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)
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