Russia's VEB considering issuing ESG bonds as demand grows

Credit: REUTERS/EVGENIA NOVOZHENINA

Russia's VEB is considering issuing 'green' and 'social' bonds next year in light of growing demand for environmental, social and governance (ESG) financing of projects, executives from the state development institution said.

By Elena Fabrichnaya

SOCHI, Russia, Sept 16 (Reuters) - Russia's VEB is considering issuing 'green' and 'social' bonds next year in light of growing demand for environmental, social and governance (ESG) financing of projects, executives from the state development institution said.

Demand for ESG assets is growing as companies that perform well on issues ranging from climate change to boardroom diversity are seen as better long-term investments than peers lagging in these areas.

Russia is shifting its attention to the ESG agenda as many of its companies, despite increasing borrowing at home, are still dependent on Western debt and capital markets.

Also, the European Union is preparing to charge importers a fee at its borders from 2026 based on the CO2 emitted in making their products, forcing Russian firms to think about making their goods greener.

"We are getting deeper and deeper into the ESG agenda," Konstantin Vyshkovsky, a VEB board member, told reporters on Thursday.

VEB, which offers state-backed financing for everything from large-scale infrastructure projects to urban development, is considering issuing both 'green' and 'social' bonds at some point next year, vice-president Dmitry Aksakov said.

In July, the Russian central bank advised companies to disclose their ESG agenda and evaluate related risks while warning that failure to identify ESG issues could trigger losses.

The central bank is considering allowing Russian banks to set aside lower provisions for bad loans for 'green' projects comparing to those involving higher CO2 emissions, Sergei Shvetsov, the first deputy central bank governor, said this week.

(Reporting by Elena Fabrichnaya; writing by Katya Golubkova; editing by Jason Neely)

((ekaterina.golubkova@thomsonreuters.com; +7 495 775 1242;))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Reuters

Reuters, the news and media division of Thomson Reuters, is the world’s largest international multimedia news provider reaching more than one billion people every day. Reuters provides trusted business, financial, national, and international news to professionals via Thomson Reuters desktops, the world's media organizations, and directly to consumers at Reuters.com and via Reuters TV.

Learn More