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Center-invest Bank Launches New Green Bonds

On 9 December 2020, the placement of a new RUB300m issue of Center-invest Bank green bonds began on the Moscow Exchange in its Sustainable Development Sector. The bank's experts predict that the environmental impact of this issue will be equivalent to a reduction in CO2 emissions of 6,408 tonnes.

Center-invest Bank is the first bank to issue green exchange-traded bonds in Russia in compliance with both Russian and international standards for responsible financing. Under the new Russian regulations, the bonds are officially designated as “green bonds”.

The ACRA Rating Agency confirmed that Center-invest Bank’s green bond issue was in line with internationally recognised principles and standards in the field of ecology and / or green financing. The bonds were assigned the highest possible rating, GR1, which means that the issuer's approaches to the selection of projects and management of the funds raised comply with the taxonomy of the International Capital Market Association (ICMA) and have a positive environmental effect. The rating agency's conclusion also noted that the bank's strategy is aimed at sustainable development and that environmental responsibility is one of its key priorities along with the development of traditional banking products and services.

International financial organisations and partners have supported Center-invest Bank’s green projects, noting their importance and relevance for the Russian economy. The co-underwriter of these green bonds is the International Bank for Economic Co-operation (IBEC), which has signed up for 10% of the issue, acting as a reliable partner in the green economy.

The main distinction with Center-invest Bank’s green bonds is the purpose for which they are issued. The bank guarantees that the funds raised from this issue will be used to finance and refinance loans for energy efficiency projects in the industrial sector, agribusiness, housing and utilities, and the service sector. Accordingly, in its annual Environmental Report, the bank will disclose information on the use of the funds raised from this issue, as well as the overall impact of these investments on sustainability indicators.

“The placement of our second issue of green bank bonds, and the first “officially designated” green bank bonds, in the Moscow Exchange’s Sustainable Development Sector, is another landmark event for both the Russian economy and the bank,” said Lidia Simonova, Chairman of Center-invest Bank’s Executive Board. “Center-invest Bank is making strides in responsible finance and we remain a pioneer in green finance in Russia, the only bank to place a second issue of green bonds on the Moscow Exchange. By investing in green bonds, you will be contributing to the sustainable development of southern Russia and helping to address environmental problems in our region.”

A year ago, Center-invest Bank issued the first green bank bonds in Russia (RUB250m issue) and became the first financial institution in the country to register its eco-bonds in the green bonds segment of the Moscow Exchange’s Sustainable Development Sector. The environmental impact of the bank’s first green issue was equivalent to a reduction in annual CO2 emissions of 4,600 tonnes (equivalent to planting 187,000 trees).

The funds obtained from this first bond issue were used to finance 36 energy efficiency projects, 83% of which are in agriculture and 17% in manufacturing. The full project list is disclosed in the bank’s Annual Environmental Report for 2019. The average loan amount was RUB7.1m.

“We are glad to see new green bond projects emerge in the 'traditional green' sectors,” said Mikhail Babenko, Director of the Green Economy Programme at WWF Russia. “It is especially important that projects have specific target parameters to reduce the environmental impact. However, the biggest challenge today is building investor confidence in the green bond instrument in terms of targeted use, understandable results and transparency. These components are necessary to avoid greenwashing, which is when projects look green, although in fact they just ensure compliance with legal requirements. But an equally important challenge is to show that green projects are economically profitable, which means stimulating the development of new high-quality green projects.”

The development of green finance in Russia, adherence to the UNEP FI's “Principles of Responsible Banking”, and membership and active participation in the Global Alliance for Banking on Values (GABV), is strengthening Center-invest Bank's reputation as a bank that prioritises environmental and social responsibility and observes ESG principles in its work.

The International Bank for Economic Co-operation (IBEC) is a multilateral financial institution, the purpose of which is to promote the economic growth and sustainable development of the Bank's member countries, as well as foreign economic relations between economic entities of the member countries, and also to expand their foreign trade relations with counterparties from other countries. The Bank has operated since 1963 on the basis of the intergovernmental Agreement on the Organization and Activities of IBEC, registered with the Secretariat of the United Nations. There are eight IBEC member countries: Bulgaria, Vietnam, Mongolia, Poland, Russia, Romania, Slovakia and the Czech Republic.