According to the research, despite the low general awareness of ESG, the interest in this issue is growing. Over the next three years, around 40% of banks expect the impact of climate change on their financial results, and around 20% of banks expect a significant increase in the role of ESG ratings for investment decision-making.
Yana Epifanova highlighted the uniqueness of the research conducted by Deloitte company, which was initiated by the Association of Banks of Russia. Nowadays, it is the first report on ESG-banking in Russia based on the system analysis of the market. Not only the analysis of available information, but also a survey and a number of in-depth interviews with market participants, regulators and experts were conducted.
The research has confirmed that all infrastructure elements necessary for successful development of ESG approaches are available in Russia today. There are regulators, methodologist, stock exchange, rating agencies, which among other things perform the functions of verifiers. At the same time, all key infrastructure participants are actively involved in the development and implementation of ESG initiatives and tools, largely guided by the best international standards.
Moreover, the Government and the Bank of Russia also focus on the introduction of ESG principles, and the national standards package has already been drafted. There are also platforms, including the Association of Banks of Russia, where the market and regulators can discuss challenges and trends of ESG development.
“In our study we tried to define ESG-banking. We see it as a concept of banking activity, which is based on the principles of environmental, social and corporate responsibility towards present and future generations, as well as on practical implementation of initiatives to achieve sustainable development and other socially significant values”, said Yana Epifanova.
“This definition is the result of joint work of Deloitte specialists, experts of the Association of Banks of Russia and members of the ESG-Banking Project Group. We managed to provide the study with expertise of the most respected and highly experienced experts and market participants in this sphere. We believe that this is another undoubtedly useful practical result of our work.”, added the Vice President of the Association of Banks of Russia.
The final chapter of the research is dedicated to suggestions and recommendations on ESG-banking promotion in Russia. These include application of reduced risk ratios for ESG financial instruments in the calculation of sufficiency ratios, special terms of provisioning for green projects, subsidizing the coupon rate of green bonds, simplified procedure of inclusion of ESG bonds in the Lombard list of the Bank of Russia, as long as the issue meets the rating requirements.
“In our view, possible tax incentives for both banks and, especially, organizations are very important,” believes Yana Epifanova.
You can watch the interview in Russian here
The research in English can be downloaded in the "Documents" section, in Russian on the page of the ESG-Banking Project Group.
