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The chapter aims to define the role of green banking in the implementation of environmental sustainability, identify the green financial products and point out the role of green banking networks. There is a great deal of interest globally in green finance. Green innovations are desirable for companies, and financial institutions are happy to help finance such projects. Thanks to new technologies, ecological trends and the need to save the planet, banks will increasingly offer green products and services. The concept of green banking is a relatively new one. Green banking promotes environmentally friendly attitudes. Green banks are also called balanced banks, because they are trying to implement a sustainable development policy. Banks, wanting to maintain a high competitive advantage on the financial markets, in their financing policy launch tools that are focused on the protection of the natural environment. In addition to pro-ecological policy support, banks focus on supporting elements related to environmental investments, but also shape pro-ecological attitudes among their clients. The green banking trend leads to environmental responsibility.
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F.W. Geels, “The Impact of the Financial-economic Crisis on Sustainability Transitions: Financial investment, Governance and Public Discourse”, Environmental Innovation and Societal Transition, No. 6, p. 24, 2013.
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H. M. McLuhan was the first to use the term “global village”; The Gutenberg Galaxy, 1962.
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K. Schwab, founder and president of the World Economic Forum, states: “The fourth industrial revolution can strengthen both individuals and entire communities, as a result of creating new economic and social opportunities as well as conditions for development. But it can also lead to marginalization of some social groups, increase inequalities, contribute to the emergence of new security threats and disrupt interpersonal relationships”; see Kolodko G., The Wandering World, “It is not only progress and progress required by the majority of humanity that requires change, but even the maintenance of the natural environment, economy and societies in a state of relative equilibrium without certain changes is not possible. These changes must naturally take place on the path of economic growth”, 2008.
Climatic Paris Agreement 2015, Sustainable Development Goals UNDP adopted UNDP; more broadly, Boulding K., The Economics of a Coming Spaceship Earth, w: Jarret H. (red.), Environmental Quality in a Growing Economy, John Hopkins University Press, Baltimore s.314, 1966.
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Schumacher, as one of the first, made a comprehensive analysis of contemporary economic relations, and in addition showed their responsibility for the ecological and social collapse of many regions of the world (see: Schumacher 1973).
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According to the UN report, GDP should not be a measure of success, especially for small and medium-sized economies’ long-term economic growth, because financial crises are often related to the unsustainable development of the financial sector (see in more detail: Stiglitz et al. 2008).
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ESG (environmental, social and governance) is a generic term used in capital markets and by investors to evaluate corporate behavior and to determine the future financial performance of companies. ESG factors are a subset of non-financial performance indicators which include sustainable, ethical and corporate governance issues such as managing the company’s carbon footprint and ensuring there are systems in place to ensure accountability. The European Federation of Financial Analysts Societies (EFFAS) has defined topical areas for the reporting of ESG issues and developed key performance indicators (KPIs) for use in financial analysis of corporate performance. EFFAS has identified nine topical areas that apply to all sectors and industries (energy efficiency; greenhouse gas (GHG) emissions; staff turnover; training and qualification; maturity of workforce; absenteeism rate; litigation risks; corruption; revenues from new products). Next to these nine areas, sector-specific ESGs and KPIs have also been defined. ESG has quickly become part of the investment jargon to describe the performance of investment and fund portfolios on environmental, social and governance criteria and the quality of their performance against measurable ESG factors that are reported to shareholders. ESG analysis can provide insight into the long-term prospects of companies which allows mispricing opportunities to be identified. Investors can find new market opportunities with companies that place the management of ESG factors at the core of the business. Company-specific ESG factors offer a benchmark for investors to judge the overall quality of the board’s governance and risk management processes and their positioning within an industry sector. The UN-backed Principles for Responsible Investment (UNPRI) provides a voluntary ESG framework for companies and funds, from which investors can make informed investment decisions that relate to sustainability and governance practices. The growing interest in ESG factors from institutional investors, in particular, reflects the view that environmental, social and corporate governance issues can affect the performance of investment portfolios and should therefore be given appropriate consideration by investors (access: 19.11.2018).
Corporate Social Responsibility (CSR) is a self-regulating business model that helps a company be socially accountable—to itself, its stakeholders and the public. By practicing corporate social responsibility, also called corporate citizenship, companies can be conscious of the kind of impact they are having on all aspects of society including economic, social and environmental. To engage in CSR means that, in the normal course of business, a company is operating in ways that enhance society and the environment, instead of contributing negatively to it. Read more: Corporate Social Responsibility, https://www.investopedia.com/terms/c/corp-social-responsibility.asp#ixzz5YZN4smeE; see more in: “Blowfield, M., and A. Murray, Corporate responsibility; a critical introduction, Oxford University Press, New York, 2008.
Socially responsible investment (SRI) is an investment strategy that seeks both financial return and social good; broader: https://www.ussif.org/sribasics.
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The “polluter pays” principle is implemented under the Environmental Liability Directive (ELD), which aims to prevent or remedy otherwise the damage caused to the environment, protected species and habitats, damage to water and damage to the soil. Under this principle, business entities carrying out activities that potentially burden the natural environment are obliged to take specific preventive actions minimizing the negative impact on the environment.
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The Fundamental International Initiatives for Supporting of Sustainable Finance Concept includes: The Equator Principles (EP); https://equator-principles.com (access: 12.11.2018). United Nations Environment Programme Finance Initiative (UNEPFI); http://www.unepfi.org/ (access: 12.11.2018); United Nations Global Compact (UN GC), broader: https://www.unglobalcompact.org/take-action/events/1673-high-level-meeting-of-caring-for-climate (access: 12.11.2018). Principles for Responsible Investment (PRI); broader: https://www.unglobalcompact.org/take-action/action/responsible-investment Collevecchio Declaration (CD); (access: 12.11.2018). https://www.publiceye.ch/de/news/implementing_the_collevecchio_declaration_on_financial_institutions_and_sustainability/ Sustainability Reporting (Global Reporting Initiative—GRI); broader: https://link.springer.com/article/10.1023/A:1022958618391 (access: 12.11.2018).
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The concept of multi-level governance (MLG) was born in the early 1990s as part of political science and public administration theories devoted to the process of European integration. The authors of the MLG concept are Lisbeth Hooghe and Garry Marx. The concept of multi-level governance is a model that combines the transfer of competences by member states to both supranational (EU) institutions and local authorities. To put it simply, the concept of MLG is a derivative of the theory of governance and division of governments developed on the basis of federalism and confederalism.
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