ESG Banking: A Fundamental Component of Sustainable Development, or Development Without Prejudice to the Future of Russia

The authors investigate the features of the formation and development of ESG banking in Russia. It was revealed that: (1) the business model of ESG banking is the conduct of banking business under the UN’s sustainable development standards (environmental, social, and governance (ESG)); a detailed description of these standards is called taxonomy; (2) Legal regulation of ESG banking is carried out in each country by the primary financial regulator and other specially authorized bodies; in Russia, the Bank of Russia acts as the leading financial regulator and VEB.RF has been a specially authorized body since November 18, 2020; (3) The primary sources of legal regulation of ESG banking in Russia are the documents of the Bank of Russia, namely: (a) “Recommendations for the implementation of the principles of responsible investment” dated July 15, 2020; (b) Regulation of the Bank of Russia dated December 19, 2019, No. 706-P “On the standards for the issue of securities”; (4) In July 2020, VEB.RF published “Methodological recommendations for the development of investment activities in the field of green finance in the Russian Federation”, which contained a taxonomy of “green” finance. However, the adoption of the Federal Law “On Environmental Audit and Environmental Auditing and Amendments to Certain Legislative Acts of the Russian Federation” developed by the Ministry of Natural Resources and Environment of the Russian Federation would contribute to improving the implementation of “green” projects; (5) Research by Russian experts shows that Russian banks are ready to implement the ESG banking business model, but more than 60% of banks consider it necessary to establish regulatory standards for risk assessment, information disclosure, and accounting for ESG factors; (6) Russia has a positive experience in ESG banking: in February 2021, the RAEX-Europe rating agency published the ESG ranking of Russian companies, which for the first time included Russian banks. © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022.