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In terms of appearance order, the notion of sustainable development predates that of the green economy. Throughout the second half of the 20th century, as ecological disasters intensified and people's awareness of the need for environmental preservation grew, sustainable development started to be seen as an essential behaviour. The term "green economy" initially arose around the start of the twenty-first century, in part as a result of unsuccessful attempts to put the idea of sustainable development into practise.Many definitions of sustainable development make reference to different perspectives on what this notion need to entail and how many pillars it ought to be supported by. Intense environmental catastrophes around the turn of the century have led to an increase in environmental contamination. Globally rapid population expansion coupled with strong technical and technological advancements have led to an increase in the demand for non-renewable energy, raw materials, and other natural resources. The countries with the highest population growth rates, or those whose development was quick and rapid, are where these issues initially surfaced. When we discuss this incident, we generally think of China and India, therefore it was partially regional in nature. Yet, this practise spread globally as a result of the quick economic development (MunitlakIvanović et al., 2014). Establishing a suitable balance between production growth (the economic aspect), the extraction of natural resources (the ecological component), and life circumstances is the goal of the establishment and execution of sustainable development (social aspect). It is not viable to offer a choice based on the tenet "economy vs ecological." It can be said that sustainable development works in tandem with economic growth (increases in economic efficiency and productivity, modernization of technology, etc.), social progress (socially responsible business that reduces poverty, advances public health, etc.), and environmental progress (reduction of pollution, preservation of biodiversity, etc.) (Stanojevi et al., 2013). Chart of the above described relationship is shown below: Although there are several definitions of the "green economy," they really don't differ that much. The phrase itself denotes an environmentally friendly philosophy, the use of green technology in such economies and production, the significance of environmental protection, and socially responsible behaviour on a global scale as well as that of people and businesses (Ili Petkovi, 2015). Since that environmental catastrophes are not confined by territorial or geopolitical borders, such a desire is pretty obvious. They are both regional and international, and they are expanding. A new idea called resilience captures society's efforts to prepare for these and other unforeseen shocks and restore the balance among all of its pillars (OECD, 2014). The idea of resilience is built on four pillars as opposed to sustainable development since it aims to protect society from shocks and increase its adaptability. In other words, while there are parallels between the four pillars of resilience and sustainable development, the notion of resilience is fundamentally original since it is founded on four pillars. Institutional flexibility is a brand-new fourth pillar (MunitlakIvanovi, Miti, 2016).

Figure 1. Interrelationship between economic, ecological and social aspect in the concept of sustainable development

Source: United Nations Forum on Sustainability Standards (2017), (available at:https://unfss.org/work-areas/topics/additional-areas/)

One may argue that the idea of sustainable development first emerged in 1980 with the creation of the first environmental protection policy, which had the simple goal of "sustainable development via conservation of natural resources." Lele detailed and decried this tactic, which was developed by the International Union for Conversation of Nature and Natural Resources (1991).

At the United Nations' 42nd General Assembly session, the notion of sustainable development—a potential model of development—was formally established and adopted. In the study titled "Our Common Future," the Global Commission on Environment and Development defined sustainable development as "a development which fulfils present demands while not compromising the potential of future generations to satisfy their needs" (Brundtland, 1987). The Commission was initially established in 1983 at the 38th session of the United Nations General Assembly. If wellbeing is thought of as increasing with development, then sustainable development means that welfare does not decrease with time.

The most common and widely recognised definition of sustainable development is the one described above, although it is not the only one. Politically appropriate, this term quickly gained widespread acceptance of the idea of sustainable development. Nevertheless, as stated by MutlakIvanovi (2007), "sustainable development is not contained in any field as a whole, but it is incorporated in several scientific disciplines: economy, technology, environment, law, sociology, and ethics.

Like sustainable development, the term "green economy" lacks a widely agreed meaning (Vladisavljevi et al., 2017). As there is no universal agreement on what constitutes a "green economy," each nation's attitude defines the function and importance of the green economy in accordance with its own requirements and worldview. As a result, the definition of a "green economy" is based on the vision that is commonly recognised in the economic theories of each nation. The primary objective of a green economy is to promote economic growth, which will then lead to an increase in employment. Knowledge is crucial to this process because it is one of the main drivers of long-term economic growth (Tomi, 2015), and it also helps to prevent environmental disasters in a timely manner.The growth of production and consumption has negative effects on the environment, including increased noise levels, environmental pollution, the extraction of natural resources, particularly fossil fuels, and other production and consumption inputs, according to the logical sequence of unadjusted economic and ecological pillars of sustainability. As natural resources cannot always be extracted in order to enhance output growth, the green economy aims to ensure sustainable production and consumption (Kalyta, 2016).

Some theorists claim that the green economy encompasses all of the accomplishments of the sustainable development concept, with these accomplishments being extended by initiatives to improve overall human well-being, lessen social inequality, and decrease the frequency and severity of environmental disasters (Szabo, 2016).

It is important to note that green finance has a tight link with ethical business practises in order to discuss it as an expression and application of notions of sustainable development and the green economy.

The idea of socially conscious business exists. Ebner and Baumgartner's (2006) investigation of the connection between socially conscious company practises and sustainable growth. The study's findings suggest that there is no one definition that captures the precise link between socially conscious business and sustainable growth. The same study has revealed that in the practise of the group of financial institutions, socially responsible business and sustainable development are equivalent.Fundamentally, such an approach speaks of viewing sustainable development as a macro-level phenomena, whereas the notion of socially responsible company is viewed as a micro-level expression of sustainable development.The observed links reflect the belief that the notion of sustainable development is the foundation of socially responsible company (Ebner, Baumgartner, 2006). The similar conclusion was reached by Rana et al. (2009). Dahlsrud (2008) analyses various definitions of socially responsible business in his thesis and confirms the attitude that there is no common definition of such business, indicating that five basic dimensions always appear in observations and definitions of various theoreticians: interest groups, economic aspects, environmental protection, and social environment, followed by goodwill for such business.

Relationship between Sustainable Development and Green Economy

Environmental protection should be the focus of technical, scientific, and economic research in this subject in order to assess the effect and predict the consequences of irresponsible industrial behaviour. There are several causes for this, including soil degradation, climate change, GHG emissions, and any other activity that might jeopardise the future or even existence on a global scale (Goluin et al., 2012).It has previously been stated that the green economy and sustainable development are not synonymous. In these interactions, sustainable development is a tool for implementing green economy (Ili Petkovi, A., 2015, Pokrajac, S., 2009, Unkovi, Kordi, 2012). There are certainly parallels between these two notions, as all ecological activities contribute to the realisation of both principles at the same time. In this approach, sustainable development truly serves as the foundation for the creation of a green economy (Unkovi, Kordi, 2012).Sustainable development does not occur if production and/or consumption have any negative repercussions or induce the exploitation of non-renewable resources. This indicates that the notion of green economy is applied not only when the economy embraces "green" business principles, but also when the social component is considered, that is, when all kinds of social equality are considered (Popovi et al., 2015). The facts stated above imply that natural resources, particularly nonrenewable resources, have exploitation constraints.On the contrary, if resources are used carelessly and without a plan, production and society would collapse sooner or later owing to a shortage of resources, which runs counter to the principles of sustainable development and green economy. When partnerships are established in this manner, these two conceptions are equal and completely in sync (MunitlakIvanovi, 2007).

Relationship between Sustainable Development, Socially Responsible Business and Green Economy

Andrew Carnegie's piece "The Gospel of Wealth" introduced the notion and idea of socially responsible company for the first time in 1889. Carnegie is the first author to openly assert that a business must benefit, and so enhance, the community and environment in which it exists. His approach, however, was not accepted at the time (Cooper, 2000). The Great Depression and the collapse of the financial markets in the 1930s caused a rethinking of this mentality, but no substantial changes were observed until the 1950s.This was due to the damage caused by World War II, as well as the establishment of new international and commercial links. But, for the first time, the country's position and its activities in relation to workers and society were evaluated.Initially, capital owners were concerned that engaging in such activities would have a negative influence and result in a decrease in company earnings. When multinational corporations first developed in the 1970s, more responsible behaviour towards employees and the environment began to be applied as a consequence of pressure on firms to establish such a business philosophy. Owing to several industrial, particularly environmental disasters, the repercussions of which were felt internationally, such a style of conducting business became significant and began to be adopted more intensively in practise.According to Sredojevi, socially responsible activities began to be conducted in the 1990s. In that sense, Sredojević (2006) points out: „Activities of many firms had detrimental consequences on environment and hence international companies had to adopt codices of corporate conduct. Until then, the activities were voluntary, which led to ecological, ethnic, and financial controversies, as well as scepticism about multinational corporations' globalisation and commercial accountability, transparency in business, and dedication to social development and welfare."

Figure 2: Pyramid of corporate social responsibility

 

Source: (Sredojević, 2006) taken from: Carroll (1991): The Pyramid of Social Responsibility: Toward the Moral Management of Organizational Stakeholders.

The most realistic model of socially responsible company is pyramid-shaped and shows a clear interplay of determinants such as philanthropic, ethical, legal, and economic issues. Carroll created the model in 1991. Carrol highlighted the philanthropic component as the most significant aspect, which must work in tandem with the ethical, legal, and economic factors. The model was evaluated in theoretical and practical studies, and it showed to be adaptable and optimum as an instrument for assessing management behaviour in successful businesses.

In reality, the terms "socially responsible business," "corporate social responsibility," "social responsibility of firms," and "corporate responsibility" are synonyms for the behaviour Carrol characterised as philanthropically, morally, legally, and economically justified and concurrent. These synonyms, like other innovative social techniques, will gain scientific disciplinary status over time.

As with the green economy and sustainable development, there is no universally accepted definition of socially responsible behaviour. Different authors and international institutions take different approaches, but various forms of protection are at the heart of all scientific determinations of this term: consumers' interests, the environment, workers' rights, the interests of business partners and competitors, corporate protection, and global society protection.

The authors of this study choose to define two international institutions, the World Bank and the European Commission. The World Bank defines socially responsible behaviour as "the profit sector's commitment and contribution to sustainable development through work with employees, their families, local communities, and society as a whole in order to improve quality of life through a process that benefits the company and contributes to general development" (Petkoski, Twose, 2003). The European Commission defines corporate social responsibility as "corporate accountability for their influence on society" (European Commission, 2011).

But, from the perspective of capital owners, the influence of socially responsible business on corporate profit is a critical problem. There is no consensus in this sector either, although three fundamentals are evident. Chapple et al. (2005) and Herbohn (2005) convey "fear," i.e. the belief that socially responsible business increases company expenses. Some writers take a completely different approach to this issue, believing that socially responsible business is an investment in the company's human capital rather than a cost (Chamorro, Bangail, 2006, Klein, Dawar, 2004).The third approach may be described as neutral. Writers Wang & Bansal (2012) and Carter (2005) are of the opinion that there is an influence of socially responsible business on firms and activities, but this impact varies and has diverse repercussions. Basically, connection "social duty vs profit" incorporates dualism "economy versus environment", i.e. "long-term sustainability versus green economy".

Green Banking and the Role of the Equator Principles in Green Economy

The phrase "green banking" implies a tight association with business concepts that are distinctive of the green economy, and hence it is unquestionably a component of socially responsible business (MunitlakIvanovi et al., 2015). This worldwide trend was started by international institutions including the Group of 20 (G20), the International Financial Corporation-IFC as a World Bank member, the World Trade Organization-WTO, and the United Nations-UN.Non-governmental organisations play an important role in the execution of this type of funding. A type of finance must include two characteristics in order to be labelled green banking. They are environmental protection and social protection. To achieve such a profit-sensitive financial institution's business model, several types of foreign initiatives, i.e. programmes, have to be launched.From the perspective of various programmes and efforts, social and/or environmental protection might have a binding (established at the national level) or non-binding nature (they are created by non-governmental organisations and therefore they can have either international or branch character).

The creation and, notably, the execution of any change is not an easy procedure, especially if it does not directly result in profit development (MunitlakIvanovi, 2015). This describes the start of green finance development in 1992 at the United Nations Framework Conference on Climate Change (UNFCCC). This initial attempt focused on the link between profit (as a return on invested capital) and climate change, which has a detrimental influence on the environment and society, and hence on profit volatility.

The Kyoto Protocol is the first tangible agreement, with several mechanisms, the most prominent of which is the Clean Development Mechanism (MunitlakIvanovi, Bagari, 2006), i.e. "cap and trade" system (MunitlakIvanovi et al. 2014). While a stock market for selling GHG emissions was established, this agreement did not provide positive outcomes in practise since the nations that released the most damaging gases from manufacturing did not ratify or implement it. Goluin and MunitlakIvanovi (2011).

A new agreement was made in Copenhagen after the somewhat successful application of this system. The goal of this agreement was to boost developed nations' obligations to $100 billion per year in order to reduce GHG emissions. Owing to the failure of this agreement in actuality, a new agreement was made in Cancun, reiterating the need for Copenhagen liabilities to be operationalized and the magnitude of these obligations.When it comes to implementing these commitments in practise, governments find numerous methods to avoid doing so. The most recent accord, struck in Paris in 2015, is mixed. The disadvantage of this protocol is that it will not enter into force until 55 nations (out of 195 total) that emit about 55% of GHG gases ratify it.

The procedures and methods described above are mostly concerned with environmental concerns. In addition to these, new ones are being developed with the goal of achieving simultaneous social and environmental protection, which will be accomplished through the development of ISO standards 26000, the Global Reporting Initiative (GRI), the "Global Agreement," and other similar agreements and mechanisms.

Such initiatives include the United Nations Environment Programme Finance Initiative (UNEP FI), the Institutional Investors Group on Climate Change (IIGCC), the United Nations Principles for Responsible Investing (UN PRI), the Equator Principles, and other initiatives, conferences, and groups. The question is how financial organisations, which are primarily motivated by interest and profit, may have an impact on societal and environmental betterment. Each of the aforementioned efforts operates in a distinct manner. The writers adopted the Equator principles due of the short volume of this work.

In project financing, the Equator principles are a type of risk assessment, determination, and management. Its purpose is protection against hazards connected to social and environmental management at the same time (The Equator Principles Association, 2011). The objective of the Association is to establish basic criteria for risk assessment of both society and the environment in order to reduce the negative effect of authorised funding.

The Equator Principles Association was founded as a consequence of a number of financial organisations' determination to enhance their socially responsible behaviour to the highest degree feasible (The Equator Principles Association, 2011).

The Secretariat of the Equator Principles Association has its offices in London. The Board of Directors is made up of 12 members, some of which are Association founders and others from the presiding bank. The Association's activity is based on standards established and implemented by the International Finance Corporation-IFC. Table 1 provides an overview of Equator Principles III.The Equator principles have been implemented in 35 nations and 84 financial institutions. As a result, the risk of project finance connected to society and the environment is reduced. Till recently, the percentage of such funding coverage has been greater than 70%.

Because the impact of each project on society and the environment is the simplest to observe, project financing is the first sector in which the Equator principles have been established. This validates the abstract's contention that the Equator principles are a key aspect of the green economy through green banking. Loans are classified into three types based on their environmental impact: A, B, and C. Category A funds, for example, for the development of coal-fired power plants, have the greatest harmful impact on the environment.On the contrary, a project funded by category C money has little or no detrimental influence on the environment. As a result, independent auditors' reports containing environmental impact assessments must be filed alongside projects funded with funding from categories A and B, in order to subsequently discover new ways of production that would lessen these negative affects.

Table 1: Review of Equator principles III

Theme	THE EQUATOR PRINCIPLES III
	1.	Project Finance
Scope	2.	Project Finance Advisory
	3.	Project-Related-Corporate Loans
	4.	Bridge Loans
	Minimum requirements:
	1.	Number of “Projects Closed” including: categorization, sector, region
EP Association Member	and whether an independent review has taken place
	2.	Project Names for Project Finance deals (subject to client consent)
Public Reporting
	3.	Info on EP implementation process including roles and
	responsibilities, staffing, policies and procedures
	4.	Details on training mandatory for first year of EP adoption.
Client Public Reporting	1.	Online summary of Environmental and Social Impact Assessment.
	2.	Greenhouse Gas (GHG) emission levels for projects emitting over
	100,000 tons of CO2 annually during operational phase.
	1.	Social and relevant human rights due diligence.
Social	2.	“Free Prior Informed Consent” in specific circumstances.
	3.	Explicit reference to address human rights in the Preamble.
	4.	Reference to “Guiding Principles on Business and Human Rights,
	Implementing the UN Protect, Respect and Remedy Framework”.
	1.	Attention in due diligence.
	2.	Alternative analysis for high emitting projects in line with
	Performance Standard
Climate	3.	Explicit reference to address climate change in the Preamble.
	4.	Project reporting requirements on GHG emission levels:
	5.		Mandatory: projects emitting + 100K tons of CO2.
	6.		Encouragement: projects emitting + 25K tons of CO2.
Language Alignment	Environmental and social risks and impacts.

The customer that accepts funding is obligated to adopt the Equator principles in the project through an agreement that clearly defines the client's protection duties. The action plan, which can be part of the agreement or appended to it, guides the realisation of duties agreed under this agreement. There is no need for this agreement if the central bank or another legislative body has specified these tasks.

Principles are strategies and procedures for assessing the impact of sanctioned funding on the environment and society during the course of a given project. The table below lists 10 essential principles for the Equator principles mechanism. The impact of the client's permitted finances on the environment and society is assessed by whether or not these standards are met.

The Equator principles III (2013) are the following: 

1. Principle 1: Review and Categorization

2. Principle 2: Environmental and Social Assessment

3.  Principle 3: Applicable Environmental and Social Standards

3.  Principle 4: Environmental and Social Management System and Equator Principles Action Plan

4.  Principle 5: Stakeholder Engagement

5.  Principle 6: Grievance Mechanism

6.  Principle 7: Independent Review

7.  Principle 8: Covenants

8.  Principle 9: Independent Monitoring and Reporting

9.  Principle 10: Reporting and Transparency 

Two audits have been conducted since the establishment of the first Equator principles in 2003, in 2006 and 2013. The above categorization is based on the most recent audit from 2013. Audits were carried out with the major impact of the non-governmental sector, with the following motivations (UNEP, 2016):

1.  Deficiencies in the first report published by the Equator Principles Association and stakeholders

2.  Modification of standards within the International Finance Corporation-IFC 

3. Necessity for more simple implementation and more detailed definition of standards.

The following deficiencies were listed in the study conducted by the United Nations Environment Programme (UNEP, 2016):

1. Majority of financial institutions which introduced the Equator principles use this mechanism mainly for creating of positive public image or as a basis for establishing of the risk assessment system – as risk management.

2.  Absence of financial incentives, such as special interests (bonuses) for users of these funds, is mentioned as a methodological deficiency. Essentially, this means that there is no mechanism of financial incentive for users of these funds which really invest funds in a manner that does not endanger the environment or society. Or shortly, there is no reward system for financiers of socially responsible projects.

3. A significant deficiency is the existence of obligation to indicate projects that emit more than 100.000 tons of CO2 in the report, while there is no mechanism that could stop financing of such projects or demand an adequate substitution.

4.  Due to lack of information, reports make impact analysis of financed projects on the environment and society impossible.

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