Stock market as a catalyst of ESG transformation

Abstract

The modern climate agenda requires tremendous efforts from all market participants, including in terms of improving management mechanisms. It is important to have a working toolkit available that can fulfill the interests of all participants. In this regard, the stock market comes to the fore, which is acquiring special significance today. The emergence of green bonds, as well as other methods of hedging risks using stock market instruments, is becoming an integral part of the ESG agenda. In recent years, the world community has been trying to focus its efforts as much as possible on achieving the principles of sustainable development through the stock market. In these conditions, the existence of well-developed mechanisms for regulating the issue and circulation of financial instruments that contribute to solving climatic and social problems becomes a rather important aspect. The article discusses the features of the use of green and social bonds. The contradictions and systemic shortcomings that hinder the process of introducing «green» financial products have been identified. The experience of Russian and foreign financial institutions in the field of responsible investment has been studied. The author also analyzed the regulatory practice and formulated proposals to ensure the consistency of interests of the participants in the process. The paper gives recommendations in terms of synchronizing work on the formation of ESG-ratings, and also substantiates the importance of the management component in the sustainable development system.