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ESG Banking for IT Specialists


The 2021 FINOPOLIS Forum of Innovative Financial Technologies will be held online. This format will allow Center-invest Bank to share its experience of the agile digitalisation of ESG banking with a wider audience.

Dr Vysokov, Chairman of Center-invest Bank’s Board of Directors, head of the ESG Project Team of the Association of Banks of Russia, will be speaking at the Forum. Dr Vysokov has produced a video lecture on the interconnection between ESG principles and the digitalisation of banking. It is impossible to develop a banking business model based on ESG principles without using information technologies. And it makes no sense to develop IT without ESG.

Modern banking is 90% IT, and 10% the smiles of the front office staff. To keep everyone smiling in the front office, we need to use ESG transformation to strengthen the corporate culture in IT.

Looking past the ESG hype, ESG banking expands the sphere of the risks considered (environmental, social, and governance) and the time horizon (in the interests of current and future generations). This requires additional expenditure, but it brings additional advantages. It allows you to see new alternatives, new opportunities, and new tools for new adaptation to new challenges. Exploiting these advantages requires creative thinking skills and an integrated approach to ESG transformation.

Digital ESG transformation requires us to harmonise solutions (“put together jigsaw pieces”) from each of the ESG banking sub-systems: taxonomy, structure, strategy, ESG risk management, and ESG reporting. A design concept for this approach is presented in the Practical Recommendations of the Banking Community on the Implementation of ESG Banking in Russia.

Information technologies allow us to approach the ESG banking jigsaw puzzle in a new way: from the point of view of IT, the choice of taxonomy comes down to mapping the nomenclature of banking products and services against the reference guides for the various taxonomies.

For IT specialists, the complex task of establishing a corporate ESG culture is addressed using distributed databases with algorithms for taking complex decisions. A strategy is not a static document, but an electronic model, which includes balance sheet equations, regulatory restrictions and standards, risk probability and a description of the reproduction of all types of capital. To assess ESG risks, the default probability functions should be supplemented with arguments for ESG factors, taking into account legislation, requirements, incentives and penalties.

Reporting for different stakeholders requires different indicators and different information from databases. Center-invest Bank was the first in the world to provide reporting using the SDGs as well as financial indicators. Over 80% of the bank’s funding is from customer accounts, and this money is transformed to help achieve SDGs: Goal 2 Zero Hunger (47% of the loan portfolio), Goal 8 Decent Work and Economic Growth (21%), Goal 9 Industry, Innovation and Infrastructure (13%), Goal 11 Sustainable Cities and Communities (6%), and Goal 3 Good Health and Well-Being (3%).

The lecture contains many examples of the practical implementation of ESG principles, the impact in the environmental, social and governance spheres, and ESG funding.