THE TAXONOMY OF SUSTAINABLE ECONOMIC ACTIVITIES AS AN INSTITUTIONAL FRAMEWORK FOR GREEN FINANCE DEVELOPMENT IN UKRAINE

Abstract

The article examines the theoretical and practical foundations of green finance development in Ukraine in the context of financial system transformation and the growing need to mobilize resources for sustainable and post-war economic recovery. It is substantiated that the taxonomy of sustainable economic activities represents one of the key institutional mechanisms for the formation of a modern green finance system, as it provides standardized criteria for identifying environmentally sustainable economic activities and enhances transparency in financial markets. The purpose of the study is to improve the theoretical and methodological foundations of green finance by determining the role of the taxonomy in transforming the environmental characteristics of investment projects into financial decisions and by developing a conceptual model for the differentiated selection of green finance instruments in Ukraine.

The study systematizes the major green finance instruments, including green bonds, green loans, sustainability-linked loans and bonds, blended finance mechanisms, guarantee instruments provided by governments and international financial institutions, green leasing, investment funds, and other capital mobilization mechanisms. Their functional purpose, advantages, limitations, and potential application in the Ukrainian context are identified. Based on the synthesis of scientific approaches and contemporary sustainable finance practices, the article proposes an author’s conceptual model illustrating the role of the taxonomy in connecting sustainable economic activities with financial markets. The model demonstrates how taxonomy-based criteria help reduce information asymmetry, increase transparency, strengthen investor confidence, and facilitate the mobilization of financial resources through various green finance instruments.

The scientific novelty of the research lies in improving the understanding of the taxonomy of sustainable economic activities as an institutional foundation for the development of green finance. Unlike approaches that primarily consider the taxonomy as a classification and disclosure tool, the proposed framework highlights its role in supporting capital allocation toward environmentally sustainable projects and enhancing the effectiveness of green finance instruments. The study also provides a comparative assessment of major green finance instruments based on their environmental effectiveness, capital mobilization potential, transparency, alignment with the taxonomy, and relevance to Ukraine’s sustainable recovery.

The practical significance of the research lies in the possibility of using the proposed conceptual framework and comparative assessment by policymakers, financial institutions, investors, international organizations, and businesses when designing and evaluating green investment projects. The findings support the development of a taxonomy-based sustainable finance system capable of mobilizing private and international capital for Ukraine’s green transition and post-war reconstruction.