Green Financing Green Financing
Recognising the importance of financial institutions' involvement in the creation of a low-carbon economy, VTB actively implements the principles of responsible financing in its operations and provides financial support to projects that meet the Bank's environmental requirements.
As part of green financing, the Bank strives to provide loans to implement projects improving environmental indicators, reducing natural resource consumption, and promoting the use of renewable energy sources. In addition, VTB engages its retail customers in environmental initiatives.
Financing green industries
One of the key areas of VTB's green financing is its strategy for financing innovative projects in the Russian energy sector aimed at reducing carbon emissions and supporting the implementation of modern technology solutions.
A wind power plant in the Rostov region
In 2020, VTB provided syndicated financing for the project company of the Wind Power Development Fund, a joint investment fund created by Fortum PJCS and ROSNANO JSC on a parity basis.
The project will result in construction of a wind power plant with total capacity of 100 MW. The project is implemented on the principles of project financing and assumes the provision of credit funds against a guarantee of future cash flows under contracts for the provision of capacity of generating facilities operating on the basis of the use of renewable energy sources.
Upgrade of a hydroelectric plant in the Republic of Tatarstan
In 2019, VTB Bank and Tatenergo JSC signed the largest credit agreement in the history of the company for a total amount of RUB 36 billion for a period of 16 years. The financing will be used to implement a project to upgrade the Zainskaya hydroelectric power plant, a key facility of the energy infrastructure of the Republic of Tatarstan.
The Zainskaya hydroelectric power plant will be renovated through the construction of the most powerful combined-cycle plant in Russia, manufactured by General Electric, with a total capacity of 858 MW and unprecedented operational efficiency - the efficiency factor will be 65%.
Garbage collection and recycling in St. Petersburg and the Leningrad region
In 2019 VTB Group, the Government of St. Petersburg, the Government of the Leningrad Region and Inter RAO PJSC entered into an agreement of intent to jointly address the issue of waste management and recycling in the two constituent entities of the Russian Federation.
Joint actions of the parties under the agreement will be aimed at implementing the concept of organising waste collection, transportation and recycling with the use of modern technologies in waste recycling. The project implementation meets the requirements of the national Ecology project and will help to improve the ecological situation on the territory of the regions.
Making environmental claims in project financing
"VTB Group adheres to principles of managerial, social and environmental responsibility in the implementation of infrastructure projects, which reflect our commitment to our customers, partners and society. The principles of responsible investments oriented towards achieving sustainability goals have been firmly embedded in the infrastructure market since this approach was adopted in our projects in the early 2010s".Oleg Pankratov CEO of VTB Infrastructure Holding
During the concept creation stage, we study environmental impact mitigation issues and assess not only the direct effects of a project, but also the indirect ones, such as projected tax revenues, job creation, improved quality of life, territorial development and improved environmental standards.
Obligations of project companies to hold public hearings and regularly monitor and report on environmental and social issues are an important condition for the financing of VTB infrastructure projects.
Environmental impact of VTB's infrastructure projects
Western High-Speed Diameter in St. Petersburg
Eastern exit from Ufa
Funding for energy efficiency projects
One of the VTB Group's activities aimed at improving energy efficiency is the factoring of energy service contracts. This type of financial product represents an alternative non-collateralised source of investment resources for developing enterprises with the aim of improving their energy efficiency. Factoring of energy service contracts does not require an initial investment by the customer, and the projects implemented on its basis produce an economic effect from the date of commissioning.
Introduction of modern energy efficient technologies under the energy service contract allows to reduce expenses on fuel and energy resources by 30-50%, thereby proportionally reducing greenhouse gas emissions and increasing environmental friendliness of production.
An example of such a project in 2020 was the signing of a contract worth more than RUB 500 million by one of Russia's leading tube-rolling mills for the delivery of innovative energy-saving equipment for heating pipe stock with high-frequency currents. The equipment reduces electricity consumption by several times, thereby preventing emissions during production. With the financial support of VTB Factoring LLC, the customer will be able to pay for the equipment in instalments over a period of five years.
Another area for financing projects promoting energy efficiency is the leasing of energy-efficient equipment. Thus, in 2020 VTB Leasing signed a contract with IDGC of Centre PJSC for the leasing of a comprehensive automated electricity metering system worth RUB 1.2 billion. Under the terms of the contract, VTB Leasing will finance the turnkey manufacturing of an integrated automated electricity metering and telemechanics system with remote data collection. Implementation of the project will reduce electricity transmission losses and increase the reliability and overall environmental friendliness of the enterprise in the long-term.
Environmental initiatives for retail customers
Given the growing interest of its customers in the preservation of natural wealth and sharing personal responsibility for environmental quality, in 2020 VTB implemented several retail eco-projects based on the Multi-Bonus loyalty programme.
Renunciation of plastic cards
Another important retail project benefiting the environment was the switch from plastic to digital debit and credit cards. The renunciation of plastic cards was launched in late 2019 and is one possible option to reduce the environmental impact of banking institutions. In addition, VTB considers the issuance of digital cards as an important step towards developing a digital experience in the design, receipt and use of card products.
By the end of 2020 the share of virtual cards made up 5% of issue and the turnover was around RUB 8 billion. A total of 342 thousand digital cards and 5 million cards with paperless PIN envelopes were issued in 2020 (45% of total card issue). By 2023, VTB plans to increase the share of digital cards in its total card issuance to 40%.