Scientific periodical

ISSN 2658-5332

Financial Journal Vol.12 No.4 2020

CONTENTS

Zhanna A. Mingaleva
Institutional Features of International Financing for Climate Change Adaptation Programs, p. 10-25
Abstract
The article is devoted to analyzing the main institutional mechanisms of the process of financing the programs for the least developed countries’ adaptation to negative climate change, implemented within the UN Framework Convention on Climate Change (UNFCCC). The paper presents the results of the analysis of basic institutions designed to support the financing processes for sustainable development and adaptation to negative climate changes developed at the international level. The analysis covers two stages of creating and developing a system of financial institutions for international support: the Kyoto Protocol and the Paris Agreement. The reasons behind the need for further transformation of institutional mechanisms for financing adaptation programs are identified. As a result of the study, it is concluded that the key obstacles to the successful implementation of financial adaptation mechanisms are their weak institutional basis and the presence of conflicts in international documents on climate regulation and sustainable development. Based on the institutional analysis, it is shown that the institutions that form the core of international financing mechanisms are characterized by internal and external contradictions and have low implementability as well as low attractiveness for investors. It is concluded that limited access to financial capital is one of the key reasons for the slow resolution of the problem of combating environmental pollution and negative climate change as well as achieving the corresponding goal of sustainable development.
Keywords: financial mechanisms, adaptation programs, climate change, institutions, UN Framework Convention on Climate Change, Adaptation Fund.
JEL: Q54, Q56, Q58, Q52
For citation: Mingaleva Zh.A. Institutional Features of International Financing for Climate Change Adaptation Programs. Financial Journal, 2020, vol. 12, no. 4, pp. 10–25 (In Russ.). DOI: 10.31107/2075- 1990-2020-3-10-25.

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Igor A. Yakovlev, Lyudmila S. Kabir, Svetlana I. Nikulina 
Climate Policy of the Russian Federation: International Cooperation and National Approach, p. 26-36
Abstract
The article gains an insight into the key provisions of Russia’s climate policy and the main stages of its formation. The relevance of the research topic is determined by the need to develop an effective national strategy to reduce climate risks for Russia’s sustainable social and economic development. The article is aimed at shaping a well-grounded understanding of the current state of the national climate policy. It describes the current climate regime of the United Nations, resulting from longstanding international cooperation. The article analyses Russia’s approach to the formation of climate policy on the basis of the national legal framework to combat climate change and adapt to its consequences, and identifies the key problems affecting the formation of the national climate policy. As a result of the research the authors have come to the following conclusions. The climate policy of the Russian Federation is developing in accordance with the global concept. However, the key issues of climate policy have not yet been fully integrated into the national social and economic policy. The current stage in the development of Russian climate policy suggests that the process of its formation should move to a new quality level in the short run.
Keywords: climate change, climate change adaptation, international agreements, national policy, climate policy, Framework Convention on Climate Change, Kyoto Protocol, Paris Agreement.
JEL: F64, O44, Q58
For citation: Yakovlev I.A., Kabir L.S., Nikulina S.I. Climate Policy of the Russian Federation: International Cooperation and National Approach. Financial Journal, 2020, vol. 12, no. 4, pp. 26–36 (In Russ.). DOI: 10.31107/2075-1990-2020-4-26-36.

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Elena P. Fedorova 
Role of the State in the Resolution of Green Finance Development Issues, p. 37-51
Abstract
Problems related to green finance exist in all the countries of the world. Those problems are especially acute in the developing countries, whose economic growth depends on recovery of hydrocarbon fossil fuels. To research the history of issues related to green finance and identify the key reasons hampering its development, this article presents a systematic literature review; it applies a systematic analytical approach to researching green finance. The paper considers the key notions and the world expertise gained in the resolution of problems related to green finance; it also presents a statistical analysis of data provided by websites of international institutions and financial organizations. This article analyzes a number of problems that are unique for green finance: disagreement in interpreting the concepts of “green finance” and “green economy sectors”; difficulties related to assessment and evaluation of the external effect exerted by green finance; institutional reasons hampering the development of green finance; information asymmetry; and problems related to estimation of credit and market risks. The paper considers innovations in the financial sector that are typical for long-term investment, such as green bonds, asset-backed security, and yield cos. As a result, the article concludes that cooperation between the government, international institutions, and business companies is necessary to resolve the issues of green finance. The government ought to play the key role in that cooperation — it must inform, coordinate, stimulate, and control activities related to green finance.
Keywords: sustainable development, economic growth, green economy, green finance, green investment, green bond.
JEL: O44, Q32
For citation: Fedorova E.P. Role of the State in the Resolution of Green Finance Development Issues. Financial Journal, 2020, vol. 12, no. 4, pp. 37–51 (In Russ.). DOI: 10.31107/2075-1990-2020-4- 37-51.

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Svetlana V. Doroshenko, Anna D. Mingaleva 
Carbon Exchanges: European Experience in Developing the Mechanism of Emission Permit Trading, p. 52-68
Abstract
The system for trading permits for greenhouse gas emissions is currently being presented as one of the most promising mechanisms for influencing climate problems. However, the regulatory function of this mechanism is not as positively unambiguous as it is represented by international organizations, and its creation, operation and distribution on a global scale are facing many obstacles. The article presents the main results of a study on the process of creating and developing a system for trading in permits for CO2 emissions, implemented in the EU for more than 15 years. In order to identify problems in the functioning of the mechanism for trade in permits for CO2 emissions, a phased analysis of development within the EU has been carried out, and the main institutional obstacles in the existing mechanism have been detected. The analysis of the features of its application is then performed, the strengths and weaknesses of the functioning are determined, and the development prospects are assessed. As a result of the study, it is concluded that, due to the presence of objective contradictions and shortcomings in the existing mechanism for trading permits for CO2 emissions, its validity in its current form does not allow one to achieve the results on reducing emissions and pollution recorded in the UN and EU planning documents on environmental regulation. The main obstacle is the inability to reach, in modern conditions, coordination of the interests of many stakeholders in reducing emissions, which provokes the effect of “carbon leakage”.
Keywords: trading permits for CO2 emissions, EU ETS, carbon exchanges, regulating one-sidedness, carbon leakage, quotas, greenhouse effect.
JEL: Q52, Q54, Q56, Q58
For citation: Doroshenko S.V., Mingaleva A.D. Carbon Exchanges: European Experience in Developing the Mechanism of Emission Permit Trading. Financial Journal, 2020, vol. 12, no. 4, pp. 52–68 (In Russ.). DOI: 10.31107/2075-1990-2020-4-52-68.

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Vladislav N. Rutskiy, Maria V. Osipenko 
Green Economy as a Labor Productivity Factor in the Manufacturing Industry of European Union Countries, p. 69-84
Abstract
These days many countries declare saving natural resources and reducing anthropogenic pressure on the environment as being among their national priorities. They place importance on sustainable development and the transition to a green economy model. However, the problem of assessing the effectiveness of the green economy and the competitiveness of related technologies is still open to debate. The paper examines approaches to measuring the green economy and presents an empirical analysis of the relationship between labor productivity in the manufacturing industry and green economy factors for a number of European Union countries, characterized by high performance in the global rankings of the green economy. Studying approaches to the identification and measurement of the green economy, the authors identify trends in the realization of a new environmentally sustainable development model in the countries of the European Union and the dynamics of key indicators of the green economy. The paper develops an empirical correlation and regression model that defines, along with other factors, the influence of green economy factors on labor productivity in manufacturing. An assessment of the model specification based on panel data from the manufacturing industries of seven European countries shows a significant positive effect of investment in equipment and plant for pollution control on labor productivity in the industry. The results indicate the relevance of further studies, in particular, the possible attractiveness of private investment in the formation of a green economy in various sectors of the economy in both developed and developing countries.
Keywords: green economy, labor productivity, sustainable development, government support, invest- ments in green technology, empirical model, industrial data.
JEL: O44, Q56, C33
For citation: Rutskiy V.N., Osipenko M.V. Green Economy as a Labor Productivity Factor in the Manufacturing Industry of European Union Countries. Financial Journal, 2020, vol. 12, no. 4, pp. 69–84 (In Russ.). DOI: 10.31107/2075-1990-2020-4-69-84.

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Irina P. Dovbiy, Alexey N. Degterenko, Vlada V. Kobilyakova
“New Industrialization” in Russia as a Factor in the Transition to a Green Economy, p. 85-100
Abstract
The present study reveals the conditions and factors of “new industrialization” in the context of the growing need for Russia to transition to a new, green model of economic growth. It can be assumed that the consequences of the global structural crisis caused by COVID-19 will raise the requirements of environmental standards. The latter can become a powerful tool in the competition between companies and states for resource and sales markets. In Russia, “new industrialization” should become the basis for the greening of the economy, since there are certain prerequisites for this. The authors have investigated various factors, conditions, trends, requirements and features that the new industrialization must meet in order to ensure sustainable development and competitiveness in global markets. In the theoretical aspect, the authors have made a reasoned conclusion about the dialectical unity of the processes of “new industrialization” and greening of the economy. If certain conditions are met – in particular, priority development of the real sector of the economy on the latest technological basis, formation of a new technocratic elite with competencies for the intellectual provision of the “new industrialization” policy, and building up of the intellectual potential of scientists, engineers and technicians pursuing new scientific directions and development of competitive technologies — it will be possible to say that “new industrialization” is a factor of transition to expanded green reproduction of the national economy.
Keywords: “new industrialization”, best available techniques, sustainable development, green economy, COVID-19, global structural crisis.
JEL: D02, O14, O44
For citation: Dovbiy I.P., Degterenko A.N., Kobilyakova V.V. “New Industrialization” in Russia as a Factor in the Transition to a Green Economy. Financial Journal, 2020, vol. 12, no. 4, pp. 85–100 (In Russ.). DOI: 10.31107/2075-1990-2020-4-85-100.

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Irina I. Prosvirina, Natalya S. Dovbiy 
Selection of Sources of Traditional and Green Financing for the Best Available Techniques, p. 101-116
Abstract
Russia has been gradually expanding the principles of green development in the national economy. The article examines the state of methodological and institutional support for green investments, and analyzes the problems that hinder the financing of the best available techniques. The leading role of the state in eliminating institutional gaps between the individual interests of investors and the collective problems of society is established. The authors have investigated various criteria for selecting sources of financing and concluded that it is appropriate to develop green lending relationships in Russia, taking into account regulatory restrictions and ESG risks. In the theoretical (methodological) aspect, the authors have identified specific features of green financing as a trinity of elements: “Object– Subject–Institutional Environment”; each of the features must meet the principles of green financing. The necessity of further formation of the institutional environment for green financing is justified. In practical terms, statistical data-based modeling has been carried out for entities from a list of 300 polluting enterprises that need to update their fixed assets based on the best available techniques. This study has provided answers to the questions of what factors influence the growth of non-current assets, including factors related to the sources of their financing. It is determined that first of all enterprises solve the problem of current management and working capital adequacy, and only then begin to direct financial resources to updating the fixed capital. Based on the results obtained, the main problems are formed and the main tasks of the nearest development of green development principles in the Russian economy are shown. When writing the article, the authors used modern methods of systemic and statistical analysis as well as economic and mathematical modeling.
Keywords: best available techniques (BAT), financing the “new industrialization”, sources of green finance, green investments, sustainable development.
JEL: D02, O14, O44
For citation: Prosvirina I.I., Dovbiy N.S. Selection of Sources of Traditional and Green Financing for the Best Available Techniques. Financial Journal, 2020, vol. 12, no. 4, pp. 101–116 (In Russ.). DOI: 10.31107/2075-1990-2020-4-101-116.

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Ekaterina O. Vostrikova, Anna P. Meshkova
ESG Criteria in Investment: Foreign and Russian Experience, p. 117-129
Abstract
The evolution of financial instruments improves investment decision-making. Modern society requires additional information about companies' activities: standard financial statements and financial indicators no longer satisfy its needs. Environmental degradation, global warming, and the fight against poverty amid growing prosperity in developed countries — all these factors promote the development of new financial instruments and criteria. ESG provides the answer to these modern demands and can help evaluate companies' activities related to investment in sustainable development. Moreover, the application of these criteria enables companies to reduce risks and to create reputation, and helps investment funds make quality investment decisions. This trend, which has emerged and strengthened in developed foreign countries over the past 50 years, is penetrating emerging markets as well.
This article investigates the role of ESG criteria in making investment decisions based on foreign experience. The leaders in socially responsible investment are the economies of developed countries: the USA, Canada, Great Britain, Germany, and Australia. As Russian companies seek international financing, they will have to compete for investors in foreign financial markets on their terms. Therefore, it makes sense to focus on following ESG criteria in their activities right now. Currently, there are a number of barriers to the implementation of ESG criteria in Russia: lack of understanding of the importance of socially responsible investments, lack of state standards in the disclosure of non-financial information, lack of large domestic investors (lack of competition on the pension insurance market as well), and the focus of Russian companies only on medium-term profits.
Keywords: socially responsible investment, ESG criteria, green investment, investment funds, risk, sustainable investment.
JEL: G11
For citation: Vostrikova E.O., Meshkova A.P. ESG Criteria in Investment: Foreign and Russian Experience. Financial Journal, 2020, vol. 12, no. 4, pp. 117–129 (In Russ.). DOI: 10.31107/2075-1990-2020-4- 117-129.

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Scientific periodical

ISSN 2658-5332