VEB.RF Officially Starts Selecting Verifiers of Sustainable Financial Instruments
VEB.RF has started selecting organisations to be included in the permanent list of verifiers of sustainable financial instruments. The process was launched in accordance with Ordinance of the Russian Government No. 3024-r of 18 November 2020 and Resolution of the Russian Government No. 1587 of 21 September 2021. The launch of the verifier selection process is a key stage of implementing the mechanism for sustainable financial instruments verification, and it represents the full-fledged launch of the green finance market in Russia.
From now on an organisation may submit to VEB.RF an application for the inclusion in the list of verifiers. The applicant should confirm its compliance with verifier requirements in accordance with Resolution No. 1587 in respect of having sufficient experience in conducting assessments, adequately qualified experts, effective business processes, an organisational structure that allows the applicant to verify financial instruments, verification methodologies, a positive business reputation, and compliance with minimum business duration requirement (1 year).
At the current stage, in order to submit an application for the inclusion in the list of verifiers, an organisation should fill in the application and questionnaire templates posted on VEB.RF’s website and attach supporting documents. An application with attached documents should be routinely sent by e-mail at email@example.com and officially by mail to VEB.RF’s address. VEB.RF is currently developing a digital platform for sustainable financial instruments that will automate the process of submitting applications. VEB.RF should consider applications within 60 business days.
Before the permanent list of verifiers is made, the temporary list of verifiers posted on VEB.RF’s website applies.
VEB.RF representatives highlighted the implementation of a Yakut SIB project related to assisted living during the meeting of the project committee chaired by Vice-President Olga Balabkina. According to Yakut-Sakha Information Agency, the repair of the assisted living facility was completed in the second quarter, young people with mental health disabilities were successfully adapting to their new home, acquiring new skills and obtaining employment.
The project committee members discussed the stages of the social impact project in the area of social services.
“This is a key quarter. The first stage was preparatory, while the second one was marked by important events. The assisted living facility was repaired and furnished with new furniture. From 1 August 2021 through 1 September 2021, social beneficiaries were moving into the building and are currently occupying the premises. All arrangements have been timely completed,” Director of VEB.RF’s Russian Government Agent Office Denis Bokov said.
He noted that the stage was considered important due both to the repair completion and the people’s adaptation. For instance, the survey results show that the young people find their living conditions quite satisfactory.
“Additionally, 16 staff members were recruited including home carers, psychologists and social workers. All of them have the required qualifications, and 12 people received off-the-job training in St. Petersburg. It’s a pleasure to note that the adaptation process is developing rapidly, and six people have already obtained employment. Thus, we can say as early as now that there has been no significant deviations from the planned schedule. In the third quarter we will start working with home bred children, and we acknowledge the importance of parental involvement.
Yakut Minister of Labour and Social Development Elena Volkova informed the participants about maintenance services, renovation works and project implementation plans.
According to Project Manager of Saint Petersburg–based association of disabled children’s parents GAOORDI Alexey Ignatenko, the tenants accommodated in that quarter were category 1 beneficiaries. The rest of the families also had contacts with project managers.
“Planned individual and group adaptational training is under way. We have also organised online meetings with tenants of our facilities. Young people were able to communicate, become acquainted and give each other gifts. We are planning to arrange such meetings in future, since they give the positive emotional backing these people need.
According to Head of the Assisting Living Service Lena Denisova, the young people have good labour potential. An individual employment plan was prepared for each beneficiary.
“Young people develop social and domestic skills every day. They do powerlifting, go swimming, practise athletics and improve the level of computer literacy at a Book 0.3 specialised library. Our specialists also hold special events, help young people to develop cooking skills and handle money. We will continue to teach them and help them to better adapt to life,” Lena Denisova said.
In conclusion, Managing Director of VEB.RF’s Russian Government Agent Office Mikhail Alashkevich gave a positive opinion on the project implementation in the Republic of Sakha.
“We are now at the very beginning. It is especially important to maintain the results. I believe that this project is about the future, about people who haven’t ever discussed their future before and who are not only discussing it now, but also translating their dreams into reality. We are pleased that we could increase the project scope and attract additional people,” Mikhail Alashkevich said.
As a reminder, the first assisted living care home was opened in Yakutia. The project initiated by Yakut authorities is aimed at introducing new social services in the region for people with mental health disabilities that are alternative to specialised in-patient facilities.
The programme is part of the SIB agenda initiated in Russia by VEB.RF. Currently, more than 1,100 people with mental health disabilities are living in special care institutions in Yakutia. The project is designed to replace in-patient treatment with home care, so that people with disabilities could habituate themselves to living at home or in conditions close to living in family, and unlock their labour potential.
State Development Corporation VEB.RF has become a member of the Zero Waste Charter (hartia.ru) aimed at developing an efficient waste management sector in Russia. A respective announcement was made during the ESG-day event organised by VEB.RF.
Cooperation of major public and private companies is an important step towards introducing a circular economy and zero dumping in Russia.
The Charter agreement was previously signed by Business Russia, Russian Environmental Operator and RT-Invest. Ten companies are now involved in joint work focused on complying with sustainability principles and improving quality of life in Russia.
“We welcome the fact that VEB.RF acceded to the Charter designed to develop an efficient waste management sector and ESG-principles in Russia. Sustainable development basically means a long-term trend materially affecting all types of companies. Businesses are well aware of investor attention to, and a growing consumer interest in sustainability, and are under great pressure from supervisors, regulators and intergovernmental institutions. The Environmental Protection national project provides for 100 percent waste sorting and a two-fold landfill decrease by 2030. Together with its partners, Business Russia hopes to efficiently achieve the ambitious goals of the national project. We are ready to consolidate our efforts to attain the goals set. As far as we know, RT-Invest is consistently developing a comprehensive MSW management system. High level competencies of the Charter participants will enable Russia to accelerate the creation of a comprehensive waste management system and generate steady demand for the use of recyclable materials to produce new goods. We will introduce circular economy principles in cooperation with all stakeholders (manufacturers, processors and consumers),” Business Russia’s Vice-President and Head of the Executive Committee Nonna Kagramanian said.
The Zero Waste Charter participants are keen on creating in Russia a comprehensive waste management system and generating demand for the use of recyclable materials to produce new goods. Manufacturers, processors and consumers will be actively involved in introducing the circular economy principles including separate collection, recycling and reuse, composting of organic waste and construction of energy-from-waste facilities. Thus, all types of waste will be recycled and reincluded in the economic turnover.
Nikolay Tsekhomsky, First Deputy Chairman and Member of the Management Board, VEB.RF:
“Environmental agenda is extremely important for VEB.RF as a financial partner in a whole range of waste management projects. VEB.RF is currently considering projects for separate collection, sorting and disposal of municipal solid waste. These projects will help to improve the environment, encourage additional investment in Russia’s industrial sector and create high-technology jobs in the regions. We are also planning to attract commercial banks, financial institutions and private investors to these projects, including through public-private partnerships and green bonds.
VEB.RF believes that in order to achieve economic and social development goals and improve quality of life in Russia, the Charter participants should prioritise ESG projects and be guided by global best practices in sustainable development. That is why VEB.RF offered to include these provisions in the text of the Charter.”
The efforts of the Charter participants intended to develop the circular economy include creating and developing the system of bottle/can recycling kiosks, introducing separate collection of waste, constructing waste recycling and disposal facilities and energy-from-waste facilities, and landfill reclamation and full rejection.
“We are pleased that VEB.RF has a clear strategic view of the sector needs. As a financial development institution, VEB.RF is developing a national practice for operating with green socially responsible capital. The company supports projects aimed at achieving the goals of zero dumping. RT-Invest has offered a programme for developing an efficient comprehensive waste treatment system designed to recycle each kilogram of waste into new goods and energy. Our goal is to close by 2035 and to prevent opening of 200 new landfills across the country,” RT-Invest General Director Andrey Shipelov said.
All these measures will help to eliminate landfills altogether at first in resort clusters and cities with population over one million, and then across Russia. The Charter will be another important step towards zero dumping in Russia.
Regulatory Changes Take Effect: New Risk-Weighting Coefficient of 20% for VEB.RF’s Rouble-Denominated Debt Instruments
The Bank of Russia’s Directive No. 5886-U of 18 August 2021, amending Instruction of the Bank of Russia No. 199-I of 28 November 2019 “On Banks’ Required Ratios and Capital Adequacy Buffers for Banks with a Universal Licence”, became effective on 12 October.
“This is long-awaited news for us, our investors and lenders. The effect of the Bank of Russia’s decision will facilitate interbank cooperation, including by bolstering the demand for VEB.RF’s public debt instruments among Russian banks. The regulatory changes will create the necessary conditions for scaling up capital market funding for VEB.RF’s operations and will allow us to work with Russian banks to provide financing for landmark investment projects in the Russian economy,” said Konstantin Vyshkovskiy, Senior Banker and Member of the Management Board, VEB.RF.
The regulatory changes provide that banks should invariably use a lowered risk-weighting coefficient of 20% to calculate their prudential ratios for creditors’ claims denominated and funded in roubles in relation to VEB.RF (including investments in VEB.RF bonds).
The amendments to the Bank of Russia’s instruction are only the first step. Further changes are expected to be made to banking regulation in the near future to reflect the fact that the regulator has recognised the high creditworthiness of VEB.RF as a borrower and its status as Russia’s leading national development institution.
Shchekinoazot’s New Methanol Production Facility in Operation with Financial Support from VEB.RF
- The project was completed through the Project Financing Factory; VEB.RF’s financial partner was Gazprombank
- The expansion of production created 120 jobs
- The new production facility is to make Shchekinoazot one of Russia’s largest methanol producers and exporters
Shchekinoazot’s methanol production facility with a capacity of 500,000 tonnes per year was put into operation in the Tula Region. The project was a pilot under VEB.RF’s Project Financing Factory (PFF) programme. The project is to increase current methanol output by 50% to 1.5 million tonnes per year. Shchekinoazot’s share is forecasted to reach about one-third of the Russian methanol market by 2023.
An official ceremony took place on 8 October 2021 to mark the launch of production. The event was attended by VEB.RF Chairman Igor Shuvalov and Shchekinoazot President Boris Sokol.
The project is consistent with the presidential decree concerning the promotion of non-resource non-energy exports. The total project value is 22 billion roubles.
Igor Shuvalov, Chairman, VEB.RF:
“This is already the fourth project completed through the PFF. In partnership with Gazprombank and us, the project initiator was able to start production one and a half years ahead of schedule. The Project Financing Factory was an effective mechanism to support the project. In addition, the changes made to the PFF programme this year enable us to combine different kinds of government support within one investment project. For example, the Corporate Competitiveness Enhancement Programme (CCEP) is important to many of our export-oriented projects. It gives substantial subsidies on the interest rate, and the Shchekinoazot project used it in conjunction with the PFF mechanism. We have a large-scale programme to develop the Yefremov site ahead of us. We are happy to work in partnership with Shchekinoazot and we want to increase cooperation with them.”
Boris Sokol, President, Shchekinoazot:
“The M-500 is a high-tech facility. It uses resource- and energy-efficient technology. The project has strategic significance to the company and as well as this country. What we’ve done is the result of our painstaking work, accurate cost analysis, knowledge of the market, and ability to develop a strategic vision. None of this would have been possible without the help of our skilful, highly qualified staff; without cooperation with authorities, major financial institutions or international licensor. And the cornerstone is science and advanced technology, which ensure the industrial and environmental safety of our production. We build production facilities, but we do so without harm to unique nature in the Tula Region, to the Yasnaya Polyana conservation area.”
Alexey Belous, Deputy Chairman of the Management Board, Gazprombank:
“Gazprombank is a long-time partner of Shchekinoazot. The project enabled the company to get additional advantages of financing and start production ahead of schedule. The new facility consumes less natural gas and energy than its peers, operates an environmental monitoring system and helps this country to fulfil its export potential. I think the Project Financing Factory mechanism has proved effective. I’m sure Gazprombank’s experience and expertise in carrying out high-profile investment projects will allow us to continue to implement initiatives contributing to economic growth in Russia.”
The M-500 project used high-performance technology to minimise its environmental impact.
The syndicated loan agreement for the project to build the M-500 methanol production facility using project financing was signed by Shchekinoazot, VEB.RF and Gazprombank during the Russian Investment Forum in Sochi in 2019.
According to experts, VEB.RF’s comprehensive approach to unlocking the potential of gas-to-chemicals projects will allow methanol production to be increased by 50% by 2030 due to investment projects. If all projects that VEB.RF has in the pipeline are completed, methanol production will rise by more than 11 million tonnes per year.