Serhiy Makarenko

Environmental responsibility mechanism in the public sector of the economy has an important sense in UN Sustainability Development Goals achievement, as well as in ensuring the competitiveness of the state-owned companies and the state as a whole. Sustainability concept, concept of “smart cities and smart communities” and the implementation of public administration reform, the necessity to increase the transparency of state-owned companies and the responsibility of municipalities to communities determine the reasonability and urgency in environmental responsibility mechanism development. Systematization and comparative analysis of world and national experience of environmental responsibility mechanism development in the public sector of the economy were made. The author’s approach to the structuring of the mechanism of environmental responsibility in the public sector was developed. Public policy peculiarities implementation in the field of environmental responsibility were investigated considering the levels of regulation of such liability: in state-owned companies as models for other sectors of the economy; in public authorities and municipalities.

This paper is devoted to the investigation of environmental, social and governance investment (investment with ESG criterion) normative base in the context of standardization process in sustainable economy financing. Complexity of such standardization and the lack of commonly accepted regulations, indexes metrics are under discussions of scholars, which encourage the need for clear guidance in ESG investment. 651 sustainability rating products and more than 300 investment policy instruments in different countries show the need for classifying the ESG standards. The solution of this scientific and practical task is based on the developed ESG investment standards system classifications. Proposed classification incorporates such criteria as level of standards adoption, mandatory degree, sectorial specificity, degree of companies’ awareness of responsible activity, ensuring transparency and the benchmarks formation, creating the institutional support of the ESG investment standardization process in sustainable economy and making more grounded investment and regulatory decisions.

The research is devoted to the analysis of the European and Ukrainian experience of banks’ management report audit assurance, the disclosure of the national features of such assurance using the case study of 75 state-owned banks, banks with private and foreign capital in Ukraine, and the specific features of audit verification of this report in the current crisis conditions. It was discovered that the requirements of national regulatory documents and guidelines for preparing a management report for banking institutions generally comply with the European approaches, particularly with Directive 2014/95/EU, Directive 2013/34/EU, and Directive 2014/56/EU (Legislation of EU, 2013, 2014). However, specific national requirements for the content of the report and the procedure for its audit are duplicated, intersect, and create inaccuracies in the disclosure of non-financial information by banks. Besides, the requirements for the reflection of the information on the management report in the independent auditors’ report of the studied banks of Ukraine are partially met. The common challenges for accounting and audit support for the management report for Ukrainian and European banks are disclosed in terms of the current crisis caused by global health risks and their economic consequences for banks.

An important factor in restoring the confidence of financial consumers in banks is to provide auditors with credible and detailed financial statements and their solvency. This study is a pilot step in clarifying the auditor’s role in ensuring the banks’ reliability as public interest entities in Ukraine. It is aimed at investigating the segmentation of the banking audit services market in Ukraine and its comprehensive characteristics. Structural and dynamic analysis were applied to investigate market, regional and branch concentration, as well as main trends in bank audit market development within the data and registers of the Audit Chamber of Ukraine (ACU) and 75 annual reports of Ukrainian banks. Key aspects of the bank audit market in Ukraine are highlighted: the potential of the bank audit market, the ability of auditors to provide audit services and current characteristics of market conjuncture. Bank audit market is highly segmented: this study differentiates strong segments of international audit networks, associations and alliances, including Big 4 companies and the segment of weak Ukrainian audit companies. Kyiv and Kyiv region are the dominant economic active regions in terms of the regional bank market concentration and the presence of international audit networks. The study results are the basis for improving the regulation of the banking audit services market by the National Bank of Ukraine and ACU.

The paper analyzes the key European benchmarks in the field of compiling and submitting sustainability reports. The analysis concerns the disclosure of their features in the context of considering the introduction in Ukraine to increase transparency, accountability and investment attractiveness of Ukrainian enterprises. Based on content and comparative analyses, a comparison was made of the key provisions of sustainability reporting issued by various standards-setters (ISSB (International Sustainability Standards Board), EFRAG (European Financial Reporting Advisory Group), SEC (The United States Securities and Exchange Commission), GRI (Global Reporting Initiative), and IIRC (International Integrated Reporting Council)) as a methodological level of the system of such benchmarks. The global impact of the specified benchmarks is complemented by an analysis of the impact of Directive 2014/95/EU (Non-Financial Reporting Directive – NFRD) and the new Directive 2022/2464/EU (Corporate Sustainability Reporting Directive – CSRD) on the introduction of the sustainability reporting. It is proved that in the context of the formation of the Ukrainian accounting system on the way to European integration, the transposition of the requirements of these Directives is the first step towards streamlining the regulatory framework for companies’ sustainability reporting. A two-level sustainability reporting benchmark system is presented, which at the operational level is based on the EU directives on disclosure of non-financial information and sustainability reporting, and at the methodological level – on the European Sustainability Reporting Standards and other generally accepted standards.

Acknowledgment
Inna Makarenko gratefully acknowledges support from the Supreme Council of Ukraine (0122U201796).