MKB enhances its focus on managing S&E impacts of provided financing

21.07.2021

Credit Bank of Moscow (MKB, Region-Rossium Group) has developed a manual for managing environmental and social impact of proposed financing. Prepared by experts of the bank's Sustainable Development Division, the document is the backbone of the S&E, H&S and EE&C integrated management system (IMS) which is being deployed pursuant to the relevant policy approved and published in March 2021.

The manual is intended to manage MKB's indirect impact related to provided financing, which its ESG strategy and IMS policy designate as a key area to address. The document has been approved by EBRD representatives.

The manual supersedes the social and environmental management policy the bank has had since 2015. It is better aligned with international standards as regards terminology, evaluation processes, categorisation of social and environmental risks, as well as updates the distribution of responsibility given the creation of an internal centre of expertise. The manual, like the policy, regulates the appraisal of all incoming banking transactions and, at the same time, differentiates the depth and format of social and environmental due diligence according to the kind of financing and the applicability of any international standard to the given financial product or service.

Managing the indirect S&E impact is a key issue for the banking sector, so MKB wants to further regulate this area. Absent any detailed up-to-date national or international guidance on managing indirect banking impact, it was decided to refer to proven international standards of responsible financing and, firstly, the Environmental and Social Policy of EBRD as one of MKB's shareholders.

The document is also applicable to the existing loan portfolio as it lists more than 200 ESG criteria to be used for S&E appraisal of the bulk of the loan portfolio.

"The manual regulates processes related not only to the evaluation, but also to the prevention and mitigation of customers' S&E impacts through the development of managerial S&E plans. A recommendation will be given for each identified non-compliance and each area of improvement. The most comfortable remediation format will be defined in a dialogue with the customers. MKB has enough experience and expertise in this area and already has a track record of sustainable financing and advisory engagements with big corporate customers. Importantly, the appraised customers will get, free of charge, a comprehensive picture of their sustainable development progress and identify areas of improvement with the support of MKB's specialists. Our global goal is to improve our customers' S&E performance, thus contributing to greater sustainability of the entire national economy," commented Julia Titova, MKB's First Vice President.