Assessment of the ESG rating of banks

Abstract

Environmental, Social, and Governance (ESG) ratings are gaining significant traction. These ratings act as a
window into a bank›s commitment to sustainability practices. They assess how a bank integrates environmental, social,
and governance factors into its operations and the associated risks.
ESG encompasses three key areas: environment, social responsibility, and corporate governance. These factors influence
the activities of every business entity. Considering these factors is crucial when evaluating the effectiveness of a
company›s operations and the outcomes of its policies.
A common misconception exists that ESG factors and their implementation are only relevant to companies directly
involved in resource extraction and production. However, the reality is that all economic entities, including financial institutions,
especially banks, need to adopt these criteria for sustainable development.
The article emphasizes the need for standartized and universal ESG rating indicators. This would require employing various
assessment methods to ensure a comprehensive evaluation.