Moscow Exchange to establish Sustainability Sector with support from Russian Ministry of Economic Development
Updates to the Moscow Exchange Listing Rules taking effect on 12 August 2019 will create a Sustainability Sector for financing projects in the fields of environmental and social sustainability.
The new sector will consist of three independent segments: green bonds, social bonds and national projects.
The segments for green and social bonds are for Russian and international securities that meet requirements for a bond issue, issuer and investment project as set forth in the Green Bond Principles of the International Capital Market Association (ICMA) or the standards of the Climate Bonds Initiative (CBI). Whether a bond meets these requirements requires confirmation from an external review provider. This corresponds with the concept currently developed for green, social and sustainability bonds by the Russian Ministry of Economic Development, relevant government agencies, the Bank of Russia and business community. The concept will provide tax incentives for issuers and financial support from the Bank of Russia for investors (including provisioning benefits).
The segment for national projects will include Russian and international bonds that meet the objectives of national projects such as "Environment", "Demography" and "Public Health", and federal initiatives including "The Adoption of Best Available Technologies", provided that a government agency or government official and inter-agency commissions have also confirmed the bond program’s compliance with one of the projects set out in the Listing Rules.
Yury Denisov, CEO of Moscow Exchange, said:
"More and more investors are seeking to invest in projects of social significance aimed at improving the environment and social welfare, and this is driving Russian companies’ expanded commitment to corporate social responsibility and ESG practices. The new sector will promote appropriate positioning of special-purpose issuers and investors and improve financing options for companies working on projects aimed at environmental protection and social importance. It’s my hope that many companies will seek to become members of the Sustainability Sector and reap the benefits from the development institutes".
Ilya Torosov, Deputy Minister of Economic Development of the Russian Federation, said:
"We support Moscow Exchange’s initiative with our efforts to provide companies and banks raising funds for environmental and social projects with further preferences from the Russian government and the Bank of Russia similar to those that small- and medium-sized enterprises (SMEs) gain on the Innovation and Investment Market".
In May 2019, the Russian government issued an executive order providing for a 70% subsidy on coupon income for bond issuers contributing to the investment projects on the adoption of the best available technologies. Establishing the Sustainability Sector is in line with good global practices. Moscow Exchange strives to promote responsible investing principles in Russia. In early 2019, the Exchange joined the United Nations Sustainable Stock Exchanges (SSE) initiative. In March 2019, MOEX cooperated with the Russian Union of Industrialists and Entrepreneurs (RSPP) to begin calculating sustainability equity indices – the MOEX-RSPP Responsibility and Transparency Index and the MOEX-RSPP Sustainability Vector Index – which are based on RSPP’s annual analysis of Russia’s largest companies demonstrating a robust ESG profile. Since 2018, Moscow Exchange has participated in the Ring the Bell for Gender Equality initiative that aims to advance gender equality and better recognition of the contribution women make to business, politics and the economy.