IFC + ESG: Rethinking the Mission of Financial Centers
KEY CONCLUSIONS
Financial companies are not quite ready to switch to green finance
“Are financial institutions ready to turn to green finance? In conversation they are, but in reality... they are not. In which sense? In a sense that financial institutions are pursuing shareholder value creation goals,” Oleg Vyugin, Chairman of the Supervisory Board, Moscow Exchange PJSC.
“We share a common atmosphere and climate ... it creates a tangible need, I hope common sense wins out here,” Sergey Shvetsov, First Deputy Governor, Central Bank of the Russian Federation (Bank of Russia).
“The financial centers are in the middle of all these [decarbonization] processes ... we take full responsibility,” Henk Jan Hoogendoorn, Managing Director of Financial Sector Office, Qatar Financial Centre.
“Russian banks are not yet ready to solve this problem [of decarbonization] in any way. It seems to me that they are going through the strongest cognitive dissonance stage right now. <...> They know that it has to be done, this is a long-term project that will last for decades. On the other hand, they are concerned about the fact that they have to make a profit here and now. To be honest, the Russian economy will not be transformed and will not move away from hydrocarbons for a long time,” Oleg Sysuev, President, First Deputy Chairman of the Board of Directors, Alfa-Bank.
“Russia and Kazakhstan are only at the beginning of this path... It is yet nothing but a trend. It would be good to introduce it slowly, and don't get too carried away,” Kairat Kelimbetov, Governor, Astana International Financial Center.
PROBLEMS
Financial market participants lack motivation to invest in environmental projects
“Problem is the fifty shades of green. It is easy to make a political decision at the highest level ... next comes the most important thing: how to make sure that this process captures everyone and does not create a situation where there are successful sovereigns and there are sovereigns who miss out on everything. This creates ... an absolutely terrible problem of inequality in all its aspects,” Oleg Vyugin, Chairman of the Supervisory Board, Moscow Exchange PJSC.
“The question remains: how much of a sharp turn to green finance would be best to create that shareholder value. It is left unanswered. It will apparently be addressed somehow, but ... how?” Oleg Vyugin, Chairman of the Supervisory Board, Moscow Exchange PJSC.
“Banks are very pragmatic. If the motivation for change is serious, they will do it,” Oleg Sysuev, President, First Deputy Chairman of the Board of Directors, Alfa-Bank.
SOLUTIONS
Adoption of environmental initiatives at the state level
“The challenge of the green economy requires political decisions at the highest level. I would structure them this way: it takes decision making and ability to cooperate. If such decisions can be made, it plays a big role at the regulatory level. In many ways it is up to the central banks, the institutions that regulate the movement of financial flows,” Oleg Vyugin, Chairman of the Supervisory Board, Moscow Exchange PJSC.
“It has to become a national project. <…> It takes political will,” Oleg Sysuev, President, First Deputy Chairman of the Board of Directors, Alfa-Bank.
“Green bonds can stimulate such a switch,” Henk Jan Hoogendoorn, Managing Director of Financial Sector Office, Qatar Financial Centre.
Demand from the public and development of competitiveness
“Competition in terms of financing of green economy will be useful. <...> Of course, it is necessary to create mechanisms for mutual consultations, meetings, exchanges, it is very useful. And somewhere we will need to find opportunities for cooperation, which promotes competitiveness,” Oleg Vyugin, Chairman of the Supervisory Board, Moscow Exchange PJSC.
“The key point is the reaction of the population ... the demand of the population. We live in an information society. If this flow that pushes the population towards green values prevails, it will become part of the culture for millennials and generation Z – then business will simply be forced to adjust to this, there is no other way,” Sergey Shvetsov, First Deputy Governor, Central Bank of the Russian Federation (Bank of Russia).
“Worldwide, thirty trillion dollars in the coming years will go from one generation to another, from wealth owners to millennials, and they've made their choice, we see it on the political level. They are voting for an environmental agenda everywhere. We see that the big investor club is taking a commitment on themselves, too, that they're not funding the non-green economy any further," Kairat Kelimbetov, Governor, Astana International Financial Center.
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