Alexander Dolganov, Deputy Chairman of Center-invest Bank’s Management Board, PhD in Economics, participated in the 7th Annual Conference «Risk Management in the Banking Sector» and shared Center-invest Bank’s experience in developing and implementing an ESG risk assessment model for SME lending.

Conference participants discussed conceptually new approaches, advanced methodologies and tools for risk management in today’s environment.

Center-invest Bank’s approach to assessing lending risk has always been quite conservative and responsible. In 2022, the bank introduced a new type of business assessment through ESG customer rating. The ESG rating is a rapid assessment of how well a company manages environmental, social and governance risks. The ESG rating underpins the traditional financial analysis of the customer’s business when forming a solvency opinion.

High business standards, no pollution risks and fulfilment of social obligations to employees reduce the borrower’s credit risks. Inclusion of loan programmes with interest rate differentiation depending on the level of ESG rating of the loan in the bank’s product line solves two problems: it allows taking non-financial risks into account in the lending process and encourages borrowers to build their business on the basis of ESG principles and approaches.

The bank’s established and methodologically sound approach to risk has a positive impact on our lending quality indicators: the share of overdue loans at Center-invest is significantly lower than the Russian average.