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There are many standards and requirements for sustainable finance businesses. VEB.RF has been directly developing a green finance taxonomy — a set of rules that defines which projects can be financed through green bonds and loans.
We started developing them in March 2020 under the supervision of the Ministry of Economic Development. At that time, there was a fairly detailed base of international standards, and we tried to be guided by them.
One of our goals was to attract international investors to Russian environmental projects, so we tried to make our sustainable financing rules as similar to those in the world as possible. The key difference until recently was that we recognised nuclear power as ’green’ in our taxonomy immediately, while Europe did not recognise it until late 2021.
In the summer of 2020, we released the first draft of our rules and discussed it at length with market participants, ministries and the expert community. The final version of the Russian sustainable financing taxonomy came out in November 2021.
Even before it was officially published in the form of a government decree, many Russian issuers began issuing green bonds based on the draft rules published on our website.
We understand that this document needs to be constantly improved: new technologies and international requirements for different sectors are emerging. That is why we are preparing the second edition of the Russian taxonomy for release this autumn.
The market has enthusiastically welcomed its appearance. Here are some examples of the biggest green bond issues: "Russian Railways has issued bonds worth 100 billion roubles in 2020, the city of Moscow has issued bonds worth 70 billion roubles in 2021 and VEB.RF has issued bonds worth 50 billion roubles in 2022.
The market worked because there were clear rules for green finance. Business needed them, and we provided them. Businesses also need to make it more profitable to raise funds through green finance instruments than through conventional financial instruments.
The government and the Bank of Russia are now working on this task. Separate measures to support projects aimed at ecological modernisation of industrial production are already in place, such as the Ministry of Industry and Trade’s subsidy for the transition to the best available technologies (BAT). I expect that new support measures will be introduced before the end of this year.
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