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WWF welcomes the issue of first Russia’s regional green bonds

27 may 2021
May 27, 2021 saw the issue of Russia's first sub-sovereign green bonds (the bonds were issued by a regional government within Russia). The Moscow Government issued RUB 70 billion worth of bonds with a maturity period of 7 years. The funds raised through the issue of the bonds are to be spent on reducing the emissions of contaminants and greenhouse gases from Moscow public transport

WWF-Russia believes these green bonds, the first issued in this country not by a business but by a government, form an important step towards achieving sustainable development goals. This is a significant Russia's contribution to the fight against climate change and the destruction of ecosystems.

“Moscow has once again taken a big step towards a green future; it's now vital that other regional governments and municipalities in this country follow suit,” says Mikhail Babenko, Head of WWF-Russia's Green Economy Program. “And in order for that to happen certain legislative changes are needed; specifically, the budget code needs improvement. We also need to scale our positive experience with this, and regional governments need to be taught the mechanism for issuing green bonds.”  

WWF-Russia first started promoting green securities in 2016. The market for the new type of securities started to emerge in 2018 when the first green bonds were issued.

The International Capital Markets Association (ICMA) has included the newly issued securities in the registry of sustainable development bonds. The Green Financing Committee of VEB.RF has recognized the bond issue as a green financial instrument. The Moscow Government is going to be reporting on how it is spending the funds raised through these bonds in annual public reports.

“Moscow is trying to constantly expand the number of green projects in the city, and it's these kinds of projects that investors have started prioritizing. Moscow has many such projects; 7 of the 14 state development programs being implemented in the city include environmental protection and climate change projects. Just like other megacities around the world, Moscow has been experiencing serious environmental issues brought on by public transport. For this reason, the investments raised through the 74th municipal bond issue are going to be spent on implementing major infrastructure projects aimed at promoting environmentally friendly electric transport,” said Anton Kulbachevsky, Head of the Department for the Use of Natural Resources and Environmental Protection of the Moscow Government.

It is expected that major banks and investment companies will take an interest in the new securities. Given the recent developments (numerous oil spills, illegal loggings, industrial accidents, etc.), investors have been taking more and more interest in assessing the environmental risks of the projects into which they're considering putting money. Financiers are comprehensively revising their sustainable development strategies and paying special attention to instruments with ESG factors (i.e., environment, society, corporate governance).

Photos in the announcement: (c) Sergey and Olga Vinogradovy / WWF-Russia
Photo in the splash: (c) Mikhail Paltsyn / WWF-Russia