*1.2. Green Deal and Sustainable Finances*

The European Union has created the Green Deal as a green growth program, and such requires behavioral changes in citizens (as consumers), businesses, and decision-makers, both with the EU and beyond its borders. Nowadays, sustainability is one of the most challenging global issues, affecting not only individuals but also organizations, both of those operating in the financial and non-financial sector, from small- and medium-sized enterprises (SMEs) to large commercial companies and governmental institutions [28]. The keys to ensure the long-term competitiveness of the EU wide economy are sustainability and the transition to a more resource-efficient, low-carbon circular economy, which increases the well-being of the population due to social justice, on the one hand, and the reduction of anthropogenic impact on nature and the depletion of natural resources [29]. The main aspects and essence of the implementation of the CE in socio-economic development are competition, increase in jobs, poverty alleviation, resource efficiency.

The implementation of green technologies (especially by business entities) should not be "greenwashing" as a type of environmental marketing, since misleading information about sustainable development is of growing interest from consumers and investors. It is important to develop the level of corporate, social, and environmental responsibility of business entities depending on the results of their economic activities, that is, the volume of profitability and its level as indicators of economic efficiency and sustainable management. Sustainable development, first of all, is a process of harmonious development of a person and an ecosystem, with the help of which public welfare is improved, negative externalities are minimized, conditions are created for the introduction of resource-saving technologies, economic growth is observed along with the preservation of the natural environment. Currently, these trends are supported by most developed countries, they are a guide for the further development of the socio-economic system and contribute to an increase in investment in environmental projects and innovations. The creation of resource-saving technologies, on the one hand, is capital-intensive, however, in the long run, it has improved efficiency and reduces risks for business, society, and the state. More often, sustainable development is a combination of the natural environment and automated innovation systems that, if properly used, have a sufficiently long lifespan and are capable of modernization. Becoming the first climate-neutral continent by 2050 requires significant investment from both the public and the private sector. Public finance needs to lead the way, private actors need to provide the scale [30].

The ambitions are high, the goals are challenging, but the question is–how will member states and in particular how businesses be able to meet these targets? A substantial shift in business models as well as in business thinking and consumer behavior is required and moreover support from the state and the EU in terms of funding is essential.

This is why the EU has already been working since 1997 in order to develop a range of documents covering sustainable development, the circular economy, and now green deal aspects [31,32]. Sustainable finance involves investing and making financial decisions that take into account the consequences and impact of investments on the environment. Socially responsible investment helps to reduce the negative impact of the activities of an organization that meets the principles of sustainable development.

Therefore, the transition to a circular economy is possible thanks to the financing and insurance of companies in this area, as well as on the basis of a strategy for sustainable financing, which is based on the inclusion of environmental, social, and governance performance (ESG) in decision-making to ensure sustainable development.

The transition to a policy of managing the rational use of resources and optimizing consumer behavior requires a balance, considering the necessary conditions for the development of the economic system as a backbone element. In this regard, the concept of "Earth Overshoot Day" has gained popularity, the introduction of which was associated with a response to an increasing anthropogenic impact (for example, emissions of carbon dioxide waste into the atmosphere) on natural resources with the impossibility of their full recovery over a certain period against the backdrop of aggressive consumer behavior. As a result, there is an ecological deficit associated with an exaggeration of the ecological footprint over the biocapacity of the territory (Figure 1).

**Figure 1.** Ecological Footprint vs Biocapacity (gha per person): (**a**) The ratio of Ecological Footprint and Biocapacity in European countries; (**b**) The ratio of Ecological Footprint and Biocapacity in the World [33–35].

A distinctive feature of the ecological footprint and biocapacity is the level of ecological deficit (decrease in ecological assets or increase in waste) and ecological reserve (excess of the biocapacity of the region over the ecological footprint). The ecological footprint is characterized by the biocapacity of the region's environmental assets in the production process using natural resources and the resulting waste (carbon emissions) from these activities. In turn, the biocapacity of a region is determined by the productivity of its environmental assets for waste absorption and the ability of ecosystems to recover. Ecological footprint and biocapacity are measured in global hectares (with average global productivity). Figure 1 shows the values (gha per person) for more than 50 years, where in the World (b) since 1961 more than 1.7 times the resources were required, and before 2000 this figure reached more than 2 times. In Europe (a), the opposite is observed, where the ratio peaked in 1980 by almost 3 times and decreased to the world average only by 2017.

The calculation of the ecological footprint can be represented by the following formula [36]:

$$\text{EF } = \sum \frac{T\_i}{D\_w} \times \text{EQF\_i} \tag{1}$$

where it is the annual number of tons of each product and consumed in region, Dw is the average annual average annual production yield of each product "i", and EQFi is the equivalence factor for each product "i".

Biocapacity is calculated in terms of constant gha as follows [37]:

$$\text{BC}^{\circ} = \sum \mathbf{A}\_{\text{i}} \times \text{YF}\_{\text{i}} \times \text{EQF}\_{\text{i}} \tag{2}$$

where Ai represents the bioproductive area, and YFi, and EQFi, are the country-specific yield factor, the world average intertemporal yield factor, and the equivalence factor for each product "i".

Earth Overshoot Day characterizes the level of overspending of resources and leads to the need to use the concept of sustainable development, considering the specific features of the economic system and the need to increase the ecological reserve, which is necessary in industrial regions where its biocapacity does not exceed the ecological footprint [38]. The concept of sustainable development is aimed at achieving balance and coherence, uniting all transformational processes in the social sphere (Goals 1–6), the economic sphere (Goals 7–12), and the environmental sphere (Goals 13–17). At the same time, meeting the conditions for sustainable development is possible when implementing appropriate models of sustainable development, the main one of which is to ensure a balance between the economy and the environment and responsibility. In our opinion, as already stated above, the paradigm of sustainable development of the system in the future should consider specific features and should be based on the current level of development of productive forces. At the same time, a model of the circular economy is being formed with the ability to take into account the transformation of production factors and the value chain focused on sustainable development.
