By Katya Golubkova and Alexander Marrow

MOSCOW, November 10 (Reuters) – that of Russia biggest lender Sberbank SBER.MM plans to increase its portfolio of environmental, social and governance (ESG) loans by more than 40% to 200 billion rubles ($ 3 billion) this year, then multiply it several times in 2022an executive told Reuters.

Russia is one of the world’s largest emitters of carbon dioxide along with China, the United States and India, and has set its own goal of carbon neutrality by 2060 – a process in which forests Russia, hydropower and nuclear power are expected to play a key role.

The Russian economy is no stranger the surge in ESG financing linked to sustainability objectives because its energy and mining companies – which are among the state’s most important sources of revenue – have Western shareholders and global hedge funds among the investors.

“Our loan portfolio is the reflection of Russian gross domestic product “, Alexander Vedyakhin, first vice-president of the state bank, told Reuters. “We will gently push our customers towards green change, but we will not make it an ultimatum.”

Sberbank introduces its own internal ESG measures allowing clients to access cheaper loans if the criteria are met. “If the company is well positioned for ESG, then it is stable and worth investments and loans,” he said.

The bank’s ESG portfolio is expected to reach 200 billion rubles by the end of the year, up from 140 billion today, and “we will expand it several times next year,” Vedyakhin said.

He added that the Russian conglomerate Sistema AFKS.MM, its mobile network unit MTS and others have already raised ESG loans from Sberbank.

And if Russia’s central bank changes risk weights or provision requirements for ESG loans – something Vedyakhin hopes to see next year – Sberbank could cut rates on those loans even further.

State development bank VEB plans to use Sberbank’s ESG metrics so borrowers have unified rules if they want cheaper loans, a VEB executive told Reuters this week, and stop lending for raw material extraction processes.

Sberbank aims to be part of a yet to be developed Russian system for trading carbon credits, and sees the SPB Exchange as a platform to do so, Vedyakhin said.

“We are now looking for that role, we will be a market player, maybe (even) a market maker … should organize this market, and we have the experience. “

($ 1 = 70.5625 rubles)

(Report by Katya Golubkova and Alexander Marrow, edited by Andrei Khalip)

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