Why Banks Are Going Green: ESG Summary #11

How Rosneft plans to achieve carbon neutrality by 2050, why banks need ‘green’ energy and other news on the ESG agenda – per RBC Trends and NKR

About the author: Andrey Piskunov, Director General of the National Credit Rating Agency (NKR, part of RBC Holdings).

What is Rosneft’s strategy?

Rosneft has introduced a new development strategy until 2030, in which the company also sets a goal to achieve net carbon neutrality by 2050. As explained by Rosneft Senior Vice President, Didier Casemiro, we are talking about emissions from Scope 1 and 2 (Scope 1, Scope 2). That is, about emissions from direct sources in the production of the company and indirect emissions from the production of energy consumed by the company, respectively. In particular, the company’s absolute emissions will be reduced by more than 25% by 2035. In addition, by 2030, Rosneft plans to reduce the methane emissions intensity to less than 0.2%, as well as the emissions intensity in the exploration and production sector to a level below 20 kg of carbon dioxide.2Equivalent to each barrel of oil equivalent. As one of the main suppliers in the global market, Rosneft implements a carbon neutral strategy on a par with global competitors. The company’s efforts to decarbonize ancillary services deserve special attention – the transition of its cars to low-carbon fuels and the use of “green” technologies at gas stations will allow the company to demand emissions reductions with a broader coverage.

The ESG sector appeared on the St. Petersburg Stock Exchange

The St. Petersburg Stock Exchange has included in the listing rules a new segment in the field of environmental, social and corporate governance, consisting of existing segments: green bonds, social bonds, sustainability bonds,

The local regulatory environment continues to adapt to the needs of the ESG agenda. If listing “green,” adaptive, and social bonds in stock listings has already become a routine practice, expanding the list by including issuers that invest in high-growth technology projects and “green” projects at an early stage of implementation, as a separate category, broadens the list. Scope of securities for investors. An additional incentive for the development of this market segment will be the presentation of any advantages from the state.

Why are banks turning to renewable energy

Major banks are converting their branches to electricity from renewable sources. The transition to “green” electricity for banks is more than just a selfie. The energy consumption of office buildings cannot be compared to the energy consumption of industrial facilities, and the inclusion of the offices themselves in the city-wide energy system makes the transition to “green” energy simply impossible. Speer has already made attempts to convert part of its offices to green energy by purchasing appropriate shares of green electricity. The practice of installing solar panels in Russian climatic conditions is not able to provide bank premises with the required amount of energy, and the Central Bank has positively evaluated the initiatives of banks to switch to green energy, especially given Russia’s commitments to achieving carbon neutrality. At the same time, they do not expect this to become a significant factor in the rise in the cost of financial products and the increase in prices.

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