Why did the National Bank update the rules of corporate governance
In recent years, the global financial sector has increasingly moved to a model of responsible business conduct, where environmental, social and managerial factors are taken into account along with financial indicators. That is why the National Bank decided to update the recommendations for Ukrainian banks so that they correspond to international practices and modern market requirements.
It is not only about the profitability or efficiency of the financial institution. From now on, banks must evaluate how their activities affect the environment, society, human rights and the development of the economy in general. This approach is designed to make the banking sector more resistant to risks and increase the trust of clients and international partners.
What documents should banks prepare?
One of the main requirements of the National Bank was the introduction of internal documents that will regulate issues of sustainable development.
The regulator recommended banks to July 31, 2026 develop or update relevant policies, internal regulations and procedures. They should determine the procedure for managing ESG risks, principles of responsible financing, and mechanisms for assessing the impact of the bank's activities on the environment and society.
In fact, sustainable development should become part of the corporate strategy of every financial institution, and not a separate line of work.
What does "responsible business" mean?
One of the key innovations was the official introduction of the concept "responsible business conduct".
By this term, the National Bank understands a comprehensive approach to bank management, in which decisions are made not only taking into account financial benefit, but also possible consequences for the environment, society and the economy.
This means that banks must take into account environmental risks when financing projects, adhere to the principles of social responsibility, maintain fair competition, ensure transparency of management and avoid financing activities that may negatively affect people or nature.
On what principles will the activity of banks be built
The new section of recommendations on sustainable development defines four main areas that should be integrated into the work of banks.
Economic responsibility provides for ensuring the long-term financial stability of the bank, supporting the country's economic development and financing strategically important sectors of the economy.
Environmental responsibility covers the reduction of negative impact on the environment, the development of "green" financing programs, the support of environmental projects, the efficient use of resources and the reduction of greenhouse gas emissions.
Social responsibility provides for the observance of human rights, the development of an inclusive environment, ensuring equal access of clients to financial services, supporting war veterans and creating a barrier-free space for all categories of citizens.
Managerial responsibility refers to the transparency of corporate governance, high standards of business ethics, integrity of management, quality system of internal control and fair competition in the financial market.
What is "green camouflage" and why it will be fought
One of the most noticeable innovations was the introduction of the concept greenwashing, or "green camouflage".
This term refers to a situation where a company or bank creates the impression that its activities are environmentally or socially responsible, when in fact such statements do not correspond to the real state of affairs.
For example, a financial institution may promote itself as a supporter of sustainable development, but at the same time not have any proven programs or continue to finance projects that contradict environmental standards.
The National Bank emphasizes that banks should avoid such practices, as well as assess their clients and counterparties for the possible use of "green camouflage".
What priorities are determined during the war
The recommendations pay special attention to the conditions of martial law and the future post-war reconstruction of Ukraine.
The regulator notes that the principles of sustainable development should take into account the real needs of the state, therefore banks should direct funding primarily to directions that contribute to strengthening the country's economic and defense stability.
Priority areas include:
development of the defense-industrial complex;
support of critical infrastructure;
financing of energy projects;
restoration of enterprises in the de-occupied territories;
liquidation of the consequences of environmental destruction caused by the war.
Thus, banks must take into account not only the commercial feasibility of lending, but also its strategic importance for the state.
How banks work with clients will change
The new guidelines will also affect the customer evaluation process.
Financial institutions should develop their own ESG risk analysis mechanisms and form the so-called ESG profile of the client.
During such an assessment, banks can analyze the enterprise's activities, its environmental impact, social policy, corporate governance system, compliance with legislation and principles of business transparency.
For this, special questionnaires, additional documents, open sources of information and internal risk assessment procedures can be used.
If necessary, the bank will even be able to carry out on-site inspections at the client's place of business if there are doubts about the reliability of the information provided.
What the new rules mean for business
For most companies, the new guidelines will not create additional difficulties, but businesses will have to pay more attention to their own reputation and transparency of operations.
Companies applying for financing or large credit programs will increasingly have to demonstrate not only financial stability, but also a responsible attitude to the environment, employees, corporate governance and social policy.
This approach has long been used by international financial organizations, so the Ukrainian banking sector is gradually adapting to similar standards.
What does this mean for the banking system of Ukraine
The update of the National Bank's recommendations is part of a larger transformation of the financial sector.
In the future, this should contribute to increasing the stability of banks, improving the quality of corporate governance, reducing non-financial risks, and simplifying the cooperation of Ukrainian banks with international investors and financial institutions.
In addition, the integration of ESG principles brings the Ukrainian banking sector closer to European standards, which is especially important in the context of European integration and post-war economic recovery.
Conclusion
The updated recommendations of the National Bank are not limited to changes in the internal procedures of banks. They actually form a new approach to conducting financial business, where, along with profitability, transparency, responsibility, environmental safety and social impact become increasingly important.
For banks, this means the need to review corporate policies and the risk management system, and for businesses to be ready for a more detailed assessment of their activities when receiving financing. In the long term, such changes should make the Ukrainian financial sector more stable, open and attractive to international partners.
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