Sustainability goes out of fashion

Sustainability goes out of fashion



The volume of green and social loans in the banking sector of the Russian Federation reached 1.2 trillion rubles, tripling year-on-year, but up to 90% growth occurred last year. After the outbreak of hostilities in Ukraine, the situation changed. In the context of economic instability and restrictions on working with international markets, interest in ESG tools has fallen. However, experts and market participants are counting on some recovery in the future: regulators continue to support the ESG agenda, and business is gradually adapting to new realities.

"Kommersant" got acquainted with the review of ESG-banking for the first half of the year, prepared by "Expert RA". According to the document, compared to the first half of 2021, the volume of lending to ESG projects has tripled - from 400 billion to 1.2 trillion rubles. Medium and small banks have become more actively involved in the agenda, the authors of the study note. Thus, according to the results of the reporting period, systemically important credit institutions account for 91% of the portfolio of green and social loans, which is 5 percentage points lower than a year earlier, according to the study. However, after the outbreak of hostilities in Ukraine, which provoked a new sharp round of the economic and financial crisis in Russia, the relevance of the ESG agenda fell sharply.

ESG — environmental, social and corporate governance. About a third of ESG lending falls on the energy sector, transport (electric and gas engine fuel) accounts for 23%. 13% each falls on waste management, metallurgical and mining industries. Other industries account for about 17% - these are housing and communal services, the chemical industry and fertilizers, construction and pharmaceuticals.

Against the background of the loss of access to international markets and investors, the interest of borrowers in ESG lending has seriously decreased, says Maxim Khudalov, Executive Director of the Financial Advisory Center of Gazprombank. About 90% of the growth noted in the study occurred in the second half of last year, in January-June 2022 it hardly exceeded 2–4%, the expert believes. “Growth in the first half of the year was ensured by the continuation of the implementation of previously launched ESG initiatives, which were unprofitable to complete prematurely, and the pool of new projects of those companies that have already managed to adapt to new realities and have determined the relevance of the ESG agenda for themselves,” says the director of the Center for Sustainable Development Skolkovo School of Management Elena Dubovitskaya.

Moreover, stagnation occurred even before the segment received significant development. “The share of loans directed by banks to projects that fully comply with the national taxonomy of green projects does not exceed 1%, with the bulk of them being loans aimed at environmentally friendly transport and green energy,” explains Vladimir Gorchakov, head of the ACRA sustainable development risk assessment group.

Banks confirm the decline in demand for ESG lending, although they expect the segment to recover. “Due to the international situation”, responsible financing instruments have given way to more relevant short-term priorities of companies, admits Alexei Ievlev, head of the corporate business directorate of Rosbank, but “recently, a gradual revival of the market has begun, in particular, interest in issuing ESG bonds has increased.”

At the beginning of spring, the largest banks in Russia declared that they were not abandoning ESG strategies yet. According to Mr. Ievlev, “despite all the changes that have taken place,” the direction has an incentive that has not lost its relevance: the requirements of foreign consumers, including Asian ones, built into international supply chains. “This will encourage companies to pay significant attention to the ESG factor in the future,” the banker believes.

A long-term request for a transition to a sustainable development model remains both among market participants and authorities, Sberbank claims. Indeed, the Central Bank of the Russian Federation continues to declare the strategic importance of the ESG agenda. According to Maxim Khudalov's forecasts, in the second half of the year, the volume of ESG loans may show an increase of 10–15%, but one should definitely not expect last year's growth rates.

Polina Trifonova



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