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Transition to sustainable business solutions in the entrepreneurial environment
Transition to sustainable business solutions in the entrepreneurial environment
Creating a Favorable Ecosystem for Transitioning to a Green Economy. Establishing a conducive ecosystem is crucial for ensuring the transition to a green economy. This ecosystem encompasses the activities of the government, businesses, and society. In this context, the application of Environmental, Social, and Governance (ESG) principles is particularly significant.
Social Responsibility and Ethical Principles
The concept of socially responsible investment began to emerge in the 1970s and 1980s. Investors started considering not only financial indicators but also the social and ethical behaviors of companies when making investment decisions. The "Brundtland Report," published by the United Nations in 1987, popularized the concept of sustainable development. In the 1990s, this trend expanded further, with increased calls for the joint provision of environmental protection, social justice, and economic development.
In 2004, the United Nations' Principles for Financial Sector Sustainability Group introduced the term ESG in a systematic manner through the "Who Cares Wins" report. This document demonstrated that the application of ESG criteria by companies and investors benefits both business and society. The creation of the "Principles for Responsible Investment" (PRI) initiative by the United Nations in 2006 accelerated the global recognition of ESG and its application in investment decisions. Consequently, numerous initiatives, regulations, and standards related to ESG standards and reporting have been established worldwide. Over time, the global application of ESG has expanded.
ESG Standards Benefit Companies, Investors, and Society
Companies adhering to ESG criteria manage environmental, social, and governance risks more effectively. This helps prevent legal disputes related to the environment and reputational damages. Positive reputation strengthens partnerships with customers.
Since ESG standards also encompass efficient labor organization, companies that focus on employees' rights and welfare experience increased motivation and productivity among staff. Companies that prioritize ESG factors can offer more stable and sustainable returns. Such companies pay attention to issues like reducing carbon footprint, water usage, and waste. Additionally, fair labor conditions, gender equality, and the protection of human rights in workplaces are promoted. ESG principles contribute to increased transparency, the "greening" of the economy, and the strengthening of the concept of social responsibility.
Promoting ESG in Azerbaijan: Incentive Measures
Demonstrating commitment to international social responsibility principles, our country actively participates in sustainable development processes and pays attention to the application of ESG standards. To this end, the implementation of sustainable business practices is encouraged. In particular, tax incentives provided for components of ESG principles are significant in this regard. To support the green economy, tax incentives have been provided for electricity production projects utilizing renewable energy sources, and the import of electric vehicles has been exempted from VAT. In this context, tax incentives for electric and hybrid vehicles, discounts on energy chargers for electric vehicles, investment promotion documents, and increased excise tax rates on the import of old vehicles are implemented. Furthermore, the tax legislation includes numerous exemptions related to social issues. Various discounts and additional guarantees are provided for employees from vulnerable groups. Amendments have been made to the Tax Code and the "Social Insurance Law" to encourage individuals with disabilities to engage in activities utilizing their skills and creativity, stimulating their economic participation. This has simplified tax administration for individuals with disabilities. Social tax incentives align with ESG objectives, enhancing access to financial opportunities and promoting the development of an inclusive society. Thus, ESG standards contribute to a healthier environment, an inclusive society, and improved governance mechanisms, leading to a healthy future, sustainable financial flows, and social welfare.
Creating a Favorable Ecosystem for Transitioning to a Green Economy. Establishing a conducive ecosystem is crucial for ensuring the transition to a green economy. This ecosystem encompasses the activities of the government, businesses, and society. In this context, the application of Environmental, Social, and Governance (ESG) principles is particularly significant.
Social Responsibility and Ethical Principles
The concept of socially responsible investment began to emerge in the 1970s and 1980s. Investors started considering not only financial indicators but also the social and ethical behaviors of companies when making investment decisions. The "Brundtland Report," published by the United Nations in 1987, popularized the concept of sustainable development. In the 1990s, this trend expanded further, with increased calls for the joint provision of environmental protection, social justice, and economic development.
In 2004, the United Nations' Principles for Financial Sector Sustainability Group introduced the term ESG in a systematic manner through the "Who Cares Wins" report. This document demonstrated that the application of ESG criteria by companies and investors benefits both business and society. The creation of the "Principles for Responsible Investment" (PRI) initiative by the United Nations in 2006 accelerated the global recognition of ESG and its application in investment decisions. Consequently, numerous initiatives, regulations, and standards related to ESG standards and reporting have been established worldwide. Over time, the global application of ESG has expanded.
ESG Standards Benefit Companies, Investors, and Society
Companies adhering to ESG criteria manage environmental, social, and governance risks more effectively. This helps prevent legal disputes related to the environment and reputational damages. Positive reputation strengthens partnerships with customers.
Since ESG standards also encompass efficient labor organization, companies that focus on employees' rights and welfare experience increased motivation and productivity among staff. Companies that prioritize ESG factors can offer more stable and sustainable returns. Such companies pay attention to issues like reducing carbon footprint, water usage, and waste. Additionally, fair labor conditions, gender equality, and the protection of human rights in workplaces are promoted. ESG principles contribute to increased transparency, the "greening" of the economy, and the strengthening of the concept of social responsibility.
Promoting ESG in Azerbaijan: Incentive Measures
Demonstrating commitment to international social responsibility principles, our country actively participates in sustainable development processes and pays attention to the application of ESG standards. To this end, the implementation of sustainable business practices is encouraged. In particular, tax incentives provided for components of ESG principles are significant in this regard. To support the green economy, tax incentives have been provided for electricity production projects utilizing renewable energy sources, and the import of electric vehicles has been exempted from VAT. In this context, tax incentives for electric and hybrid vehicles, discounts on energy chargers for electric vehicles, investment promotion documents, and increased excise tax rates on the import of old vehicles are implemented. Furthermore, the tax legislation includes numerous exemptions related to social issues. Various discounts and additional guarantees are provided for employees from vulnerable groups. Amendments have been made to the Tax Code and the "Social Insurance Law" to encourage individuals with disabilities to engage in activities utilizing their skills and creativity, stimulating their economic participation. This has simplified tax administration for individuals with disabilities. Social tax incentives align with ESG objectives, enhancing access to financial opportunities and promoting the development of an inclusive society. Thus, ESG standards contribute to a healthier environment, an inclusive society, and improved governance mechanisms, leading to a healthy future, sustainable financial flows, and social welfare.