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Determinants of ESG sustainability in financial systems: a fuzzy cognitive approach with a focus on Georgia

Author

Listed:
  • Nazira Kakulia

    (Ivane Javakhishvili Tbilisi State University, Georgia)

  • Salome Tvalodze

    (National Bank of Georgia, Georgia)

Abstract

Sustainable finance has gained momentum over the last several years amid increasing environmental and social challenges. This research seeks to characterise Environmental, Social, and Governance (ESG) sustainability within the financial sector as a novel concept, identifying its core determinants, evaluating and modelling relationships among them, and subsequently analysing various scenarios for enhancing ESG Sustainability. To this end, a fuzzy cognitive map construction and modelling method was employed. Through a multi-stage process, a fuzzy cognitive map of ESG Sustainability was developed using Georgia's financial sector as a case study. The main findings identified ten fundamental factors influencing ESG Sustainability within the financial sector and evaluated the causal relationships among them. According to experts' assessments, the Local Sustainable Finance Regulatory Framework and the Involvement of International Financial Institutions are particularly important among these key fundamental factors. Additionally, the scenario analysis revealed that targeted improvements in the key factors could significantly enhance ESG Sustainability.

Suggested Citation

  • Nazira Kakulia & Salome Tvalodze, 2025. "Determinants of ESG sustainability in financial systems: a fuzzy cognitive approach with a focus on Georgia," Entrepreneurship and Sustainability Issues, VsI Entrepreneurship and Sustainability Center, vol. 12(3), pages 10-21, March.
    • Handle: RePEc:ssi:jouesi:v:12:y:2025:i:3:p:10-21
    DOI: 10.9770/s6258796776
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    More about this item

    Keywords

    sustainability; responsible business practice; sustainable finance; Environmental; Social; and Governance (ESG); sustainability; Fuzzy Cognitive Map (FCM);
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation
    • Q01 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - General - - - Sustainable Development
    • Q56 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Environment and Development; Environment and Trade; Sustainability; Environmental Accounts and Accounting; Environmental Equity; Population Growth
    • C63 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computational Techniques
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • O16 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Financial Markets; Saving and Capital Investment; Corporate Finance and Governance

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