TOWARDS A THEORETICAL UNDERSTANDING OF THE GREEN TRANSFORMATION OF THE FINANCIAL SYSTEM AS A TOOL FOR ACHIEVING SUSTAINABLE DEVELOPMENT AND REDUCING FINANCIAL RISKS ASSOCIATED WITH ENVIRONMENTAL PROBLEMS

Abstract

Abstract. The purpose of the article is to analyze conceptual and theoretical approaches to the study of the financial system in the context of its imperative greening against the background of developing institutional tools to combat climate change and environmental crises that affect the riskiness of the international trade and international finance system. The ambiguity of the category of “green finance” is confirmed by the fact of the existence of disparate and uncoordinated taxonomies of sustainability, which complicates the interaction of green initiatives on an international scale. The need for a revision of economic theories based on the concept of ultimate growth without taking into account the qualitative characteristics of the latter becomes obvious. The alternative is the concept of degrowth, which forces us to rethink the balance of economic, environmental and social interests of many stakeholders. It has been established that in the professional literature on degrowth models, the phenomenon of finance is either ignored or demonized. At the same time, at the meta-level of international economic policy, the climate agenda is being institutionalized, which aims to form a consolidated approach to recognizing the need for greening the financial system, which requires a clear definition of the potential and boundaries of greening its structural links. We identify institutional, financial, technical, and psychological obstacles to the implementation of a sustainable and green agenda, while, depending on the focus of the analysis, the risks inherent in the green and energy transition are modified - physical risks, transition risks, and liability risks. The risk-oriented approach on which the modern financial supervision system is based distinguishes liquidity risk, credit risk, market risk, and operational risk. Climate change puts pressure on the outlined risks, which complicates the attraction of financial resources. The lack of unified approaches to identifying the "green attribute" of the financial market leads to manipulation of the green agenda in order to accumulate financial resources that will be directed for other purposes. The demand for the formation of a new perception of the economy in the context of sustainable development becomes obvious, which is served by the concepts of the blue economy, green economy, bioeconomy, degrowth economy, circular economy, low-carbon economy and green growth economy. The article identifies the subjects of green financing. The role of the state in financial support of green initiatives is noted. The impact of climate change on the sectors of the financial market is emphasized - the insurance market, the banking services market, the collective investment market, the foreign exchange market, the payment services market, the precious metals market, which will adapt green instruments to their work. The special role of the carbon market and system of trading quotas for greenhouse gas emissions in the functioning of the global climate agenda system and in encouraging the development of the green segment of the financial system is substantiated. Green finance is considered as a complex of economic relations, which involved the analysis of economic theories that appeal to sustainability. This allowed establishing the leading role of financial institutions in the fight against environmental crises. Investment projects that involve financing sustainable and responsible climate development are recognized as a source of reducing financial risks associated with the destructive consequences of climate change.