Bank of Russia expands range of sustainable finance instruments
From 28 November 2022, Russian companies will be able to issue new types of bonds. The first type is adaptation bonds, the second is sustainability-linked bonds, and the third is climate transition bonds. They are provided for by the amendments to Securities Issue Standards.
Adaptation bonds allow companies to raise funds to transform their operations in the transition to a low-carbon economy. These are project-linked bonds. The company should use the proceeds for specific projects, the criteria of which are approved by the government.
Issuers of sustainability-linked bonds can use the proceeds to solve any of their corporate problems, provided they commit to achieving the key performance indicators declared when issuing the bonds. If this fails, investors will be paid a higher return.
Climate transition bonds are also not linked to a specific project. However, issuers should put forward a science-based strategy to transition their operations to a low-carbon economy and fight climate change.
Besides new instruments, the document provides for other changes related to the issue of securities. For example, the parameters of the share issuance under a convertible loan agreement have been established. The document also improves the regulation of infrastructure bonds and addresses other issues related to the use of standards.