The article notes that the new paradigm for ensuring the financial stability of Ukrainian banks is based on the implementation of the principles of sustainable development and inclusion. The main strategic priorities in this area are: 1) allocation of capital for implementing economic management policies and increasing sustainability levels; 2) acceleration of the green transition by increasing investment and transforming the financial system; 3) ensuring sustainability and equal access to human capital through inclusive financing. The article offers a three-stage approach to implementing ESG in banking institutions: 1) diagnostics and development of a sustainable development strategy, which includes the processes of planning, integration of information systems and ESG data, and their consolidation; 2) formation of sustainable development reporting, its public transparency; and 3) drafting sustainability strategies taking into account ESG principles. Sustainable development is strategically oriented towards a people-centric approach, the financing of green initiatives, renewable energy, climate risk management, and the resilience of financial systems in developing countries. The article identifies the principles of orientation towards the European Green Deal and the transition to climate neutrality and the implementation of ESG principles in terms of three main components: 1) requirements for products and types of activities in the context of compliance with the principles of sustainable development and the level of ESG risks; 2) requirements for building corporate and risk management systems taking into account climate as a component of ESG and other risks, in the context of their impact on capital adequacy in the short, medium, and long term; 3) criteria for disclosing information with a dual approach to the impact of ESG factors on business, and the impact of business on the environment and society. The author argues that the integration of the principles of sustainable development and inclusion into the mechanism for ensuring the financial stability of Ukrainian banks requires a systemic approach. Based on the research conducted, the article identifies the following key areas: 1) improvement of prudential regulation taking into account ESG risks; 2) development of the green financing market; 3) activation of the financial inclusion policy; 4) strengthening the role of state-owned banks in implementing the principles of sustainable financing; 5) ensuring transparency and reporting.
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