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National Interests: Priorities and Security
 

The impact of regulatory risks of ESG integration on the sustainable development of power companies

Vol. 17, Iss. 4, APRIL 2021

Received: 11 February 2021

Received in revised form: 28 February 2021

Accepted: 15 March 2021

Available online: 15 April 2021

Subject Heading: SUSTAINABLE DEVELOPMENT OF ECONOMY

JEL Classification: C43, C81, D01, M40, Q32

Pages: 624–648

https://doi.org/10.24891/ni.17.4.624

Irina V. ZENKINA Financial University under Government of Russian Federation, Moscow, Russian Federation
zenkina_iv@mail.ru

https://orcid.org/0000-0003-1020-4050

Subject. The article focuses on modern trends in the integration of sustainable development drivers into the substantiation of investment decisions, related regulatory risks and their impact on the sustainable development of companies in the energy and fuel sector.
Objectives. I study the global advancement of responsible investment through the sustainable development concept and determine how regulatory risks of the integration of environmental responsibility factors, social responsibility and administrative efficiency into the investment decision-making process on the sustainable development of power companies.
Methods. The study relies upon the analysis and synthesis, detailed elaboration and generalization, comparison, abstraction, analogy, index method, systems, strategic and risk-based approaches.
Results. The article demonstrates how the sustainable development concept currently evolves and is getting updated. I found the unstoppable evolution of the regulatory and legislative framework, which encourages sustainability projects, and business practice including ESG factors into the investment decision-making process. The article substantiates the role of the responsible investment mechanism and the impact of regulatory risks of ESG integration on the sustainable development of power companies. I show what results can be achieved by analyzing ESG performance of an oil and gas corporation via Thomson Reuters, which helps to assess ESG risks for the company, its investors, and other key stakeholders.
Conclusions and Relevance. The integration of ESG factors into the investment decision-making process ensures the adequate awareness of investors, helps mitigate ESG risks, increases the reasonableness of decisions investors make, and raises the quality and completeness of ESG data disclosure in corporate reporting. Regulatory risks of the ESG integration stem from companies’ breaches in effective regulations and rules on ESG performance and result in negative legislative and economic consequences. Therefore, I make suggestions on the analysis of sustainability factors and indicators, which pursues the mitigation of ESG risks of power companies and their investors, and ensures the efficiency of investment decisions.

Keywords: sustainable development, responsible investment, regulatory risks, ESG integration, ESG performance indicators

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