Green finance in Russia lacks incentives

Against the backdrop of sanctions pressure and the absence of foreign investors in 2024, the key goals of sustainable development in Russia have become adaptation and social projects, the transition to a closed-loop economy, and increased resource efficiency. In the social sphere, the emphasis is on the development of human capital.

These are the conclusions contained in the report of the National Rating Agency (NRA) “Financing in the “agenda”: where to get money for ESG projects?” According to analysts, the need to develop the ESG agenda is dictated by climate change, issues of social stability and strengthening corporate governance.

ESG bonds

The volume of placement of financial instruments for sustainable development continues to decline. In 2024, seven issues of ESG bonds were placed for a total of RUB 52.8 billion. — This is 73% of the declared volume and almost four times less than the peak figures for 2021.

The bulk of the placements — RUB 40 billion — were social bonds of SOPFDOM.RF, aimed at the construction of engineering and transport infrastructure. Among private companies, large issues were also carried out by: Metalloinvest — RUB 10 billion for the implementation of the climate transition strategy; EuroTrans — RUB 2.8 billion for the development of charging station infrastructure for electric vehicles.

At the beginning of 2025, there are 47 ESG bond issues on the market for a total of RUB 635 billion. However, there are no significant discounts to the yield of such instruments yet, which reduces their attractiveness.

ESG banking

The volume of ESG lending in Russia has been growing since 2020. By the end of 2024, it reached 6 trillion rubles, with more than half of it coming from financing the electric power industry, transport, construction and metallurgy. The market leader is Sber (3.5 trillion rubles), followed by Gazprombank, Promsvyazbank, Rosselkhozbank, BankDOM.RF and Sovcombank.

Prospects for green financing

The main problem with green financing is lack of regulatory incentives and benefits for issuers and investors. The Bank of Russia is considering the possibility of introducing such measures, including tax incentives, subsidies and state guarantees. It is expected that by 2030, ESG financing in Russia will become more structured, and reporting standards will be brought closer to international standards.