LEGAL AND INSTITUTIONAL FRAMEWORK OF ESG AS A STRATEGIC AND COMPETITIVE CONDITIONS FOR THE DEVELOPMENT OF FINANCIAL INSTITUTIONS
DOI:
https://doi.org/10.12775/EiP.2026.22Keywords
ESG, reporting, disclosures, strategies, financial institutions, TCFD, ISSB, FSBAbstract
Motivation: According to Principles for Responsible Investment (PRI), the number of ESG regulations in the global economy amounted to 460 in 2024. Therefore, it is important to identify the main directions of the impact of these regulations on the conditions of functioning of institutions and their effects.
Aim: To present the impact of ESG regulations on changes in the conditions of operation of financial institutions in the global economy based on the analysis of disclosure results in the years 2017-2023, in terms of theme, sector, region and capitalization.
Results: ESG regulations are shaped at the global, regional and national levels. The legal and institutional dependencies in the ESG area at financial institutions result from the extent to which they are subject to specific legal regulations and oversight by supervisory authorities.
According to the ESG Regulation Hub of Sustainalytics, international institutions are the leading actors in ESG regulatory activity, while at the regional level the most active regulators include those from the EU, the Americas, and Asia. Larger financial institutions are observing a strong impact of ESG regulations on operations, investments, and competitive rivalry, while smaller institutions are also experiencing a significant impact on strategic activities. Many transnational corporations are striving not only to comply with applicable regulations but also to accelerate transformation processes. This stems from treating ESG as a new strategic element and competitive tool, with legal and institutional infrastructure playing a key role.
Based on the TCFD and IFRS Foundation, the analysis of ESG disclosures from 3,814 entities for 2017–2023 showed that the highest disclosure rates were observed for governance-related topics, the insurance and banking sectors, Europe and North America, and institutions with a market capitalization exceeding USD 3.2 billion.
References
Adrian T., Grippa P., Gross M., Haksar V., Krznar I., Lepore C., Lipinsky F., Oura H., Lamichhane S., & Panagiotopoulos A. (2022). Approaches to Climate Risk Analysis in FSAPs, IMF Staff Climate Notes, July 14.
Almeyda, R., & Darmansya, A. (2019). The Influence of Environmental, Social, and Governance (ESG) Disclosure on Firm Financial Performance. IPTEK Journal of Proceedings Series, (5), 278. https://doi.org/10.12962/j23546026.y2019i5.6340
Battiston, S., & Monasterolo , I. (2019). How could the ECB's monetary policy support the sustainable finance transition? FINEXUS: Center for Financial Networks and Sustainability, March.
Battiston, S., Mandel, A., Monasterolo, I., Schütze, F., Visentin, G., Mandel, Antoine Monasterolo, & I., Visentin, G. (2017). A climate stress-test of the financial system, Nature Climate Change, 7(4).
Chairani, R., & Zuraida, Z. (2021). Effects of Environmental, Social, and Governance Disclosures on Organizational Visibility: Empirical Study of Non-Financial Companies Listed on the Indonesia Stock Exchange. Indonesian Journal of Sustainability Accounting and Management, 5(2). https://doi.org/10.28992/ijsam.v5i2.476
Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council by specifying the content and presentation of information relating to environmentally sustainable economic activities to be disclosed by undertakings subject to Article 19a or 29a of Directive 2013/34/EU and specifying the method of meeting this disclosure obligation.
da Cunha, Í. G. F., Policarpo, R. V. S., & de Oliveira, P. C. S. (2025). ESG disclosures in high-pollution industries: The role of board structure and ownership. Future Business Journal, 11(1), 1–1. https://doi.org/10.1186/s43093-025-00539-1
Davidson, A., Dence, M. (1988). The Brundtland Challenge and the Cost of Inaction. Royal Society of Canada, Institute for Research on Public Policy, December. https://archive.org/details/brundtlandchalle0000unse
Directive (2014/95/EU) of the European Parliament and of the Council of 22 October 2014 amending Directive 2013/34/EU as regards disclosure of non-financial and diversity information by certain large undertakings and groups Text with EEA relevance, https://eur-lex.europa.eu/legal-content/EN/TXT/ ? uri =CELEX:32014L0095 .
Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting, https://eur-lex.europa.eu/search.html?scope=EURLEX&text=2022%2F2464&lang=en&type=quick&qid=1788279422257
EBA (2021). Annual Report , https://eba.europa.eu/sites/default/files/eba_flourish_extracted/1037133/en/index.html
EBA (2025). EBA ESG Dashboard, https://ebprstaewspublic01.blob.core.windows.net/public/tools-prod/documents/Big_Files/books/interactive-tools/2025/powerbi/ESG_dashboard_page.html
EBA/GL/2025/01, https://www.eba.europa.eu/publications-and-media/press-releases/eba-publishes-its-final-guidelines-management-esg-risks
ECB (2022). Financial Stability Review, November.
ESRB (2016). Too late, too sudden: Transition to a low-carbon economy and systemic risk , ASC Report, no. 6.
ESRB (2020), Positively green: Measuring climate change risks to financial stability, June, https://www.esrb.europa.eu/pub/pdf/reports/esrb.report200608 _on_Positively_green_-_Measuring_climate_change_risks_to_financial_stability~d903a83690.en.pdf?c5d033aa3c648ca0 623f5a2306931e26 .
FSB (2023), Progress Report on Climate-Related Disclosures, 12 October, https://www.fsb.org/2023/10/progress-report-on-climate-related-disclosures-2023-report/.
Giuzio M., Krušec D., Levels A., Melo AS, Mikkonen K., & Radulova P. (2019) . Climate change and financial stability, Financial Stability Review, vol. 1.
González-Bueno, J., Riaño, E. F., & Moreno, J. J. M. (2025). ESG-oriented portfolio optimization in an emerging market: A bi-objective mean–variance approach. Business, Management and Economics Engineering, 23(1), 1–16. 456
GRI Sustainability Taxonomy (2025). https://www.globalreporting.org/standards/gri-sustainability-taxonomy/
IFRS Foundation (2024), Progress on Corporate Climate-related Disclosures—2024 Report, IFRS Foundation, London.
IFRC (2025). https://www.ifrs.org/issued-standards/integrated-reporting/
Jafar, R., Basuki, B., & Windijarto, W. (2024). ESG disclosure and the cost of equity capital: Evidence from emerging markets. Cogent Business & Management, 11(1), 242. https://doi.org/10.1080/23311975.2024.2429794
Juhmani, O. I. (2013). Ownership structure and voluntary corporate disclosure: Evidence from Bahrain. International Journal of Accounting and Financial Reporting, 3(2), 133. https://doi.org/10.5296/ijafr.v3i2.4403
Kalkuhl M., & L. Wenz. (2020), The Impact of Climate Conditions on Economic Production. Evidence from a Global Panel of Regions, Journal of Environmental Economics and Management , No. 103(C).
Kim, S., & Li, Z. (2021). Understanding the Impact of ESG Practices in Corporate Finance. Sustainability, 13(7), 374. https://doi.org/10.3390/su13073746
Kørnøv, L., Lyhne I., Davila, J. G. (2020). Linking the UN SDGs and Environmental Assessment: Towards a Conceptual Framework. Environmental Impact Assessment Review, 85, 106463.
Kosztowniak A. (2023a). System zarządzania ryzykiem ESG w sektorze bankowym krajów Unii Europejskiej, [w:] J. Wielgórska-Leszczyńska, M. Matusewicz, 30 lat w naukach społecznych. Nowe myśli i idea, Oficyna Wydawnicza SGH (ESG risk management system in the banking sector of European Union countries, [in:] J. Wielgórska -Leszczyńska, M. Matusewicz, 30 years in social sciences. New thinks and the idea), SGH Publishing House, Warsaw, pp. 301-316.
Kosztowniak A. (2023b). Climate Policy Relevant Sectors in the Polish commercial banks, Central European Review of Economics & Finance , Vol. 42, No. 1, https://doi.org/10.24136/ceref.2023.004 ( accessed: 12/01/2024 ).
Kosztowniak A. (2025). Ryzyko ESG w instytucjach finansowych w gospodarce światowej, Ekonomista, https://doi.org/10.52335/ekon/204852
Kosztowniak, A. (2023c). The evolution of banking business models in the European Union considering the regulation and sustainability taxonomy, European Policies, Finance and Marketing, Warsaw University of Life Sciences - SGGW PressWarsaw, 30 (79), http://doi.10.22630/PeFIM.2023.30.79.13
Kosztowniak, A., Kozak, S. (2023). Assessing the impact of climate policies and risks on the macroeconomic situation of EU countries, Central European Review of Economics & Finance, no. 45(4a): 67-89, https://doi.org/10.24136/ceref.2023.035
Kozhuharov, V., Mitrofanova, E., & Zlateva , P. (2024). Ownership structure, ESG disclosure, and capital inflows in transitional economies. Business, Management and Economics Engineering, 22(1), 91–. https://doi.org/10.3846/bmee.2024.2144
Lagasio, V., & Cucari, N. (2019). Corporate governance and environmental social governance disclosure: A meta-analytical review. Corporate Social Responsibility and Environmental Management, 26(4), 701. https://doi.org/10.1002/csr.1716
Lunawat, A., & Lunawat, D. (2022). To Environmental, Social, and Governance Performance Impact Firm Performance? Evidence from Indian Firms. Indonesian Journal of Sustainability Accounting and Management, 6(1). 475
Meadows, D. H., Meadows, D. I., Randers, J., Behrens W. W., (1972). The Limits to Growth. A Report to The Club of Rome. https://web.archive.org/web/20130928090817/http://www.religionandnature.com/bron/courses/pdf/LimitsToGrowth.pdf
Monastelo, I. (2020). Climate change and the financial system, Annual Review of Resource Economics, no. 12, pp. 299-320.
Monasterolo, I., & Battiston, S. (2020). Assessing Forward-Looking Climate Risks in Financial Portfolios: A Science-Based Approach for Investors and Supervisors ; NGFS Occasional Paper. Case Studies of Environmental Risk Analysis Methodologies.
NGFS (2020). Guide to climate scenario analysis for central banks and supervisors , June, https://www.ngfs.net/en/guide-climate-scenario-analysis-central-banks-and-supervisors .
NGFS (2024). Annual report 2024, https://www.ngfs.net/en/publications-and-statistics/publications/annual-report-2024
Ould Daoud Ellili, N. (2020). Environmental, Social, and Governance Disclosure, Ownership Structure and Cost of Capital: Evidence from the UAE: Vols. 12(18), 77. Sustainability. https://doi.org/10.3390/su12187706
PRI (2025). Regulation database, https://www.unpri.org/policy/global-policy/regulation-database
Qayoom, I., & Chisti, K. A. (2025). Earnings transparency and ESG reporting: An empirical investigation. Journal of Financial Reporting and Accounting, 23(1), 34–. https://doi.org/10.1108/JFRA-11-2024-0815
Rath, C., Kurniasari , F., & Deo, M. (2020). CEO Compensation and Firm Performance: The Role of ESG Transparency. Indonesian Journal of Sustainability Accounting and Management, 4(2), 278. https://doi.org/10.28992/ijsam.v4i2.225
Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector, https://eur‐lex.europa.eu/eli/reg/2019/2088/ oh .
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32020R0852
Survilaitė-Venskienė , S., & Stankevičienė , J. (2024). Sectoral sensitivity of credit risk and financial distress prediction in ESG-integrated models. Business, Management and Economics Engineering, 22(2), 123. https://doi.org/10.3846/bmee.2024.4658
Tampakoudis , I., Noulas , A., Kiosses , N., & Drogalas , G. (2021). The effect of ESG on value creation from mergers and acquisitions. What changed during the COVID-19 pandemic? Corporate Governance: The International Journal of Business in Society, 21(6) 1117. https://doi.org/10.1108/CG-10-2020-0448
Sustainalytics (2024). ESG Regulatory Hub, October, 2024, https://www.sus tainalytics.com/investor-solutions/esg-regulatory-solutions/esg-regulatory-insights-hub
TCFD (2017). Recommendations of the Task Force on Climate-related Financial Disclosures, https://www.fsb.org/uploads/P290617-5.pdf
TCFD (2020-2024), Task Force on Climate-related Financial Disclosures. 2020-2024 Status Report, https://www.fsb-tcfd.org
Tian, Y., & Zhao, M. (2025). Does managerial climate risk perception improve environmental, social and governance (ESG) performance? International Review of Financial Analysis, 91, 102961. https://doi.org/10.1016/j.irfa.2025.102961
Velte, P. (2020). Institutional ownership and voluntary sustainability reporting: Empirical evidence from Europe. Management Research Review, 43(1), 123. https://doi.org/10.1108/MRR-04-2019-0158
WEF (2024). The Global Risk Report 2024, 19th Edition, https://www3.weforum.org/docs/WEF_The_Global_Risks_Report_2024.pdf
Downloads
Published
How to Cite
Issue
Section
License
Copyright (c) 2026 Aneta M. Kosztowniak
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.
Stats
Number of views and downloads: 46
Number of citations: 0
