Aug 14

Russia Explores Green Bond Amid ESG Focus

Editorial Staff
Mar 26, 2021

Russia’s central bank and finance ministry have begun discussions of a green bond issue, a senior central bank official announced Tuesday according to a recent Reuters report. The move comes as Moscow works to ramp up its sustainability efforts amid growing international pressure to meet climate targets.

Green bonds are a category of fixed-income securities whose proceeds are earmarked for environmental projects. Their popularity has surged over the past year as governments sought to secure a sustainable recovery from the pandemic. Recent sovereign issuers include Germany and France, while the UK has announced plans to launch one of Europe’s largest issuance programmes later this year.

Russia’s decision to join this growing list, given the country’s high economic reliance on fossil fuels and mining, is an encouraging step for other emerging market players.

“There has been limited ESG issuance so far this year among emerging markets borrowers especially in emerging Europe,” said Michael Workman at DG19 Investment Management, a European-based asset management group. “Russia itself has not been active in the renewables or ‘Green Bond’ market. So this new issuance when it comes should be well received.”

While sustainability efforts are still at a nascent stage in Russia, the country has significant ESG potential and is aware of the benefits associated with transitioning to a greener economy. This was reflected in a statement by Deputy Finance Minister Alexei Moiseev at a repo forum on Tuesday, as he urged Russian companies to place ESG issues at the heart of their corporate agenda to attract investments from Western funds increasingly conscious of sustainability ratings.

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