Climate bonds and their role in the development of ESG-finance banking practice: global and Russian experiences

. The history of banks' involvement in solving the issues of sustainable development of the society is, on the one hand, short by the standards of economic history, and on the other hand, bright and ambiguous. This is explained by the strategic goal of the banking institution functioning - ensuring a stable turnover of financial resources in the socio-economic system of the country and building up financial capital. It is the latter component that caused the interest of the market and state regulators in the possibility of attracting banks' capital to finance so-called "green projects" aimed at solving local or global environmental problems of mankind. Today, the strategic agenda of more and more banks includes various elements of ESG-methodology of responsible corporate behavior, implemented in the form of corporate social policy (mainly focused on the bank's staff and its clients) and a portfolio of "green investments" - a group of projects that are mainly socially-oriented or infrastructural in nature. The purpose of such responsible investment is both to solve specific socially or environmentally important tasks and to strengthen the market position of the bank-investor itself, which forms a positive image in the eyes of its key stakeholders and improves the rating position of investment attractiveness both domestically and in international rankings compiled by reputable analytical agencies, such as S&P, Moody's Investors, and Fitch Ratings.


Introduction
Environmental issues are increasingly high on the international political, business and public agenda.A wide range of stakeholders, including governmental authorities, business partners and investors demand that companies take into account environmental aspects and, more broadly, ESG factors, as well as related risks and opportunities in business planning and operations.As a result, compliance with international standards of corporate social and environmental responsibility is becoming an essential condition for enterprises to remain competitive in the current environment.
The impetus for greater focus on sustainable development, including environmental protection, has been the launch of a number of critical initiatives of a global nature.Among them are initiatives to achieve the UN Sustainable Development Goals, climate change mitigation (Paris Agreement), responsible investment (UN Principles for Responsible Investment).The concept of "stakeholder capitalism", announced at the World Economic Forum in Davos in 2020, deserves special attention, as it focuses business not on short-term profits, but on creating sustainable value for all stakeholders in the long term.
At the same time, compliance with environmental sustainability standards and "green" business transformation may require serious investment due to the need to implement modern technological and technical solutions.In conditions of limited public resources, the issue of mobilizing private capital becomes highly relevant and important.

Definition of "climate bonds" and their place in the sustainable development finance system
According to the definition of the International Capital Market Association (ICMA) "climate finance is the financing of projects aimed at solving environmental problems, including prevention and reduction of environmental pollution, preservation of natural resources and biodiversity, etc., with a special place in the system of "green" finance due to the high relevance of the problem of climate change and the need to implement the Paris Agreement, climate finance is aimed at mitigation of climate change.
The G20 Sustainable Finance Working Group defines climate bonds specifically as an instrument for financing projects that make a positive contribution to the achievement of one or more UN sustainable development goals.In the European Commission's interpretation, green bond financing is the process of taking into account environmental, social and governance (ESG) factors when making investment decisions in the financial sector, which allows us to conclude that the goals of sustainable finance are converging with the increasingly popular practice of responsible investment, including through green (climate) bonds [1 -3].
The shift in focus to sustainable finance has provided an impetus for the development of a new area of transition finance, which involves the financing of projects to implement lowcarbon and resource-efficient technologies.Currently, the main instruments of "green finance" in international practice are climate bonds and loans that meet the objectives of the ESG-agenda.Within the framework of the article, the authors will consider only green climate bonds.
In accordance with the requirements of the Climate Bonds Standard (Climate Bonds Standard), as well as the Climate Bond Initiative (Climate Bond Initiative), climate bonds are raised funds used to finance and refinance climate change mitigation or adaptation projects.In the ICMA Green Bond Principles, climate bonds are defined as funds raised or an equivalent amount used exclusively to finance or refinance eligible green projects.
Thus, a characteristic feature of green finance instruments is the targeted use of raised funds, i.e. for the implementation of environmentally-oriented projects, and a feature of climate bonds as a green finance instrument is the variation of their financial and structural characteristics depending on the achievement of sustainable development goals by the issuer or borrower.
In terms of mechanics, green bonds are no different from conventional bonds -they are the same fixed-income debt securities.Investors lend their funds to issuers -organizations that have issued bonds -for a certain period of time.However, in this case, the funds raised are used to improve the environmental situation and minimize harm to nature: development of renewable energy sources, preservation of biodiversity, land reclamation, construction of waste processing complexes, introduction of electric transport, improvement of treatment facilities, adaptation to climate change, etc.The funds are used to improve the environmental situation and minimize harm to nature.
In order to receive the official status of "green", the bond issue must comply with special principles -Green Bond Principies (GBP), which were formulated by the International Capital Markets Association (ICMA), or meet the requirements of the organization Climate Bonds Initiative.The "greenness" of bonds must be confirmed by an external expert -a verification company.If the independent verifier has no questions about the use of funds, project selection process and reporting, the bonds can be considered "green".However, even after the bonds are placed on the market, issuers must regularly report on spending and implementation of their environmental work.
By issuing climate bonds, organizations receive a number of significant privileges: improving their image, attracting new investors and raising resources for environmental projects on favorable terms: in foreign practice, some issuers of green bonds are entitled to special privileges, for example, they may not pay coupons (interest payments on bonds) themselves -this function is fully or partially assumed by the state, and investors, in turn, may be exempted from paying income tax on interest on green bonds [4 -6].

Dynamics of development of the green finance market in the world and Russia
The green finance market was born in 2007-2008, when the European Investment Bank and later the World Bank issued the first green bonds.Currently, this market is a promising and fast-growing segment of the global financial market.The volume of issuance of labeled sustainable finance debt instruments reached USD 1.6 trillion in 2021.The volume of issuance of labeled sustainable finance debt instruments reached USD 1.6 trillion in 2021 and more than doubled compared to 2020.Although the market as a whole is showing exponential growth (Table 1), sustainable finance still occupies an insignificant place in the global debt market (0.3% of total issuance in 2020, 0.6% in 2021)..  Source: [7][8][9].
Green finance, which includes the issuance of green bonds and green loans, amounted to about $720 billion in 2021.The volume of green finance, which includes green bonds and green loans, amounted to about US$720 billion in 2021.Of this, US$620 billion is accounted for by green bonds.Some environmental projects are also financed through sustainable bonds, which totaled about US$170 billion in 2021.THE TOTAL ISSUANCE OF THESE BONDS IN 2021 AMOUNTED TO ABOUT US$170 BILLION.It should be noted that climate bonds issued under CBI standards mostly fall under the category of green bonds (according to ICMA).The total issuance of certified climate bonds in 2021 amounted to US$53.9 billion.THE TOTAL AMOUNT OF CERTIFIED CLIMATE BONDS ISSUED IN 2021 AMOUNTED TO USD 53.9 BILLION.The main uses of funds raised through the issuance of green bonds are renewable energy and energy efficiency, clean transportation, and green buildings.
According to the international organization Climate Bonds Initiative, the total volume of green bond issuance from 2007 to 2020 reached $1.1 trillion, although in 2012 this amount did not exceed $3.1 billion.Among the regions, Europe ranks first in green bond issuance with $432.5 billion, followed by North America ($237.6 billion) and Asia-Pacific ($219.3 billion).
The breakdown by country looks different.The U.S. is the largest player in the green bond market, having issued $211.7 billion worth of securities over the past 13 years, followed by China ($127.3 billion) and France ($115.6 billion).Germany and the Netherlands round out the top five most active.Most of the investments received are directed to the energy sector, construction and transportation.Together, these three segments account for about 80% of the green bond market.
Globally, the majority of green bond issuance comes from financial and manufacturing companies, as well as development banks.Major issuers include financial conglomerate Fannie Mae and companies such as SNCF, Berlin Hyp, Apple, Engie, ICBC, and Credit Agricole.However, in 2020, the public sector has also joined the active issuance of green bonds: central and regional governments and state corporations.
Data on the dynamics of development of the green finance market in Russia, the structure of its participants and the instruments used are shown in Table 2.. Source: [8][9][10][11].
In Russia, there are significant differences in the application of green finance, in particular climate bonds: domestic banks are leading in terms of using green finance to build a positive business reputation and obtain indirect benefits (55.0%), such as priority access to government programs, obtaining higher grades in national rankings, increasing investment attractiveness for foreign investors and (or) financial markets; the above-mentioned position correlates with the position about the pressure of investors and financial SROs (including foreign ones) -24.0%-this fact indicates that Russian banks seriously consider the strategy of "green finance" as a tool for leveling possible sanctions and restrictions on work in foreign financial markets;environmentally responsible business thinking is only emerging in Russia, and currently the administrative mechanism of ESG strategy facilitation prevails, which may potentially lead to a conflict of interest and/or misunderstanding of the bank's strategy in general on the part of a wide range of personnel;Russian business has little idea of the financial potential of ESGstrategy in the formation of new points of income generation because clients do not understand the value of "green" financial instruments for business.Based on the results of the research, a summary table of problematic aspects of green finance market development and possible solutions, taking into account best practices and global experience, was prepared (Table 3).In international practice, banks suspected of "market monopolization" are downgraded in international ratings by S&P, Moody's and Fitch Investors.With regard to Russian players, it is also possible to introduce an amendment in the formation of ESG-bank rankings, which should lead to a temporary ban on their participation in government programs and projects, or, on the contrary, an increase in the tax burden as compensation for the attempted market monopolization of the award.To organize high-quality, and most importantly, financially effective support for SMEs in the field of industrial production or innovation as a driver of sustainable development of the country's regions, it is necessary to study the mechanisms of collective business financing by local banks that have a deep knowledge of the characteristics of SMEs and their business history.As professional materials, attention should be paid to the anti-crisis plan for SMEs in France, the package of anti-crisis microfinance for SMEs in Spain.Such a solution will not only popularize the idea of ESG-financing, but also allow local banks to gain experience in working with government sustainable development programs 3. banks' concerns regarding ESG audit of financed projects Currently, Russian banks practically do not apply ESG-audit mechanisms for projects due to the fear of client withdrawal and the lack of a transparent regulatory framework for applying restrictions to "toxic projects": according to Deloitte, less than 20.0% of banks plan to introduce ESG-audit practice within the next 3 years.
In the near future, the CBR together with the Association of Russian Banks (hereinafter -ARB) are recommended to prepare a professional guide to ESG audits of financed projects and rejection criteria, which will reduce the risks of judicial precedents in investigating refusals to provide financing to commercially efficient projects.An example of an already existing handbook can be considered the development of PWC CIS "Supervision of ESG Issues: A Guide for Directors", but this document is only of a recommendatory nature.

Low motivation of banks to apply economic instruments
to encourage "green projects".
At present, economic instruments to encourage "green infrastructure projects" are actually applied only to megaprojects of programs and less frequently to investment projects in the energy sector, which is due to the difficulty for banks to obtain tax exemptions or other preferences for private initiatives or nonstate projects/clients.
In the near future, the CBR together with the ARB is recommended to form a national standard for granting benefits and preferences to banks implementing green project financing, which will unify the criteria for recognizing a bank that implements ESG-strategy.It is recommended to take as a basis for the development of the national standard the following materials: -Action Plan on Sustainable Development Financing; -materials of the Technical Expert Group on Sustainable Financing under the European Commission; -OECD working materials on environment.

Weakness of development of collective green investment funds
According to the data for 2020, there were 7 special green finance funds operating in the Russian Federation, 4 of which were 100% created at the expense of banks, 2 -by oil and gas companies, 1 -by an infrastructure company, at the same time their target purpose is limited by the development strategies of the companies / banks themselves and do not involve private investors It is recommended that the Central Bank of the Russian Federation and industry selfregulatory organizations propose pilot projects to involve a wide range of stakeholders in green finance, for example, the creation of open-end mutual funds on the basis of "environmentally aggressive" businesses, in which all employees can participate, and in the future -the general public, for example, residents of a city or district.The management of such an OPIF should be transferred to professional market participants, for example, banks where the business is serviced, which will allow reinvestment of capital within the region and ensure its financial sustainability.Source: compiled by the author.

Conclusion
Thus, summarizing the results of the study, we note that the market of green bank financing in the Russian Federation is undoubtedly developing, but its development trends are set by the largest banks, which leads to the emergence of centripetal currents in the formation of interests and ideas of management about ESG-strategy in the banking sector and the emergence of "invisible" boundaries of market division by the most interesting sectors of the national economy from the position of future financial potential.
The following should be emphasized as priority tasks: 1. Amendments to the current antimonopoly legislation on the possibility of the Central Bank of the Russian Federation to issue a temporary ban on participation in government programs and projects, or increase the tax burden as compensation to banks suspected of attempting to monopolize the market presence.
2. Formation of the Central Bank of the Russian Federation and the ARB to prepare a professional guide to ESG-audit of financed projects and criteria for refusal to issue financing to level the risks of abuse of bank management rights to obtain tax preferences or other economic benefits from state regulators or the budget by providing information on the financing of "quasi-environmental" projects.
3. Formation of a national standard for granting privileges and preferences to banks implementing green financing of projects, which will unify the criteria for recognizing a bank that implements ESG-strategy.
4. Carrying out systematic work to involve a wide range of stakeholders in green finance, for example, the creation of open-end mutual funds on the basis of "environmentally aggressive" businesses, in which all workers can participate, and in the future -the general public, for example, residents of the city or district, while the management of the OPIF should be provided to the local bank, where, for example, the business is serviced.
5. Popularization of the idea of green finance for SMEs in the field of industrial production or innovation among local banks that know the specifics of the local market, which will allow to accumulate capital in specific regions and reinvest it directly in local initiatives.

Table 1 .
Key Indicators of the Global ESG Finance Market Development in 2017 -2022 (Estimated)

Table 2 .
Key indicators of green finance market development in Russia in 2017 -2021

Table 3 .
Problems of green finance market development in the Russian Federation and possible solutions taking into account best practices and global experience