A., Pavlenko, L. D., & Omelchenko, A. S. (2026). ESG integration in the evaluation of bank\u2019s credit portfolio under the convergence of sustainable finance policies of Ukraine and the EU. Efficient Economy, 4. https:\/\/doi.org\/10.32702\/2307-2105.2026.4.159.<\/span><\/li>\n
  8. European Parliament, & Council of the European Union. (2020). Regulation (EU) 2020\/852 of 18 June 2020 on the establishment of a framework to facilitate sustainable investment. https:\/\/eur-lex.europa.eu\/eli\/reg\/2020\/852\/oj\/eng.<\/span><\/li>\n
  9. European Commission. (2023). Commission Delegated Regulation (EU) 2023\/2772 of 31 July 2023 supplementing Directive 2013\/34\/EU as regards sustainability reporting standards. https:\/\/eur-lex.europa.eu\/eli\/reg_del\/2023\/2772\/oj\/eng.<\/span><\/li>\n
  10. European Parliament, & Council of the European Union. (2022). Directive (EU) 2022\/2464 of 14 December 2022 as regards corporate sustainability reporting. https:\/\/eur-lex.europa.eu\/eli\/dir\/2022\/2464\/oj\/eng.<\/span><\/li>\n
  11. European Banking Authority. (2025). Guidelines on the management of environmental, social and governance (ESG) risks (EBA\/GL\/2025\/01). https:\/\/www.eba.europa.eu\/activities\/single-rulebook\/regulatory-activities\/sustainable-finance\/guidelines-management-esg-risks<\/span><\/li>\n
  12. European Commission. (2022). Commission Implementing Regulation (EU) 2022\/2453 of 30 November 2022 as regards the disclosure of environmental, social and governance risks. https:\/\/eur-lex.europa.eu\/eli\/reg_impl\/2022\/2453\/oj\/eng.<\/span><\/li>\n
  13. National Bank of Ukraine. (2021). Policy on the development of sustainable finance until 2025. https:\/\/bank.gov.ua\/admin_uploads\/article\/Policy_rozvytok-stalogo-finansuvannja_2025.pdf.<\/span><\/li>\n
  14. National Bank of Ukraine. (2025). White paper on the management of environmental, social and governance (ESG) risks in the financial sector. https:\/\/bank.gov.ua\/admin_uploads\/article\/Bila_knyga_2025_fin.pdf.<\/span><\/li>\n
  15. Cabinet of Ministers of Ukraine. (2024). On approval of the strategy for the introduction of sustainability reporting by enterprises (Order No. 1015-r). https:\/\/zakon.rada.gov.ua\/laws\/show\/1015-2024-%D1%80#Text.<\/span><\/li>\n
  16. National Bank of Ukraine. (2025). On approval of the regulati.on on the procedure for disclosure of prudential information by banks of Ukraine and banking groups (Resolution No. 165). https:\/\/bank.gov.ua\/ua\/legislation\/Resolution_30122025_165.<\/span><\/li>\n
  17. JSC CB PrivatBank. (2024). Policy on the integration of environmental, social and governance criteria of sustainable development into the Bank\u2019s activities. https:\/\/static.privatbank.ua\/files\/0000003915271151.pdf.<\/span><\/li>\n
  18. JSC CB PrivatBank. (2025). Working for Ukraine: Annual report 2024. https:\/\/static.privatbank.ua\/files\/richnyy-zvit-za-2024.pdf.<\/span><\/li>\n
  19. JSC CB PrivatBank. (2026). Service with a human face: Combining innovation and empathy: Annual report 2025. https:\/\/static.privatbank.ua\/files\/annualreport2025.pdf.<\/span><\/li>\n<\/ol>\n

    [\/vc_column_text][\/vc_column][\/vc_row][vc_row][vc_column][vc_column_text]Received: 28 July 2026<\/span><\/strong><\/p>\n

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    Pakhnenko O., Zakharkina L., Nikonova I. (2026). ESG Transformation of Ukraine\u2019s Banking Sector under Institutional Convergence of Sustainable Finance Policies. Modern Economics, 58(2026), 235-241. DOI: https:\/\/doi.org\/10.31521\/modecon.V58(2026)-29.<\/span><\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

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    [vc_row][vc_column][vc_column_text] JEL Classification: G21; G28; O16; Q56 DOI: https:\/\/doi.org\/10.31521\/modecon.V58(2026)-29 [\/vc_column_text][vc_column_text]Pakhnenko Olena, PhD (Economics), Associate Professor of the Department of Financial Technologies and Entrepreneurship, Sumy State University, Sumy, Ukraine ORCID: 0000-0002-4703-4078 e-mail: o.pakhnenko@biem.sumdu.edu.ua Zakharkina Liudmyla, PhD (Economics), Associate Professor of the Department of Financial Technologies and Entrepreneurship, Sumy State University, Sumy, Ukraine ORCID: 0000-0003-1002-130X e-mail: l.zakharkina@biem.sumdu.edu.ua
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