Transformation of the national financial system of Ukraine: comprehension and ways of integration to sustainability

The article analyzes modern scientific approaches to sustainable finance and features of the transition of national financial systems, markets, financial flows in the direction from unsustainable to innovative sustainable technologies. The latest practice of implementing investment and financial activities in accordance with the goals of sustainable development is systematized. In the context of building a system of sustainable finance in Ukraine, the parity of two vectors of its functioning should be taken into account: ensuring both the sustainability of the financial sector itself and the sustainable functioning of the economy as a whole. That is, the development of the national system of sustainable finance in Ukraine is based on the generally recognized world practice in the field of sustainable finance and the decisions of the United Nations Organization, which relate to the financial aspects of sustainable development. In the context of this transformational process, Ukraine joined the Paris Agreement and received the Second Nationally Determined Contribution, which is a concept of state development to achieve ecologically and economically expedient transformations in all sectors of the economy. Financing of the Second Nationally Determined Contribution by 2030 should include a combination of domestic budget allocations, the private sector (domestic and foreign), bilateral and multilateral financial mechanisms, and international assistance. The article focuses on the need to understand the concepts and tools for ensuring financial stability, to determine the differentiated characteristics of the main directions of the transformation of the financial system and typologies of its transition. The authors single out the basic characteristics of transitions to sustainability and innovation processes: rethinking the achievement of new economic, environmental and social goals; time limit; creation of new socially inclusive, fair, ecologically sustainable economic systems; rejuvenation of the economic system through constant innovation; ensuring support for the financial orientation of transitions to sustainable development, which require integration and coordination of financial flows.


The problem
Since the Rio 2012 Summit, the issue of financing the needs of sustainable development has come to the forefront of the activities of the global establishment, academics and the business community.It is becoming increasingly clear that only with the establishment of a financial 1254 (2023) 012119 IOP Publishing doi:10.1088/1755-1315/1254/1/012119 2 system that is sustainable and at the same time capable of providing financing for sustainable development can the complex of problems related to sustainable development of the state be effectively addressed.Over the past 20 years, the concept of sustainable finance has emerged and gradually become more widespread under the auspices of the United Nations Environment Program's Finance Initiative.It has accumulated a new financial paradigm of taking into account social, environmental and governance factors (the so-called ESG criteria) of sustainable development in financial activities, as well as the principles of responsible financial behavior.To date, the world has gained considerable experience in organizing sustainable financial activities in various industries and areas.However, in Ukraine, very little attention has been paid to the concept of sustainable finance, as well as to the theoretical, methodological and practical aspects of organizing sustainable financial activities to achieve the goals of climate stability and sustainable development.Therefore, the tasks of substantiating the theory and methodology of applying sustainable finance practices in Ukraine and adapting existing concepts of financial sustainability to the conditions of our country are very relevant.
The purpose of the publication is to characterize the possibilities of organizing a sustainable financial system in Ukraine to achieve the goals of climate stability, financing sustainable development and ensuring sustainable management in the country based on the implementation of the best international recommendations and practices in the field of sustainable finance.

State of finance in sustainability transitions research
The transition of the globalized economy and the world financial system to sustainable development requires a fundamental transformation of national financial systems, markets, financial flows in the direction from unstable to innovative sustainable technologies, the latest practice of implementing investment and financial activities in accordance with the goals of sustainable development.This applies both to the energy transition, where new low-carbon technologies are more capital-intensive and environmentally friendly, and to other areas of the economy, for example, the transition to sustainable urbanization, circular economy, green energy, etc.
It is undeniable that the transition to sustainability also concerns the financial sphere, which provides society with the necessary resources, and the economy with mechanisms and tools for financing changes.It should be noted that the specifics of the functioning of the financial system and its role in the transformation to sustainability have been studied by foreign and domestic scientists.Such interest in the scientific community is explained by the fact that financial capital is an interchangeable resource that is instantly directed to new technologies through free capital markets according to neoclassical economic models.Another feature of financial capital is that it has a wide variety of forms and structures, is often distributed through financial intermediaries and other actors whose activities are based on existing institutions and infrastructure [1].Also, the "green" essence of sustainable finance is reflected in the distribution of idle social capital between different economic sectors, such as renewable energy, green cities and buildings, climate crises, corporate governance and environmental protection.
Having analyzed scientific publications related to the actualization and conceptualization of the transition of finance and financial systems to sustainability, it is possible to single out the following main directions of their research.
The first concerns research on the connection between financial crises and the transition to the concept of sustainability, as well as the direct development of conceptual approaches to ensure the development of sustainable finance.In particular, Geels [2] analyzes the crisis of 2008-2009, where attention is focused on its potential for the transformation of global economic systems, the possibility of initiating such a transition, and the analysis of state policies for responding to crisis phenomena.
The research by Quatrini [3] is devoted to the impact of the global pandemic crisis of COVID-19 on the transition to a sustainable future and sustainable investments, it is proposed to use decision support tools (DST) for ensuring sustainable development that contribute to investment decisions -ranking, sustainability ratings, standards, strategies, etc.The author comes to the conclusion that in order to effectively make an investment decision, it is necessary to change the existing practice of assessing sustainability, using new technologies and tools (artificial intelligence for checking the forecasting results, the rating model Impact AESSURANCE).
As mentioned above, publications related to the development of the conceptual foundations of the development of sustainable finance, the identification of connections between sustainability and, for example, "green" finance, should be included in this group of developments.This problem is highlighted by Wang et al [4], in which the authors emphasize that in order to achieve the goals of sustainable development, all sectors of society need to invest approximately 5 to 7 trillion US dollars annually, and the Paris Agreement provides for long-term financing with cost-benefit calculations, and within a certain period time and significant global investments.
Urban and Wójcik [5] offers a conceptual approach to sustainable finance as a multi-level socio-technical system in which the financial sector functions in a socio-technical landscape.The landscape is seen as a superstructure that includes various social groups and institutions governed by intersubjective norms that result from the process of globalization and capitalization of markets.In turn, as the authors note, capitalism and globalization, which are the main components of the modern financial regime, have a negative impact on both the regime and the trajectory of niche innovations.All this slows down the transition of the financial system to the conditions of sustainability.
Second, a number of scholars consider the availability of financial capital as an investment, energy, climate and environmental issue: for example, how new climate technologies and sustainable finance enable green growth, and using a cross-supplemented ARDL model found that climate technologies, access financial institutions to green investments and the circulation of green bonds (financial market efficiency) significantly reduce carbon emissions [6].
Furthermore, Ronaldo and Suryanto [7] prove that green investment (the indicators of which are waste management, investment in green enterprises and processing, ecological production) is of vital importance for achieving the goals of sustainable development of rural areas from the point of view of ecological and economic sustainability due to the implementation of "green" technologies, which in turn will lead to the development of "green" micro-entrepreneurship and improve the population's vital indicators.
In the framework of this direction, sufficient attention of scientists is devoted to the problems of sustainable financing and the development of the state policy of the transition to "green" energy.Besides, in the article [8], the impact of green financing and renewable energy sources (solar energy, bioenergy, hydropower and wind energy) on the sustainable development of China was investigated.Zhou and Li indicate that there is a significant need for an effective public policy regarding the widespread use of renewable energy to reduce environmental degradation and improve public health at a high level of economic activity.
Li et al [9] updated and modeled the connections between "green" financing, volatility and geopolitical risks regarding investments in renewable energy sources.The results of the study showed that green finance (in the form of green bonds) and green regulations, such as environmental taxes, play a significant and positive role in encouraging investment in renewable energy sources.Nevertheless, oil price volatility and geopolitical risk have a negative impact on the structure of investments in clean energy sources.
Thirdly, individual institutional components of the financial system are investigated, the prospects for their changes and the expansion of the range of financial instruments ensuring the transition of the financial market to sustainability are determined.
Since 2009, when the World Bank issued the first green-labeled bond for a group of Swedish pension funds, the market for fixed investment products has significantly evolved, expanded and diversified through the introduction of new structured finance instruments.In addition to green bonds, the market now offers blue bonds, social bonds, sustainable development bonds, disaster bonds.Today, individual assets of direct investment funds, investment funds, exchange funds and those created on the basis of public-private partnerships, mixed financing instruments (multi-level investments) and risk-sharing instruments (guarantees, weather insurance, first loss capital), other instruments raising public and/or private sector capital for specific purposes, often related to achieving sustainability or other environmental or social commitments [3].
The transformation of the financial system into a sustainable one requires taking into account the prerequisites of the concept of sustainability in the activities of financial institutions, including banks.In the study [10], a benchmark assessment of the sustainability practices of 37 largest banks by total assets, located in Europe, America, Asia, Africa and the Asia-Pacific region, was carried out.The author found that the percentage of banks that adapted their management structure and implemented measures that contribute to increasing the level of sustainable development culture increased by 25% compared to 2020 and reached 74%.Banks have implemented the following measures: sustainability training programs (84% of assessed banks), sustainability policies (81%) and board statements on sustainability commitments (84%).However, it should be noted that the degree of consideration of nonfinancial factors varies depending on financial institutions.Usually, such actions are carried out by large international banks, for example, Societe Generale, Hongkong and Shanghai Banking Corporation-HSBC, Credit Agricole, Triodos).
Fourthly, part of the publications is focused on the issues of the systemic nature of sustainable finance (systemic approach) and the transformation of the financial system to the conditions of sustainability.Thomas and Mantri [11] considered finance as a complex adaptive system of systems (CASOS), which complicates its design for sustainable development using traditional approaches.The work proves that the problem of sustainability is multi-scale / multimodel, which is inherently adaptive and requires that adaptive agents evolve together with the corresponding cohort system.The authors propose an axiomatic approach to the design of sustainable finance that takes into account the vision of sustainable development as meeting the needs of the present without compromising the ability of future generations to meet their own needs.
Naidoo [12] conducted a thorough study of a new approach to overcoming the polarity of the financial system by interpreting the characteristics of the process of its transition to sustainability from the point of view of meeting certain requirements.According to the Naidoo, there are five initial requirements -changes in the direction of development, temporal dynamics, the influence of coexisting systems, a conflicting social context and contextual experimentation.That is, the article offers initial parameters that inform about the reaction of financial systems to the requirements of the transition to sustainability and make it possible to evaluate it.
Thus, the financial system is able to provide radical and transformational changes to sustainability in the economy, large-scale investments in infrastructure, despite the challenges of the crisis.In addition, the challenge of the gradual transition to sustainable finance lies within an interconnected global financial system that is struggling to keep pace with the digital economy and ensure resilience to new risks.Therefore, the above-mentioned global contexts, challenges and the need to understand the possibility of gradual transformation of the national financial system to sustainability determine the relevance of this study.

The basic institutional foundation of the formation of the national system of sustainable finance in Ukraine
When considering the formation of the national system of sustainable finance in Ukraine, first of all, it is necessary to pay attention to the main positions of the national model of sustainable management, which is aimed at ensuring socio-ecological and economic growth due to the inclusion of natural, physical and human capital in economic circulation (input effects), ensuring the corresponding structural changes in the economy, primarily in the "green" direction, taking into account the climatic requirements of sustainability (efficiency effect); the need to make powerful investments in the reconstruction and modernization of infrastructure, including both its industrial, social and environmental components (stimulus effects) and stimulation of relevant innovative activity, primarily in the field of development of environmentally friendly and climateneutral technologies (innovation effects).
It is obvious that according to the above positions, building a system of sustainable finance in Ukraine must first of all take into account the parity of two vectors of such a system, that is, ensuring both the sustainability of the financial sector itself and the sustainable functioning of the economy as a whole.Thus, by building responsible financial behavior and purposeful financing of sustainable development measures, taking into account environmental, social and economic priorities, it is necessary to ensure the implementation of such processes as: • firstly: the inclusion of natural, production, financial, human and other resources in economic circulation with the help of specific financial instruments -"green" instruments of the stock market, loans, insurance policies, etc.; • secondly: sustainable financing of the "green" transition with the aim of minimizing climate change and reducing the economic burden on the environment as a whole; • thirdly: the formation of powerful investment resources for the stabilization of the economy and the implementation of the investment policy of sustainable development, • fourth: creation of a system of financial support for innovations aimed at greening the economy, "green" technological structural changes, minimizing the impact on the climate, taking into account the most modern trends in the implementation of the financial policy of sustainable development of the UN and the leading countries of the world.
Taking into account the above, the development of the national system of sustainable finance in Ukraine should be based on the universally recognized practice in the field of sustainable finance and the decisions of the United Nations Organization, which relate to the financial aspects of sustainable development.Thus, at the 75th General Assembly of the United Nations (UN) in September 2020, it was emphasized that the last decade has become the hottest in the history of mankind, the concentration of greenhouse gases continues to grow, so humanity must urgently change course, there are less than ten left years, and therefore already in the next decade, that is, by 2030, it is necessary to ensure appropriate changes in the management of the economy and finances in order to minimize further negative impacts on the natural environment and to allocate appropriate financial resources for this [13].
Today, it is recognized that climate and environmental challenges require a change in the financial policy of governments and individual financial institutions in the direction of organizing sustainable financial activities and forming an effective system of sustainable finance at the level of countries and the world.Today, climate and environmental challenges are recognized by the European Central Bank (ECB) as two main risk factors.According to the estimates of the Bank for International Settlements (BIS), they are one of the sources of systemic financial risks and may become the cause of the next global financial crisis [14].The UN Framework Convention on Climate Change (1992), the UN Agenda for Sustainable Development until 2030, and the 2015 Paris Agreement on Climate Change are the main documents that countries should be guided by to confront climate challenges and achieve a sustainable future.The specified documents, in particular, state that one of the three ways to combat climate threats in the context of sustainable development is to ensure the consistency of financial flows with the direction of low-carbon and climate change-resistant development of various-scale territorial entities (regions, countries, global economy, etc.).
According to these documents, starting from January 1, 2021, each country chooses its goals for reducing and/or limiting greenhouse gas emissions.Such goals are characterized as Nationally Determined Contributions (NDCs).The main goal of the Paris Agreement includes the following three sub-goals: sub-goal (a): keep the increase in global average temperature well below +2 °C above preindustrial levels and focus efforts on limiting temperature increase to +1.5 °C above pre-industrial levels, as this will significantly reduce the risks and impacts of climate change; sub-goal (b): increasing the ability to adapt to the negative impacts of climate change, supporting climate change mitigation, development with low greenhouse gas emissions in a way that does not threaten food production; sub-goal (c): harmonization of financial flows with the path of development, with countermeasures against climate change and with low emissions of greenhouse gases [15] (figure 1).
The main differences between the Paris Agreement and the Kyoto Protocol are as follows: • First: changing the nature of the emissions reduction target from an "obligation" to a "contribution".If the Kyoto Protocol provided for a legally fixed amount of greenhouse gas emissions for countries, which was not to be exceeded, the Paris Agreement gives each country the right to determine its contribution to the reduction of greenhouse gas emissions, taking into account national circumstances.• Second: inclusion of all countries of the world with approved plans to reduce greenhouse gas emissions in the form of nationally determined contributions.The Kyoto Protocol provided quantitative commitments to reduce greenhouse gas emissions only from developed countries (Annex B to the Kyoto Protocol).Instead, the Paris Agreement consolidates contributions from countries that are Parties to the Paris Agreement.• Third: introducing a bottom-up approach instead of a top-down approach, enabling all participants, not only at national, but also at local/local or even corporate levels, to contribute regarding the reduction of greenhouse gas emissions.
The participation of each individual country in achieving the global goal is determined by it individually and is called "Nationally Determined Contribution" (NDC).The Agreement requires that such contribution be "ambitious" and established "with a view to achieving the objective of the Agreement".The country reports on participation and it is reviewed every 5 years.
Thus, participation in the Paris Agreement is largely voluntary and thus requires the development of appropriate frameworks and formats for sustainable financial behavior based on voluntary responsibility.The country's participation is registered in the secretariat of the Framework Convention.Each subsequent participation parameter should be more ambitious than the previous one.Countries can cooperate and combine their nationally defined parameters of participation.
During the UN Climate Conference in 2015, the participating countries set their own obligations -the "Intended Nationally Determined Contribution" (Intended Nationally Determined Contribution), which will serve as the initial nationally determined contribution, if the country does not provide another in accordance with the procedure established by the Agreement.The level of each country's nationally determined contribution is determined by a voluntarily binding, but not mandatory, target.
At the end of July 2021, the government of Ukraine approved the updated national determined contribution of Ukraine to the Paris Agreement, according to which the current climate goal of Ukraine is to reduce greenhouse gas emissions to the level of 35% compared to 1990 by 2030 [17].Among the main measures to achieve such an indicator in the next 10 years, it is necessary to implement and, accordingly, finance a number of economic tasks, which include: modernization of energy and industrial enterprises; development of renewable energy sources; energy efficiency measures in all sectors of the economy; thermal modernization of buildings; increasing the share of organic agriculture and resource-saving agricultural practices; electrification and renewal of transport; introduction of waste management hierarchy; increase in forest cover and reform of forest fund management [16].
It is noted that strategic goals for decarbonization and a consistent approach to their achievement are a logical continuation of Ukraine's European integration course.

Problems of financing the nationally determined contribution of Ukraine to the Paris Agreement
In order to achieve the declared goals of the transition to a low-carbon and resource-efficient economy and to ensure its sustainability, a clear state policy of sustainable financing is necessary, which involves not only a deep understanding of the content of environmental and social risks, but also the existence of an effective system for managing such risks.By financing relevant programs and projects, banks and other financial institutions play a key role in the decarbonization of the economy and the development of its resource efficiency.
In the context of the development of sustainable financing, Regulation 2020/852 of the European Union on the creation of foundations for the promotion of sustainable investment establishes six environmental goals of sustainable economic activity, namely mitigation of the consequences of climate change; adaptation to climate change; sustainable use and protection of water and marine resources; transition to a circular (closed loop) economy; pollution prevention and control; protection and restoration of biodiversity and ecosystems [18].At the same time, the second (updated) nationally determined contribution of Ukraine to the Paris Agreement is the main document that will determine the goals set for achieving climate neutrality and the financial resources necessary for this.This document represents the concept of state development to achieve ecologically and economically expedient transformations in all sectors of the economy: energy, industry, transport, buildings, agriculture and forestry, waste management, etc.
Ukraine is a participant in key international agreements aimed at solving problems caused by environmental/climatic challenges.In accordance with the Paris Agreement of 2015, our state undertook to ensure that by 2030, the amount of greenhouse gas emissions produced by all sectors of the economy would not exceed 35% of the 1990 level.Achieving these goals requires strong financial support.
Thus, in March 2021, the Cabinet of Ministers of Ukraine approved the National Economic Strategy for the period until 2030 [19], according to which the country plans to achieve climate neutrality no later than 2060.According to experts, for the transition of Ukraine to a climateneutral economy, it is necessary to attract about 102 billion euros of capital investments by 2030, that is, about 10 billion euros of annual financing [16].The estimated investment plan is presented in table 1.
Financing of the Second (updated) Nationally Determined Contribution by 2030 should include a combination of domestic budget allocations, private sector (domestic and foreign), bilateral and multilateral financial mechanisms and development assistance.According to the experience of developed countries, the majority of resources should come from private investors, who are usually better at managing the risks associated with the construction and operation of Thus, the role of the public sector will rather focus on providing the necessary regulatory tools, financial incentives and information that will facilitate the attraction of investment from the private sector.Both state and local budgets will play an important role in increasing capital investment in the various sectors of the economy represented in the Contribution.According to experts, financing from the private sector will provide approximately two-thirds of financing for the development of low-carbon infrastructure, and public sector resources will cover the rest through low-interest loans from state development banks or through special support programs [16].
Forecast calculations presented in the Project of analytical review of the updated nationally determined contribution of Ukraine to the Paris Agreement [16] lay the basis for the formation of a further algorithm of actions to ensure sustainable financing of the obligations of our state in accordance with the Paris Agreement.
Starting from August 27, 2022, the Ministry of Environment, together with the Ministry of Finance, the Ministry of Energy, the Ministry of Agrarian Policy, the Ministry of Infrastructure, the Ministry of Economy, the Ministry of Regions and the Government Office for the Coordination of European and Euro-Atlantic Integration have started the process of forming a road map of key transformations and measures to implement the updated nationally determined contribution to the Paris Agreement [21].The operational plan of measures for the implementation of the updated nationally determined contribution to the Paris Agreement is being developed in order to strengthen internal coordination and monitoring of the implementation of climate goals, as well as to expand cooperation with international financial organizations and partners.
First, the plan should be broadly aggregated across all sectors represented in the updated Nationally Determined Contribution to the Paris Agreement and EBRD modeling results.Then, on the basis of these measures, the priority key transformations that the country must implement by 2030 will be formed, and the financial resources necessary for this will be identified.The document proposes, at the national level, not to exceed 35% of greenhouse gas emissions in 2030 IOP Publishing doi:10.1088/1755-1315/1254/1/01211910 compared to the level of 1990, or, in other words, to reduce greenhouse gas emissions by 65% in 2030 compared to 1990 [21].The most important goal of developing such strategic documents for the development of climate finance in Ukraine is to ensure the effective use of public funds and the mobilization of private financial investments.
As an institutional basis for the formation of climate finance in Ukraine as a component of sustainable finance, national and territorial financial funds of the appropriate direction, budgetary institutions of the public financial sector and financial institutions of development can act.Ukraine can attract existing or create new state funds, for example a special state fund (Climate Fund, Green Transition Fund or Green Economy Fund).
In this way, it will be possible to finance climate projects both centrally and from various sources, as well as to facilitate their coordination and support transformations in selected sectors with the help of special programs.Examples of such institutions include the Modernization Fund operating at the EU level, and the National Fund for Environmental Protection and Water Resources Management operating in Poland.These funds are separate legal financial institutions that provide financing in accordance with accepted programs and criteria based on various support mechanisms -covering a portion of the loan, providing co-financing, grant programs, etc.
As financial institutions of the public sector, which are relevant to the climate component of sustainable finance, it is possible to consider, first of all, the state and local budgets, as well as the funds of various public organizations and associations.In particular, the State and local budgets should play an important stimulating role in increasing capital investments in various sectors of the economy.The main task is to create a favorable investment climate for the implementation of the "green" energy transition, to encourage business and private investors to invest in environmentally friendly technologies and infrastructure.One solution could be the extension of tax incentives to encourage green investments, for example, exemption from payment of sales VAT and excise tax on electric vehicles [22].
Development Financial Institutions (DFIs) will also play a major role in climate change financing and the formation of a national system of sustainable finance.Curently, there are many significant contributors to the financing of climate projects in Ukraine, including: Clean Technology Fund (CTF) of the World Bank; Global Environmental Fund (GEF), which operates in Ukraine through UNDP; UNEP and UNIDO; The Finland-Ukraine Trust Fund, established by NEFKO, and the Eastern European Partnership for Energy Efficiency and the Environment (E5P), established by the European Commission for the purposes of Ukraine.DFIs in the last decade have become an important source of sustainable investment in Ukraine, which ranks 4th in the world as a recipient of climate finance from such bilateral and multilateral sources.
In total, the EBRD and the EIB mobilized over 13 billion euros in loans and 2 billion euros in grants during 2014-2019, with the aim of helping Ukraine stabilize the economy and implement comprehensive economic reforms.The EIB mobilized €4.6 billion in loans to support infrastructure development and reforms in the transport, energy, agriculture, education and municipal sectors.EBRD investments in the amount of 4 billion euros were also attracted to promote the development and reform of the banking sector, agribusiness, transport and small business.In addition, the EU's annual program of actions to support Ukraine is financed from the general budget of the EU.
Thus, in 2020, Ukraine attracted 165 million euros for several budget areas (agriculture and development of small farms; technical cooperation; civil society; climate actions) [16].It is expected that the DFI will continue to play the role of a catalyst for attracting sustainable investment in Ukraine.According to the calculations of experts, if a third of the future financial aid to Ukraine from the EU in the period 2021-2030 is directed to projects to prevent climate change, about 10 billion euros can be attracted for Ukraine, which is equivalent to 1 billion euros per year, which, according to our according to estimates, it will cover at least 10% of the The United Nations Development Program (UNDP) is also a powerful institution supporting the development of sustainable financing at the international level [23].On January 24, 2022, in Kyiv, the National Bank of Ukraine and the United Nations Development Program (UNDP) in Ukraine signed a memorandum of cooperation (hereinafter referred to as the memorandum) in the field of development of sustainable financing standards and the application of environmental, social and management approaches (Environmental, Social and Governance -ESG) in the financial sector.According to this document, the parties will implement joint measures to ensure more sustainable, inclusive and "green" economic development with the aim of increasing the resilience of the financial system of Ukraine to environmental, social and managerial risks [24].
UNDP supported Ukraine's desire to create the necessary foundations for the development of sustainable financing in the country, taking into account the fact that the development of the "green" economy and "green" finance have become key areas of support for the authorities of Ukraine for UNDP.Thanks to the strategic partnership of UNDP and the National Bank of Ukraine, complex regulatory and institutional frameworks will be developed by 2025 to support sustainable financing in Ukraine in accordance with the previously proposed NBU Policy and Roadmap for the Development of Sustainable Financing in Ukraine.According to the statements of the leadership of the UNDP representative office in Ukraine, this organization is ready to further strengthen the potential of the National Bank to implement the Policy on the Development of Sustainable Financing for the period until 2025 and support the strengthening of the country's economy for the benefit of the Ukrainian people.
In turn, the National Bank of Ukraine undertook to actively work in the direction of promoting sustainable financing in accordance with the global concept of sustainable development and the European integration vector of Ukraine's foreign and domestic policy.According to the signed memorandum, experts of the National Bank will receive qualified advisory assistance from UNDP during the period of implementation of the Roadmap regarding the development of standards regarding the disclosure of information about environmental, social and management risks by financial non-banking institutions.First of all, it is important to hold online meetings dedicated to the review of international standards and practice on this topic.The parties will also cooperate with the aim of organizing corporate governance related to the introduction of ESG principles, developing sustainable financing standards and improving the management of environmental and social risks in banking and non-banking financial institutions.
Cooperation between UNDP and the National Bank will contribute to the implementation of the Agenda for the period until 2030 in Ukraine, strengthening the efficiency and involvement of the financial sector in the sustainable development of Ukraine with the help of non-regulatory mechanisms, as well as supporting an active dialogue between the public and private financial sectors regarding the financing of the Sustainable Development Goals with in order to better align policies, strategies and investment flows.
Despite the large-scale war in Ukraine, the country's government continues to implement planned measures to achieve the Sustainable Development Goals (SDGs).Thus, after a meeting with state institutions and development partners regarding progress in achieving the SDGs, the Secretariat of the Cabinet of Ministers of Ukraine announced its intention to conduct and submit a Voluntary National Review (hereinafter referred to as the Review) in 2023.The Review is a process by which countries assess and present national progress towards the 2030 Agenda for Sustainable Development and its 17 SDGs and 169 goals.All 191 UN Member States have agreed to achieve the SDGs by 2030, and countries are also expected to conduct at least two Reviews during the SDG implementation period.
The Voluntary National Survey in Ukraine for 2021 showed a decrease in the poverty rate from 58.3% in 2015 to 43.2% in 2018.However, these positive trends are quickly changing: early UNDP forecasts showed that up to 90% of Ukraine's population could face poverty and vulnerability to poverty if the war continues for another year [25].
Thus, the government of Ukraine and financial institutions are gradually implementing measures that will contribute to the further transition of the national financial system to sustainability, taking into account the country's losses from the destruction of energy, transport and urban infrastructure, the need to restore business in the post-war period.

Understanding the conceptualization of the transition to sustainable finance
For the development of state strategies and programs for the transition of the national financial system to sustainability, the necessary basis is a scientific conceptual understanding and justification of this process.In modern science investigating the transition to the sustainability of the world financial system, attention is focused on: differentiated characteristics of the main directions of transformation (taxonomy of sustainable development projects, disclosure of information on non-financial risks by non-financial institutions, standardization of requirements for instruments for mobilizing financial resources, disclosure and consideration of information on non-financial risks by financial institutions, formation (development) of the infrastructure of sustainable finance); determination of typologies of such transitions and their features [26].Despite the heterogeneity of transient processes, certain main characteristics can be singled out, which provide the basis for conceptual understanding of this process.
In particular, transition processes are non-linear and destructive, aimed at achieving a new stable economic state of the system.In addition, multi-level and conflicting interactions are typical for transitional processes that lead to evolutionary (structural) shifts and the emergence of a new (innovative) type of systems and processes [27], when such systems demonstrate the possibility of variations and alternatives for choosing ways to achieve a new steady state.
The scientific basis of sustainable finance is the classification of the characteristics of transitional processes and practical consequences of the Paris Climate Agreement and the SDGs proposed in [12], which is illustrated in table 2. This interpretation is the result of the generalization of modern scientific developments at the initial stage of research, which will be further developed when it will be possible to implement conceptual and empirical conclusions obtained as a result of research on transitions to sustainable development.
According to the given conceptual approach, the characteristics of transitions to sustainability and innovation processes are distinguished, which are the result of technological revolutions and profound changes that will lead to the modernization and rejuvenation of the economic system, the impact of which goes beyond the boundaries of the created new industries or technologies.Thus, technological revolutions are a specific form of transition to sustainability, but at the same time it is necessary to take into account the following special characteristics of such a process.First, transitions to sustainability lead to a strategic rethinking of the achievement of new economic, environmental and social goals associated with existential threats and risks.
Second, such transitions are inherently time-bound processes that require acceleration to achieve certain results of transformative impact on the environment, society, and economy by 2030, while technological revolutions do not have specific time limits.
Third, sustainable financial systems generate impacts at the environmental and social levels, creating new socially inclusive, equitable, environmentally sustainable economic systems while simultaneously destabilizing old ecologically unstable and socially unequal ones.At the same time, technological revolutions may not reflect the social quality of innovations.
Fourth, sustainability transition processes aim at rejuvenating the entire economic system as a primary goal, paying more attention to system-level impacts that can be achieved through different types of innovation; while technological revolutions focus on innovation, and systemlevel impacts are positioned as an indirect consequence of their diffusion.
Fifth, the Paris Agreement and the SDGs support the financial orientation of transitions to sustainable development, which require integration and coherence of financial flows, while the IOP Publishing doi:10.1088/1755-1315/1254/1/01211913 Table 2. Characteristics for informing the demand on the financial system [12].

Characteristics
Indicative demands placed on the financial system

Directional changes
The intermediaries, markets and infrastructure of the financial system consistently directs itself toward achieving a new sustainable economic system.Temporal dynamics The financial system responds across short, medium and longer-term timeframes to address the systemic needs of transition processes.Co-existent system impact The financial system generates environmental and social system-level impacts, by creating new socially inclusive, environmentally sustainable economic systems and simultaneously destabilising old environmentally unsustainable, socially unequal economic systems.

Contested social context
The financial system engages with a broad base of stakeholders in developing its response to support the transition process.Contextual experimentation The financial system experiments and applies adaptive approaches to address the contextual needs of sustainability transition processes.
financing of technological revolutions does not provide for such prerequisites.Moreover, at the initial stage of development and unification is the terminological apparatus regarding such definitions as, for example, "green finance" (different interpretations of such institutions as the United Nations Economic and Social Commission for Asia and the Pacific, OECD, World Bank), definitions of individual financial segments and instruments, such as banking, bonds or institutional investments (China Banking Regulatory Commission, Global Sustainable Investment Alliance, International Development Finance Club), approaches to distinguish industries and technological sectors that primarily require sustainable investments [28].

Proposals for the Roadmap for the development of sustainable finance in Ukraine in 7 main areas of work
Taking into account European approaches to strategizing the development of the sustainable finance system and within the framework of the commitments undertaken when joining the global Sustainable Banking Network, in November 2021, the National Bank of Ukraine presented a comprehensive vision of building and future development of the sustainable financial sector in Ukraine -the NBU Policy on Sustainable Finance Development until 2025 as a separate document that is strategic for the formation of a sustainable finance system in our country.Overall, the NBU Policy on Sustainable Finance Development until 2025 is a comprehensive document that will help financial market participants to take into account the NBU's holistic vision in their plans for the coming years and prepare in advance for the discussion and implementation of future regulatory changes.
The Policy on the Development of Sustainable Finance in Ukraine until 2025 proposes a Roadmap for the Development of Sustainable Finance in Ukraine until 2025, which aims to determine the actions of the National Bank of Ukraine to create a reliable, predictable and stable regulatory framework for the development of sustainable finance in the country, indicating specific time frames and taking into account the need to ensure consistency and adaptation of the banking system and non-bank financial institutions to changes [20].With regard to the first area -improving corporate governance in banks and non-bank financial institutions (NBFIs) with regard to ESG factors, it is necessary to clearly define and detail the concept and structure of ESG factors in accordance with each of the sectors of financial activity, as well as to clearly define and implement the concepts of "sustainable finance", "climate finance", "green finance", "low-carbon finance" in the legislation, taking into account national specifics.
In the second area -the development of ESG disclosure standards -the proposals relate to the formation of a complete, comprehensive and understandable list of financial services in the context of various types of activities in such a way as to exclude double or vague interpretation of terms and thus ensure, on the one hand, the protection of the financial sector from greenwashing, and on the other hand, the effective financing of green projects.
In the third area of developing requirements for banks and NFIs to manage environmental and social risks, it is necessary to adopt a new Law of Ukraine "On Environmental Insurance" and create a sovereign wealth fund in Ukraine, which will become a factor in stabilizing the banking system of Ukraine, including taking into account the impact of ESG-related risks.
In the fourth area -establishing criteria for evaluating and selecting projects for financing, taking into account their role in sustainable development, it is necessary to develop clear regulations for full and clear criteria for evaluating and selecting projects for financing with the participation of stakeholders from public administration, business, and society.
In the fifth area, which is the formation of a sustainable finance system in terms of ensuring that financial institutions disclose information on how sustainable their activities are, the proposals relate to the organization of a review and implementation of best international standards and practices in this area in the Corporate Governance Code of these institutions.
In the sixth area, the integration of climate aspects into the financial stability system, it is necessary to improve the national system of statistical indicators to assess the impact of climate aspects on financial stability and to supplement the Roadmap with a paragraph on attracting external international financial assistance for the use of prudential instruments for sustainable development.
In the seventh area, which concerns the organization of work and implementation of measures to raise the level of financial awareness of economic entities in the development of sustainable finance in Ukraine, it is necessary to organize a National Sustainable Finance Platform, as recommended by UNDP, in order to create an active space for communication and interaction between stakeholders to develop effective management solutions in the field of sustainable finance, provide advice on harmonizing the technical criteria of the EU and Ukrainian taxonomies and updating them.Ukraine also needs to develop specific practices for implementing sustainable finance policies in the national economic system.
In order to create a national sustainable financial system in Ukraine, it is necessary to give impetus to three powerful processes that are increasingly gaining momentum in the global economy.
The first of these is an inclusive process -the capitalization of natural resources and the inclusion of natural capital in financial valuations.
The second is the formation of a system of sustainable financial relations in various areas of financial activity -investment, banking, insurance, and stock markets.
The third process is the dissemination of innovative approaches of "good governance" and "new public management" to the organization of management of economic systems through platforms, which are focused on decentralization, consensus, participation and responsibility.
These are the areas in which stakeholders should focus their efforts in the process of implementing measures to organize a sustainable financing system in our country.

Conclusion
The development of the national system of sustainable finance in Ukraine should be based on universally recognized global practice in the field of sustainable finance and the decisions of the United Nations Organization, which relate to the financial aspects of sustainable development.The main documents that the government of Ukraine should be guided by in order to face climate challenges and achieve a sustainable future are the UN Framework Convention on Climate Change, the UN Agenda for Sustainable Development until 2030 and the Paris Agreement on Climate Change, according to the decisions of which the participation of each individual country in achievement of the global goal is determined by it individually and is called "nationally determined contribution".
In the context of the development of sustainable financing in Ukraine, the Regulation of the European Union 2020/852 on creating the foundations for promoting sustainable investment enshrines the six proposed UN environmental goals for sustainable economic activity, and the main document that defines the goals for achieving climate neutrality and the necessary financial resources is the Second (updated ) the nationally defined contribution of Ukraine to the Paris Agreement, which represents the concept of state development to achieve ecologically and economically feasible transformations in all sectors of the economy: energy, industry, transport, construction, agriculture and forestry, waste management, etc.
Financing of the Second (updated) nationally determined contribution until 2030 should include a combination of domestic budget allocations, the private sector (domestic and foreign), bilateral and multilateral financial mechanisms and development assistance, while, according to the experience of developed countries, the majority of resources will come from private investors, and the role of the public sector will focus on providing the necessary regulatory tools, government guarantees, financial incentives and information that will facilitate investment from the private sector.
Starting from August 27, 2022, the Ministry of Environment, together with the Ministry of Finance, the Ministry of Energy, the Ministry of Agrarian Policy, the Ministry of Infrastructure, the Ministry of Economy, the Ministry of Regions and the Government Office for the Coordination of European and Euro-Atlantic Integration began the process of forming a road map of key transformations and measures for the implementation of the nationally determined contribution to the Paris Agreement, including the financial sector. in order to strengthen internal coordination and monitoring of the implementation of climate goals, as well as to expand cooperation with international financial organizations and partners, which requires a corresponding revision and modernization of the Roadmap for the development of sustainable financing in Ukraine, proposed by the National Bank of Ukraine, primarily in terms of the specification of measures for the development of legislation on environmental insurance, asset securitization mechanisms, application of prudential tools for sustainable development, etc.
The institutional basis for the formation of climate finance in Ukraine as a component of sustainable finance is at the stage of formation, and its main structural elements can be newly created national and territorial financial funds of the appropriate direction, budgetary institutions of the public financial sector and financial institutions of development, for example, a special state fund -the Climate Fund, the Green Transition Fund or the Green Economy Fund, etc., primarily for effective financing of the process of achieving Ukraine's Nationally Determined Contribution to the Paris Agreement.
Development finance institutions (DFIs) are significant contributors to the financing of climate projects in Ukraine, which ranks 4th in the world as a recipient of climate finance from such bilateral and multilateral sources, and climate change prevention projects in 2022-2030 for Ukraine may be at least about 10 billion euros of EU aid funds have been attracted, which is equivalent to 1 billion euros per year, and this, according to our estimates, will cover at least 10% of the funds calculated for climate goals.Furthermore, in order to ensure the transition of Ukraine to sustainable finance, a necessary condition is the development of concepts and tools, the definition of differentiated characteristics of the main directions of transformation and typologies.Therefore, the research of connections between the characteristics of the processes of transition to sustainability and the requirements for the financial system is an urgent task of further scientific research.

Figure 1 .
Figure 1.Formation of the nationally defined contribution of Ukraine to the Paris Agreement of the UN Framework Convention on Climate Change (based on[15,16]).

14 The
Roadmap for the Development of Sustainable Finance in Ukraine is detailed in the following 7 main areas of work.Our proposals to this Roadmap are summarized as follows.