Taxonomy of Objects for Sustainable Financing for Risk Management System Simulation

Abstract

Introduction. The post-war reconstruction of Ukraine's economy should be carried out on the principles of sustainable development and include the implementation of "green" technologies in various sectors in order to rationally use available natural resources and reduce the harmful impact on the environment. There are already active discussions carried out among economists and financiers about how the existing financial system will facilitate the transition to a green economy and increase the mobilization of public and private resources for investments in projects on sustainable development. The Ukraine’s European integration aspirations encourage researchers to study the experience of the European Union in creating a unified pan-European system of classification of sustainable economic activities ("EU taxonomy") and adapt them to the national characteristics in order to direct green investments to those activities that are important for achieving the goals of the European Green Deal. The above actualizes the problem of effective use of "sustainable" financing mechanisms in the implementation of programs and projects for the recovery of the economy of Ukraine in the post-war period. The purpose of the article is to adapt the European experience to improve the taxonomy of objects of sustainable financing of reconstruction projects for national economy in the post-war period and to develop methodical approaches to risk management of investment projects of sustainable development using modern mathematical apparatus. Attained results. The principles and ESG-factors of sustainable financing are summarized; the prerequisites for evaluating of sustainable development investment projects are identified using the proposed system of measures, indicators and indices of sustainable development. A structural model of the ESG risks and credit risks interrelationships through the prism of the economic activity of sustainable investment subjects is proposed. The necessity of creating a digital platform for collecting and processing ESG data, based on which it is expedient to evaluate sustainable development investment projects in the system of "region-enterprise-industry" relationships, has been proved. A set of ESG risk assessment methods and models was formed and a decision tree was developed for the selection of sustainable development investment projects, taking into account the taxonomy of sustainable economic activity and regional development priorities in the post-war period using screening and scoring models. Conclusions. The application of the proposed principles, factors, indices and indicators of sustainable development allow to develop a new theoretical and methodological approach to assessing the risks of sustainable financing. The performed analysis of the screening and scoring procedures has justified a conclusion about the need of using the optimization theory for complex socio-ecological and economic systems together with various mathematical methods based on modern digital platforms in order to perform a comparative analysis of projects in the integrated system of "region-enterprise-industry" factors. This approach can justify the selection of attractive projects in terms of their financing that will contribute to the reduction of harmful effects on the environment, as well as to effective risk management during their implementation. Keywords: sustainable finance, taxonomy of sustainable investment objects, ESG-factors, ESG-data, screening and scoring of sustainable development investment projects.