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Sovereign ESG banking


On the Center-invest Bank’s website there is an article, named “Sovereign ESG Banking”, which was written by the Chairman of the bank’s Board of Directors, Professor and Doctor of Economics, Vasily Vasilievich Vysokov. The article contains an analysis of the ESG-management concept (Environmental, Social, Governance), which has become popular in the recent years, based on the principles of environmental, social and managerial responsibility.

According to Professor Vysokov, new conditions lead to the revision of the established trends and stereotypes, including the ESG banking concept. Through the prism of the global practices inventory and Center-invest Bank’s 30 years of experience in implementing a sustainable banking business model, the author substantiates the need to develop sovereign ESG banking for the new realities of the transformation economy. 

At the same time, excessive stereotypes about replacing profit and financial sustainability with ESG indicators, the possibility of speculative transactions with ESG assets, and dual EGS standards should be declined. 

Sovereign ESG banking takes advantages of the ESG approach to make creative decisions by expanding the risk range and decision horizon, relies on a comprehensive approach, focuses on management rather than risk speculation, on long-term rather than immediate profit, on nurturing staff and a new corporate culture in the interests of all stakeholders. 

Following the trajectory of sovereign ESG banking requires the development and adoption of a technological sovereignty taxonomy by listing sector-specific projects and technologies in environmental, social and corporate standards. Moreover, systems of incentives and penalties for implementing such projects and standards shall be provided; procedures for all forms and directions of state support shall be simplified, digitised, and automated. There is a need to transform excessively complex guidelines for implementing ESG principles into routine procedures for bank lending to ESG projects with state support. 

The development of sovereign EGS banking requires the ongoing open dialogue in the global markets, supported by the experience accumulated by Russian banks. Sovereign ESG banking should be successful in any reporting system and any ESG taxonomy.