GREEN FINANCE: the AGENDA for RUSSIA Diagnostic Overview

EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including “green” financing

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview

Moscow, October 2018 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

This diagnostic overview “Green Finance: the Agenda for Russia” (hereinafter: the Diagnostic Overview) was prepared by the members of the working group on responsible financing (ESG-finance), which includes green financing, under the Expert Council on the long-term investment market under the Central Bank of the Russian Federation with the participation of experts with the relevant field of expertise and market competency. This Diagnostic Overview consolidates the main elements necessary for the formation of the green finance market in the Russian Federation, illustrates a road map for the development of the market, and offers an attempt to address comprehensively the problems in the development of this sphere. Assessments and proposals presented in this Diagnostic Overview, unless otherwise indicated, were produced on October 15, 2018. All indirect summary data in tables and graphs has been calculated and processed by analysts of the Concessionaires and Long-term Infrastructure Investors National Association (CoLTI). The material submitted is not an official publication by the Central Bank of the Russian Federation. It also does not claim to be a comprehensive review of all aspects of the formation and development of the green finance market in Russia. For specific points reflecting the market problems, proposals to change the situation have yet to be formulated. In cases where the process of developing approaches and proposals exceeded the time allotted for this research, tit was decided to leave unchanged the description of the issues. The Diagnostic Overview does not contain a forecast of any events, professional advice or advertising. Any information about the development of events is a professional opinion, the implementation of which has a degree of probability. All company names herein in this material are used solely in support of stated arguments. All statistics used in this Diagnostic Overview, with the exception of official sources, are expert sources and based on calculations, opinions and assumptions of analysts. The overview is not a basis for any financial and investment decisions, it is not an offer and published for reference purposes only.

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 1 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

PROJECT PARTICIPANTS: Svetlana Bik, Executive Director of Concessionaires and Long-term Infrastructure Investors National Association (CoLTI), Chairperson of the Expert Council on the Long-Term Investment Market under the Central Bank of the Russian Federation Denis Grigoriev, Head of the Department for the Strategic Development of the Financial Market of the Bank of Russia Kirill Bogomolov, Leading consultant of Department for International Financial Relations of Ministry of Finance of the Russian Federation Maria Golovko, Head of Information and Research at CoLTI Nataliya Ponomaryova, Head of the Sustainable Development Department at the Eurasian Economic Cooperation Orga- nization Mikhail Babenko, Director of the Green Economy Programme for the World Wildlife Fund (WWF Russia) Sergey Sementsov, Head of Green Economics at Vnesheconombank Institute Viktor Popov, CoLTI Analyst IN PREPARATION OF THE DIAGNOSTIC OVERVIEW, INFORMATION AND MATERIALS ON THE PROJECT TOPIC WERE USED, PROVIDED BY THE FOLLOWING EXPERTS: Andrey Bobovnikov, Head of Work with Issuers at Moscow Exchange PJSC

Vsevolod Gavrilov, Director of the Energy Efficiency and Natural Resource Use Project Management at Sberbank of Rus- sia PJSC Lyudmila Kabir, ScD (Economics), Professor, Professor at RAS (Russian Academy of Sciences), Chief Researcher at the Center for International Finance of the Financial Research Institute Denis Parlikov, expert Yuri Sizov, First Deputy Director of CJSC “Leader” (the Company on the management of pension fund assets) Regina Suleymanova, Head of Department of Registration of Exchange-Traded Bonds at Moscow Exchange PJSC Evgeny Yakushev, Executive Director of NPF SAFMAR

THE DOCUMENTS AS FOLLOWS WERE ALSO USED FOR THE PREPARATION OF THE DIAGNOSTIC OVERVIEW: – reports on research work covering the topic of green and sustainable financing prepared in 2016-2018, produced upon the request of the Ministry of Finance of the Russian Federation through Federal State Budgetary Institution the Financial Research Institute (FRI) www.minfin.ru/ru/document – information posted on the official websites of the Concessionaires and Long-term Infrastructure Investors National Association (CoLTI) www.investinfra.ru,www.db.investinfra.ru, Moscow Exchange www.moex.com, RSPP (Russian Union of Industrialists and Entrepreneurs) www.rspp.ru, Interfax news network www.interfax.ru, AK&M rating agency www.akmrating.ru, branches of RAEX international group in the European Union RAEX-Europe www.raexpert.eu, International Capital Market Association (ICMA) www.icmagroup.org, non-profit organization in the field of green finance Climate Bonds Initiative (CBI) www.climatebonds.net, Moody’s international credit rating agency www.moodys.com

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 2 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

CONTENT

1. GREEN TRENDS IN THE GLOBAL ECONOMY ...... 4 1.1. Development of the sustainable development and responsible investment concept worldwide ...... 4 1.2. Key international initiatives in the field of green finance ...... 5 1.3. Institutionalization and formation of the green finance market outside the Russian Federation ...... 6 1.4. The role and participation of the State in the green finance market ...... 11 1.5. Size of the green finance market outside the Russian Federation ...... 11

2. CONCEPTS AND DEFINITIONS ...... 12

3. PREREQUISITES FOR THE CREATION OF A GREEN FINANCE MARKET IN RUSSIA ...... 13

4. AND THE INSTITUTIONAL AND LEGAL BASIS FOR THE FORMATION AND DEVELOPMENT OF THE GREEN FINANCE MARKET IN RUSSIA ...... 13

5. PLAYERS OF THE GREEN FINANCE MARKET PLAYERS IN RUSSIA ...... 17 5.1. National development institutions ...... 17 5.2. Commercial banks and insurance companies ...... 18 5.3. Issuers ...... 19 5.4. Exchange and trading systems ...... 20 5.5. Review and certification ...... 20 5.6. Councils, expert groups, non-governmental organizations, working groups and other expert organizations ...... 22

6. MECHANISMS FOR THE FORMATION AND DEVELOPMENT OF THE GREEN FINANCE MARKET IN RUSSIA ...... 23 6.1. Methodologies and standardization ...... 23 6.2. Environmental risk assessment ...... 23 6.3. Environmental audit ...... 24 6.4. Indices and ratings ...... 24 6.5. Registers of non-financial reports and disclosures ...... 26 6.6. Verification and certification ...... 26

7. AN APPROXIMATE APPRAISAL OF THE SIZE OF THE GREEN MARKET AND ITS DYNAMICS ...... 26

8. A ROAD MAP FOR THE FORMATION OF A GREEN FINANCE MARKET IN RUSSIA ...... 28

APPENDICES ...... 29

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 3 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

1. GREEN TRENDS IN THE GLOBAL ECONOMY 1.1. DEVELOPMENT OF THE SUSTAINABLE DEVELOPMENT AND RESPONSIBLE INVESTMENT CONCEPT WORLDWIDE In 1972, the UN Environment Programme or UNEP (United Nations Environment Programme, UNEP) was established to provide general policy guidance for the system-wide and global coordination of environmental protection efforts. UNEP defines a green economy as one that results in improved human well-being and social equity, while significantly reducing environmental risks and ecological scarcities. The concept of «sustainable development» was formally drafted in the report «Our Common Future», released by the UN World Commission on Environment and Development in 1987. According to the report, sustainable development is to ensuring that humanity’s socio-economic development meets the needs of the present without compromising the ability of future generations to meet their own needs. The term «sustainable development» gained truely broad acception at the United Nations Conference on Environment and Development, held in Rio de Janeiro in 1992. A jointly developed international environmental treaty was opened for signature at the Conference — the United Nations Framework Convention on Climate Change, the UNFCCC—a program of actions aimed at implementing the concept of global sustainable development through national governments. With the development of globalization and the growing influence of transnational corporations and their share in the global economy, the main focus of the sustainable development concept started shifting from the national level to the corporate. The Frame- work Convention came into effect on March 21, 1994. As of today, there are 196 countries (encompassing all the developed countries, including the United States) including the supranational union European Union, all of which are parties to the Convention. In December 1997, the Kyoto Protocol to the UNFCCC was adopted at the third session of the Conference of the Parties to the UNFCCC in Kyoto (Japan). The Protocol came into force on February 16, 2005. As of today, over 190 countries are parties to the Kyoto Protocol. In 2006, the United Nations-supported Principles for Responsible Investment (PRI) were established after several major institutional investors from 12 countries accepted the invitation of the UN Secretary-General, and six basic Principles for Responsible Investment were developed. The principles are a voluntary initiative to be used by companies when considering environmental and social issues as well as corporate governance issues (ESG) as part of investment decision-making, with the aim of bridging the gap between the company’s agenda and society’s expectations. Currently, PRI brings together over 2000 organizations from investment funds, management companies and consultants. In 2008, nine joint anti-crisis initiatives were developed within the UN, one of which dealt with the green economy and was presented as «A Global Green New Deal Report». For the first time, the report included recommendations in the area of public investment, as well as stating the necessary policy reforms designed to initiate the transition to a green economy, increase employment and solve the chronic poverty issue. In 2009, GRESB (Global Real Estate Sustainability Benchmark) published the first system of assessments for sustainable development and adherence to the ESG principles. GRESB methodology allows infrastructure projects to be monitored, including energy, electricity transmission, water utilities, transport, social infrastructure, telecommunications and MSW (mu- niciple solid waste). GRESB allows the assessment of three main areas on a 1 to 100 point scale: real estate (GRESB Real Estate), real estate debt (GRESB Real Estate Debt) and infrastructure (GRESB Infrastructure). When calculating the rating, GRESB relies on such indicators as the quality of management, data disclosure policy, risk profile, performance indicators of the operating company, interaction with stakeholders, awards and certificates. In December 2014, the UN adopted and published the “Fundamental principles for the development of the world community until 2030”1, which meets the needs of the present without compromising the ability of future generations to meet their own needs. On September 25 2015, 193 countries adopted the 2030 Agenda for Sustainable Development, which It includes 17 global Sustainable Development Goals (SDGs). The new SDGs are integrated and indivisible, and balance all three dimensions of sustainable development: the economic, social and environmental.

The Sustainable Development Goals are given in Annex 1. The UN Sustainable Development Goals (SDGs) are integrated and applicable to all countries. At the same time, according

1 https //susta í nabledevelopment u n org/post2015/transform ingou rworld

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 4 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

to the document, each country makes a list of priorities, which need to be addressed first and foremost, or which have an impact on the environment of many countries at the same time. On December 12, 2015, the Paris Agreement (PA) was adopted at the 21st Conference of the Parties to the UNFCCC in Paris (France) and came into effect less than a year later, on November 4, 2016. As of July 10, 2018, all members of the UNFCCC have signed the Paris agreement, and 178 of them have ratified it, including the EU countries, the US, India and China. The countries who have joined the agreement account for approximately 90 percent of all global anthropogenic emissions of greenhouse gases. The agreement has no fixed term (for an indefinite period of time). The goals, objectives and requirements for parties concerned are for the period up to the end of the twenty-first century. 1.2. KEY INTERNATIONAL INITIATIVES IN THE FIELD OF GREEN FINANCE With the development of globalization and the growing influence of transnational corporations and their share in the global economy, the main focus of the sustainable development concept started shifting from the national level to the corporate. The following may be regarded as some of the most significant initiatives and projects in the area of sustainable development and green investment: The Coalition for Environmentally Responsible Economies (CERES) , founded in 1989, has the key aim of mobilizing investors and the business community to build a thriving sustainable global economy. Members of the organization are working on the implementation of environmental practices in business relations, promote renewable energy programs, and produce reports on climate change and global warming. CERES brings together 146 institutional investors managing assets worth more than $23 trillion, including BlackRock and State Street Global Advisors. The International Chamber of Commerce’s Business Charter for Sustainable Development provides voluntary standards for corporations. They were developed by the International Chamber of Commerce in 1991 and include 16 principles of environmental management, which companies are encouraged to implement in their daily practice. Over 1,200 companies have joined the Charter, including 132 corporations that are on the Fortune 500 list. The Global Reporting Initiative, GRI is an independent organization created in 1997 with the support of the Coalition for Environmentally Responsible Economies (CERES), and has developed the GRI Sustainability Reporting Standards—the world’s primary and most widely used standard of non-financial reporting system. The guide provides a list of specific indicators for reporting on the social, environmental and economic activities of enterprises. According to professional service company KPMG, about 93 percent of the world’s 250 largest companies produce their non-financial reports using GRI guidelines. The United Nations Global Compact is the world’s largest initiative in the area of corporate sustainable development, aimed at promoting sustainable economic growth and raising the level of corporate citizenship. The voluntary international initiative has been operating since 1999 and encourages large and small companies to develop socially and environmentally oriented events, as well as to report on the results of their activities in these areas. By August 2018, 13270 companies and organizations from 166 countries had joined the Global Compact. The Central Banks and Supervisors Network for Greening the Financial System (NGFS) was established in December 2017 at the One Planet Summit in Paris, to facilitate the implementation of measures necessary to achieve the objectives of the Paris Agreement, as well as to develop the climate risk management of the financial market and capital mobiliza-tion in environmentally friendly and low-carbon resources. By June 28, 2018, NGFS had brought together 18 participants, incorporating central banks, including Germany (Deutsche Bundesbank), Great Britain (Bank of England), Finland, France (Banque de France), and Mexico (Banco de México), the Netherlands (De Nederlandsche Bank), China (the Peoples Bank of China), Singapore (Monetary Authority of Singapore), as well as the Swedish Financial Supervisory Authority (Finansinspektionen), etc. As early as January 2018, the first meeting of the Central Banks and Supervisors Network for Greening the Financial System was held, during which participants exchanged experience and information on the development of green finance, and also made a commitment to contribute to the further development of low-carbon economic growth. The Inclusive Development Index was developed by the Swiss non-governmental organization, the World Economic Fo-rum (WEF), and published in January 2018. The index is based on 12 indicators organized into three groups which assess the level of economic development better than the indicator of GDP growth alone. The index aims to achieve broad disclo-sure of economic information, as well as increase public awareness and support of sustainable economic development. The Green Bond Pledge international initiative, was launched in March 2018 with the joint participation of the following major non-profit organizations specializing in climate change and environmental issues, along with green investments: non- GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 5 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

profit organization in the area of green finance, the Climate Bonds Initiative; international environmental organization, Mis- sion 2020; international organization on the disclosure of carbon emissions, the Carbon Disclosure Project (CDP); American advocacy organization CERES; American climate organization, Citizens’ Climate Lobby (CCL); American environmental organization “the Natural Resources Defense Council, NRDC”; and international climate organization, The Climate Group. The participants of the initiative believe that all infrastructure projects should be implemented, taking the environmental impact and climate risks into account, with a focus on sustainable development, and they take on the obligation to finance infrastructure projects with green bonds. 1.3. INSTITUTIONALIZATION AND FORMATION OF THE GREEN FINANCE MARKET OUTSIDE THE RUSSIAN FEDERATION The green bond market emerged in 2007-2008, as they were first issued by international development banks. Between 2007 and 2010, the main issuers of green bonds were the International Bank for Reconstruction and Development, the European Investment Bank, and a number of other regional and national development banks. In 2010, the international non-profit organization Climate Bonds Initiative (CBI) was founded, the key activities of which are: –– conducting analysis and research into the green bond market, –– development of standards and a certification system for green bonds, –– analysis of legislative initiatives at the national level, aimed at the development of green financing. At the end of 2011, CBI published the first voluntary Climate Bonds Standard and corresponding Certification Scheme. Between 2012 and 2015, four more industry criteria were established—for projects on solar energy, low-carbon public transport (bus rapid transit) and energy-efficient buildings. In addition, industry criteria have been developed which are relevant to the issuance of bonds for the implementation of programs and projects in the area of wind power, tidal power, as well as geothermal energy. In January 2017, Version 2.1 of the CBI Standard was published, which included all previous criteria, as well as the range of debt instruments used, which may be certified for the issue of green bonds. In 2014, the International Capital Market Association (ICMA), a self-regulatory organization and trade association for the international financial market which was established in 2005, joined the ideological and methodological work in the area of green bonds. –– ICMA’s key activities in green finance include the following: –– developing and updating Green Bonds Principles, establishing common guidelines for transparency, disclosure and reporting, engagement with governments, regulatory authorities, central banks and stock exchanges, both at the national and international level, in order to develop the financial regulation of the green bond market, –– exchange of experience and information between association members and other market participants on the development of green bonds. In 2014, a consortium of investment banks developed the Green Bonds Principles (GBP): Bank of America Merrill Lynch, Citi, Crédit Agricole Corporate and Investment Bank, JPMorgan Chase, BNP Paribas, Daiwa, Deutsche Bank, Goldman Sachs, HSBC, Mizuho Securities, Morgan Stanley, Rabobank and SEB. The Principles are accepted standards followed by most of the world’s green bond issuers. Compliance with GBPs ensures investors that an issuer meets certain standards regarding where the funds from the bonds are sent, how projects are selected and what reports are made available to investors. GBP are international principles. Following the establishment of GBP, the continuous monitoring and development of guidelines has been transferred to an independent Secretariat organized by ICMA. There are also national principles and rules established on the basis of regulatory legal acts. For example, the People’s Bank of China issued a green bond issuance guide in 2015 which regulates the issuance of green bonds. In the document, some securities fall under the green bond category, issued by financial institutions with legal entity status for the purpose of supporting green industries and repaying principal and interest payments on the agreement of stakeholders. In addition to international and national principles, principles are being developed at the regional level. For example, in 2017 the Association of Southeast Asian Nations (ASEAN), made up of 10 countries in Southeast Asia, developed standards for green bonds based on the ICMA’s Green Bond Principles with the inclusion of additional criteria. Issues that meet these standards can be labeled ASEAN Green Bonds or Islamic (sukuk) ASEAN Green Bonds.

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 6 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

Independent external assessment of green bond issue Issuers of green bonds are recommended to have an independent external assessment of green bond issue conducted in compliance with certain standards. Such assessments are usually voluntary, but highly recommended. The external review is an independent expert’s conclusion, having evaluated the issue of green bonds for compliance with the applicable standards or guidelines, such as the green Bonds Principles (GBP), the Climate Bond Standards (CBS), ASEAN standards for green bonds etc. The Issuer may use the services of external consultants or institutions that have the necessary examination skills to review green projects. The review allows the assessment of the project risks and the quality of an issuer’s actions to attract financing through bond issue. On average over 80 percent of green bonds have been reviewed by independent consultants. Green bond assessment allows investors, governments and shareholders to verify whether or not green financing is serving its purpose, and also receive access to the project disclosure system. The external review is divided into two phases: before and after the bond issue. The «ex-ante» assessment aims to provide information about the compliance of the project objectives and management schemes with green financing standards. The «ex-post» assessment is carried out to confirm the intended use of the attracted financing. The form of external assessment for green financing prior to bond issue assumes one of several options. The CBI defines them as follows. Third-Party Assurance from independent consultants on compliance of green bond issue with Green Bond Principles and the Climate Bonds Initiative provided by audit firms (consulting companies Deloitte, KPMG). A conclusion from external expert organizations (second-party opinion) is the conclusion of an expert company that assesses the risks of the project and an issuer’s credit quality to attract financing through the issuance of bonds. The assessment can be carried out by both non-profit and commercial organizations such as Oekom, Sustainalytics, Vigeo, CICERO, CECEP Consulting and others. Green bond ratings can be provided for both individual issues and securities programs. For example, the international rating agency Moody’s has developed a methodology for assessing green bonds (Green Bonds Assessment–GBA). This methodology focuses on an issuer’s compliance with the principle of targeted use of funds, quality assessment of project management and reporting. For GBA, Moody’s uses criteria developed by CBI and IOSCO. Moody’s assigned a rating to 18 issues of green bonds (0.5 percent of the market), while S&P Global Ratings assigned 16 issues (0.4 percent). If the company plans to obtain CBI certification for issuing green bonds, it is necessary to attract verifiers who have received CBI accreditation for the verification of green bonds at the ex-ante stage. These include consulting and audit companies (Deloitte, KPMG and others), certification agencies (ERM Certification and Verification Services, Kestrel Verifiers, tüv NORD CERT and others), consulting companies in the area of responsible investment and green finance (Sustainalytics, Vigeo Eiris and others). The share of certified green bonds submitted by the CBI at the end of 2017 was 14 percent. The total certified green bonds issued has increased by $21.3 billion and reached $ 31.4 billion. In the fourth quarter of 2017, certified green bond issuance amounted to $10.8 billion. Currently, the organization CBI has the most advanced methodology for the certification of “green (climate) bonds”, based on the Green Bond Principles (GBP). One of the main tasks of Climate Bonds Standard being actively fulfilled by the CBI is building investors’ and governments’ trust that issue funds are being spent on the implementation of environmentally sustainable projects in the context of their adaptation to face climate change. Independent external reporting on bonds at the ex-post stage is carried out after the bond has been issued and following the start of the allocation of the issue funds, and is necessary to confirm compliance with the requirements of the Green Bond Standard (CBI). CBI recommends the following options: –– Third-party assurance from independent consultants and conclusion from external expert organizations (second- party opinion) on the targeted use of income from the issue of green bonds. It may be carried out by consulting and auditing companies, certification agencies, companies in the field of responsible investment and green finance, research centers: for example, these are Deloitte, KPMG, Sustainalytics, Vigeo Eiris, tüv NORD CERT and others. –– preparation of reports in the field of impact investing (impact reporting). The reports contain information about the environmental impact of the projects for which bonds have been issued. These reports can be prepared by both an issuer and by specialized companies, including audit companies, certification agencies, companies in the field of

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 7 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

responsible investment and green finance, research centers, for example Deloitte, KPMG, Sustainalytics, Vigeo Eiris, tüv NORD CERT and others. –– verification of green bonds at the ex-post reporting stage serves to confirm the compliance of the bonds with the ex-post requirements of the green bonds standard (CBI), as well as the targeted use of income from the issue of green bonds. Verification is carried out by organizations that have been accredited by the CBI, including consulting and audit companies (Deloitte, KPMG and others), certification agencies (ERM Certification and Verification Services, Kestrel Verifiers, tüv NORD CERT and others), consulting companies in the field of responsible investment and green finance (Sustainalytics, Vigeo Eiris and others). According to data from CBI and ICMA, there are 30 companies and organizations in the market that have provided external review for green bond issues. Another 15 companies have been accredited by CBI and ICMA, but have yet to be assessed. In the Climate Bonds database of labeled green bonds, in which there are all the issues of green bonds according to the version of CBI and ICMA, 3561 green bond issues are recorded. The Centre for International Climate and Environmental Research (CICERO, Norway) holds the largest market share of external assessment for green bonds: the company has provided about 2,500 conclusions, which is around 70 percent of the market. CICERO is an independent research center specializing in environmental research, climate change, and green finance. CICERO was the first provider of expert review (second opinion) for the World Bank’s first green bond issue in 2007. This was really the beginning of the world’s green bond market. The next company in terms of its market share is Sustainalytics (Netherlands), which has issued 262 external reviews, representing 7 percent of the market. The company provides advisory services, strategy development services in the field of responsible investment, as well as climate change risk management for asset managers, ESG rating development services, and analyzes investment portfolios for compliance with the principles of responsible investment. The group of companies Vigeo Eiris, EY, DNV GL, KPMG, ISS-oeko have conducted a total of 308 external reviews, which is 8.65 percent. The remaining 23 (out of 30) companies and organizations that are included in the consolidated list of companies that have provided external reviews for green bond issues have evaluated 126 bond issues, which is 4 percent. 359 issues of green bonds which are in the CBI database have had no external review, and are self-labeled by an issuer. The share of such issues is 10 percent. Fig.1. Shares of companies that have provided external reviews for green bond issues as of 31.08.2018, number of external reviews / percent 126, 4% Cicero 52, 1% Sustainalytics 53, 2% Vigeo Eiris 62, 2% 359, 10% 67, 2% EY 74, 2% DNV GL KPMG 262, 7% 2505, 70% ISS-oekom Other companies and organizations (23) Number of issues without external assessment

CBI and ICMA data, CoLTI estimates According to the CBI, at the end of the 3rd quarter of 2018, the Centre for International Climate and Environmental Research Oslo (CICERO) holds the largest share of the market for the external review of green bonds: the amount of green bonds that have received an external review from CICERO amounted to $133.9 billion or 45 percent of the total issuance. Second place goes to Dutch consulting company Sustalnanalltics at $60,7 billion, or 21 percent of all issued green bonds. In third

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 8 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

place is the French consulting company in the field of responsible investment, Vigeo Eiris, with $ 59 billion or 20 percent of the total issuance of green bonds. The total green bond issues that have been external reviewed was $ 294.5 billion, which is 76 percent of the total circulating green bonds (according to the CBI methodology). Overall, according to the CBI, the total issuance of green bonds is $389 billion by the end of the second quarter of 2018. Fig.2. The share of companies which have provided external review for green bond issues on 30.09.2018, green bond issuance / percent

$1,4 billion; 1% $1,4 billion; 1% CICERO $14,8 billion; 5% $0,6 billion; 0% $20,6 billion; 7% $1,2 billion; 0% Sustainanalitics Vigeo EIRIS $59,9 billion; 20% ISS-Oekom DNV GL $60,8 billion; 21% Zhongcai Green Financing $133,9 billion; 45% Syntao Green Finance Carbon Trust Others CBI data, CoLTI estimates

The role of stock exchanges in the development of the market for green finance Stock exchanges abroad support the green finance market by creating a dedicated green stock exchange, a dedicated green bond segment or a list of green bonds. According to the CBI, green bond issues have been allocated to 10 stock exchanges abroad, including the following. The Luxembourg Stock Exchange. The first green bond was issued in 2007. In 2016, a dedicated LGX platform (Luxem- bourg Green Exchange) was launched. The main requirements for entry are an issuer’s statement that the bond complies with the green principles, an independent external review and the obligation to provide disclosure during the period of circulation. London Stock Exchange. The first green bond was issued in 2012. In 2015, a separate green segment was created. The main eligibility requirement is an independent review. Oslo Stock Exchange. In January 2015, Oslo Bors became the first exchange in the world with its own dedicated list of green bonds. The main eligibility requirements are a published independent review confirming that the bond issue is environmentally sound, and a commitment to disclose reporting on the project, agreed with investors when issuing bonds. Appendix 3 presents a CoLTI sample of green bonds issued, which were sold on foreign exchanges in dedicated segments as well as part of the general flow. In addition, the sample provides examples of private green bond listing. In the CoLTI sample “Green bond issues: cross-boarder listings on stock exchanges and private placements (outside the stock exchange)” 352 issues of green bonds from 135 issuers are displayed. Thus, in particular, the Luxembourg Green Exchange has admitted 167 issues from 42 issuers to listing. The issues comply with the ICMA Green Bond Principles, CBI standards, the Sustainability Bond Guidelines (SBG) or the PBOC Green Bond Endorsed Project Catalogue, produced by the People’s Bank of China, which may be financed through the issuance of green bonds, etc. Within the segments dedicated to green bonds on the Oslo Stock Exchange, London Stock Exchange, Mexican Stock Exchange, Shanghai Stock Exchange, Taipei Exchange (Taiwan Stock Exchange), and JSE Limited (Johannesburg Stock Exchange), 143 issues from 76 issuers have been admitted to listing. On the Australian Stock Exchange, NASDAQ exchanges in the Baltic States, the NYSE New York Stock Exchange and the Hong Kong Stock Exchange, green bond issues are also listed, amounting to 25 (13 issuers), with dedicated sections for green bonds. GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 9 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

In the context of private placements (outside the exchange) 17 green bonds issued by 4 issuers have been placed. The bond issues comply with the ICMA Green Bond Principles. The issues have also been assigned a credit rating by the Moody’s Rating Agency. The 150 issues from 38 issuers represented in the sample had independent assessment conducted by verifiers accredited by ICMA. 84 issues from 32 issuers received an independent review by verifiers accredited by the CBI. 100 issues from 53 issuers have obtained an independent review by verifiers that are accredited by both CBI and ICMA. 9 issues from 6 issuers have received independent review from verifiers who are not accredited by CBI or ICMA. They incor- porate 8 issues from 4 issuers, the external assessment of which was conducted by Moody’s Rating Agency in accordance with Green Bonds Assessment (GBA) methodology. 9 issues from 6 issuers did not satisfy the independent assessment of verifiers. 1.4. THE ROLE AND PARTICIPATION OF THE STATE IN THE GREEN FINANCE MARKET The main measures of state support for the green financing market include the following: Ensuring market integrity. The formation of green bond principles and standards at the national level ensures the development of a robust green market, guarantees government support for green bond issues, and helps investors manage the level of investment impact on climate change. Bond issuance strategies. The issuance of green bonds by the state to ensure liquidity in the market, to attract and train investors. For these purposes, sovereign and municipal green bonds, as well as bonds from development institutions or green banks may be issued. Risk reduction. Risk reduction is achieved by upscaling green projects and though the securitization of loans during the design stage to ensure access to the bond market for institutional investors, as well as the issuance of secured green bonds. Financial benefits. There are several types of financial benefits: preferential environmental taxes and fees, state guarantees, subsidies, direct state financing at the stages of preparation and design of projects, state insurance, etc. Demand guarantee. Demand guaranteed by way of public procurement, prioritizing environmental projects. 1.5. SIZE OF THE GREEN FINANCE MARKET OUTSIDE THE RUSSIAN FEDERATION The green bond market emerged in 2007-2008, with the first instances of issues by international development banks, and now represents a rapidly growing and long-term perspective segment of the global financial market. At the same time, large institutional investors are showing increased interest in the market. On July 12, 2018, non-profit organization in the field of green finance the Climate Bonds Initiative (CBI) published a report on the trends in the global green bond market in the first half of 2018. At the end of the reporting period, green bond issuance increased by 4 percent compared to the same period last year to $74.6 billion, and 156 issuers from 31 different countries issued green bonds. At the end of the second quarter of 2018, the volume of green bond offerings reached $ 45 billion compared to $ 31.8 billion raised in the first quarter of 2018. By September 4, 2018, according to the Climate Bonds Initiative, over 2018 green bond issuance has raised $92.1 billion. The prediction for 2018 is $250 billion. In 2017 in comparison, issuance raised $161 billion. According to the CBI, total green bonds issuance is to reach $389 billion at the end of the second quarter of 2018. The green bond issuance of developing countries reached $14.6 billion, or 19 percent of the overall volume of issues in the first half of 2018. According to expert predictions, taking the supranational organizations of developing countries into account (such as the Asian Development Bank or the African Development Bank), the share of green bonds of developing countries will increase to $21.5 billion and will reach 28 percent in the near future.

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2. CONCEPTS AND DEFINITIONS The international financial market has established the following definitions: Verification (confirmation of compliance) is the procedure for assessing the applicant’s documents for conformation to the established requirements. In international practice, it is carried out by independent consultants (second-party opinion) with a proven reputation in the market. Green Investments are investments in environmentally friendly and resource-saving technology. It generally implies investments in various programs and projects, the purpose of which is the development of a green economy. Green loans are loans that were provided for green projects and went towards their implementation, as well as to improve the environment. Green bonds are a special type of bond issued to ensure green financing, i.e. the implementation of programs and projects aimed at developing the green economy. Green projects are projects implemented within the green economy context. These are generally projects aimed at achieving environmental protection, at creating infrastructure that reduces the negative impact of climate change, etc. Green insurance is environmental liability insurance for environmental pollution. Green technology is innovative technology based on the principles of sustainable development and the reuse or conservation of natural resources. Green finance are the financial services designed to support economic activities that aim to improve the environment, mitigate the effects of global climate change and use resources more efficiently. Green financial instruments are plain-vanilla financial instruments through which only green projects are financed. The use of this type of financial instrument requires more detailed disclosure for a wide range of persons. Climate risk is the probability of adverse environmental conditions due to climate change. The best available technology (BAT) is technology for production of products (goods), performance of work, rendering of services determined on the basis of the modern achievements of science and technology and the best combination of criteria for achieving the goals of environmental protection, subject to the availability of the technical possibility to apply it. Responsible investing is investing, the purpose of which is not only to generate income for the investor, but also to create positive social changes, reduce the negative impact on the natural environment, and comply with ethical standards. Project green bonds are a debt instrument, under which an investor bears a direct credit risk associated with the financing of a project or several projects. The instrument may or may not provide for the right of recourse to an issuer. Securitized green bonds are debt instruments, secured by one or more specific projects or assets, including mortgage- backed and asset-backed securities. The initial source of payment for bonds of this type is usually the cash flow generated by the underlying assets of the issue. Sustainable development is the UN concept of managing human social and economic development for the preservation of the biosphere and for human survival, proposed to the governments of all countries for guidance in developing plans and decisions in the area of public administration. A financial instrument is a contract which gives rise to the financial asset of the first entity, and an equity instrument or financial liability of the second entity at the same time. Environmental risk is the probability of negative changes in the environment, caused by anthropogenic or other influ- ences. Environmental insurance is a set of different types of insurance against environmental risks, aimed at providing insurance protection in case of damage to policyholders as a result of environmental risks.

3. PREREQUISITES FOR THE CREATION OF A GREEN FINANCE MARKET IN RUSSIA 132 countries, which account for 82 percent of all harmful emissions, adopted a number of national green finance development initiatives at the state level in 2016-2017. Countries which do not participate in the development of the rules and standards in this as yet unregulated market will eventually be forced to accept the rules of a game developed by more active players.

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As a result of the decisions made, the following changes are occurring in the international financial market: –– the orientation of the international financial system is moving towards an environmentally sustainable development strategy, –– at the state level, the green financial system has become one of the topics for the general discourse on ecology and energy efficiency, –– the financial community is showing increased interest in the appearance of green financial instruments, –– foreign stock exchanges are supporting national financing systems by creating a dedicated green segment, a dedicated green stock exchange or a dedicated list of green bonds, –– environmental and low-carbon indicators are increasingly being taken into account in business ratings, and over the last 2-3 years, the reorientation of investments towards companies that show higher environmental awareness is clearly visible. –– Investment opportunities in green development will create demand from national enterprises, and will contribute to the growth of green technology transfer from abroad and the increase of technology available to companies. The key objective factors: –– economic (export of goods, attraction of financing for domestic projects, including projects focusing on the protection and restoration of the Earth’s ecosystems and promotion of their sustainable use, sustainable management of the country’s forests and unique water resources). Cooperation on a unified global regulatory regime, whether it be the introduction of carbon charges or other measures, can create non-ambiguous incentives for the development of modern technology. The economy and goods of countries that are not included or integrated into this system of uniform regulation inevitably lose competitiveness, in other words ultimately losing the opportunity to export them. In addition, green projects broaden the horizons for attracting foreign direct investment in the Russian economy, –– social (the current generation’s increasing demand for a clean, healthy and favorable environment to live in, which supports the biological rhythm of life, in unity and struggling against the contradiction of economic interests in the use of natural resources), –– image (green investments in green projects can be deemed the most probable course of action to gain exemption from sanctions. In addition, foreign investors, with a large pool of Russian green bonds in their portfolios, will lobby in every possible way to lift the existing sanctions restrictions).

4. INSTITUTIONAL AND LEGAL MECHANISMS FOR THE FORMATION AND DEVELOPMENT OF THE GREEN FINANCE MARKET IN RUSSIA Currently in Russia, the following authorities, by virtue of their powers and capabilities, can have a significant influence on the formation of the green finance market. The Ministry of Economic Development of the Russian Federation carries out the development of state policy and legal regulation in the area of private and public investment, and improving the energy efficiency of the economy of the Russian Federation. The Ministry of Natural Resources and the Environment of the Russian Federation (Minprirody of Russia) serves to develop state policy and the legal regulatory framework for the study, exploitation, restoration and protection of natural resources, in order to ensure sustainable and safe use of natural resources, to avoid the depletion of natural resources and the irreversible deterioration of environment, which is essential to preserve natural resources for the sake of future generations. The Ministry of Industry and Trade of the Russian Federation serves to develop state policy and the legal regulatory framework in the industrial sector and defense industry, the construction material industry (manufacture) and building construction, energy conservation and increasing energy efficiency relative to product turnover, and also deals with the development of aviation technology and experimental aviation, technical regulation, standardization, and ensuring that measurements, science and technology are united in the interests of the defense and safety of the State, dealing also with foreign and domestic trade, the food industry and consumer services, national arts and crafts, and the industry of children’s goods. The Ministry of Energy of the Russian Federation (Minenergo of Russia) serves to shape and implement state policy and normative legal regulation in the fuel and energy industry, providing state services, managing state property used for

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fuel and energy resource production and use, deals with public policy and legal regulation in the field of energy conservation and energy efficiency on issues concerning energy audits, information assurance measures on energy conservation and energy efficiency improvement, energy metering, methodological support for the development and implementation of regional and municipal programs for energy conservation and energy efficiency, as well as evaluating the performance of regional and municipal programs for energy conservation and increasing energy efficiency. The Ministry of Energy of the Russian Federation (Minenergo of Russia) develops and implements the state policy and legal regulation in the field of construction, architecture, urban planning and the housing and utilities sector, provides public services, and manages state property in this field. Federal Service for Supervision of Natural Resources (Rosprirodnadzor) provides state environmental supervision in the Russian Federation. According to the Order of the Government of the Russian Federation no. 400, there are 15 types of environmental supervision regulated by the Federal Law no. 7-FZ. The regulation of relations in this sphere is based on the principles, approaches and requirements laid out in international agreements, national codes, federal laws, decrees of the President of Russia, Orders and Directives of the Government of the Russian Federation, and the regulatory legal acts of federal ministries, services and agencies. The Federal Service for Ecological, Technological and Nuclear Supervision (Rostechnadzor) serves to shape and implement state policy and normative legal regulation in the designated field, as well as providing technological and nuclear supervision, monitory and supervisory functions in the area of safe work practices connected with mining, industrial safety, safe use of nuclear energy (excluding the development, manufacture, testing, operation and disposal of nuclear weapons and nuclear power installations for military purposes), electric and thermal power plant safety and network safety (excluding residential installations and networks), hydraulic engineering installation safety (excluding navigable hydraulic engineering structures), production safety, and the storage and use of explosives for industrial purposes. The Federal Agency on Technical Regulation and Metrology (Rosstandart) serves as a national standardization body, ensures the uniformity of measurements, exercises state monitoring (supervision) of compliance with the requirements of technical regulations and the obligatory requirements of standards, and is responsible for the creation and maintenance of the Federal Information Fund of Technical Regulations and Standards and the Unified Information System on Technical Regulation. At this point, Russia has already laid the legal foundation for the transition to a green economy. The Russian Federation has adopted a number of regulatory legal acts aimed at implementing measures to adapt to climate change and mitigate its impact. The Directive of the Government of the Russian Federation no. 1662-r dated 17.11.2008 “On approval of the Con- cept of long-term socio-economic development of the Russian Federation for the period up to 2020” has established priorities of national development aimed at achieving energy and environmental efficiency in the national economy, expressed as “the transition away from an export resource-based model to an innovative model of economic growth,” which has initiated a process of revision and refinement of forecasts for the national economy and its individual industries, and for development strategies of industries and regions. By Directive of the Government of the Russian Federation No. 861-RP dated 17.12.2009, the Climate Doctrine of the Russian Federation has been approved, according to which “Federal public authorities shall ensure the development of economic institutions and financial mechanisms, including taxation and financial incentives for the technological upgrade of enterprises, the replacement of outdated equipment, the introduction of technology with potential to reduce greenhouse gas emissions, including energy efficient and energy saving technology, technology for the reduction of greenhouse gas emissions by enterprises in the fuel and energy industry, transport, metallurgy, chemical and other industries, as well as an increased use of renewable sources of energy.” The Order of the Government of the Russian Federation no. 1016 dated December 14, 2010 “On the approval of rules used to select investment projects and principals for provision of state guarantees of the Russian Federa- tion in respect of loans or bonded loans raised to implement investment projects” provides for the possibility of providing state guarantees for investment projects related to energy saving and energy efficiency in the housing and utilities sector and in industry. “Fundamentals of state policy in the sphere of environmental development of the Russian Federation for the period until 2030”, approved by the President of Russia on April 30, 2012, as a strategic goal of state policy on environmental development, establishes “a solution to socio-economic problems that ensures environmentally-oriented economic growth, the preservation of a healthy environment, biological diversity and natural resources to meet the needs of present and

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future generations, the fulfillment of everyone’s right to a healthy environment, strengthening the rule of law in the area of environmental protection and ensuring environmental safety”. By Directive of the Government of the Russian Federation no. 2423-R dated December 18, 2012, an action plan for the implementation of the “Principles of state policy in the field of environmental development of the Russian Federation for the period up to 2030” was approved, including a number of measures: –– preparation of proposals on the development of voluntary mechanisms of environmental responsibility for organizations with the participation of the State, and the transition of state corporations to mandatory non-financial reporting in the field of environmental protection and environmental safety in accordance with international standards (deadline: 2014, implementing agencies: the Ministry of Natural Resources and the Environment of the Russian Federation and interested federal executive authorities), –– inclusion of (voluntary) non-financial reporting for organizations with indicators (groups of indicators) in the field of environmental protection in the annual state reports on the state and the environmental protection of the Russian Federation, as well as posting them on the official website of the Ministry of Natural Resources and the Environment of the Russian Federation (deadline 2015-2030; implementing agencies: the Ministry of Natural Resources and the Environment of the Russian Federation and interested federal executive bodies), etc. “GOST R ISO 26000-2012. National Standard of the Russian Federation. Guidelines for social responsibility”, approved by the Order of Rosstandart no 1611-st dated 29.11.2012, is aimed at promoting sustainable development. The strategy of scientific and technological development, approved by the Decree of the President of the Russian Federation no. 642 December 1, 2016, justifies the need to “ensure the technological renewal of traditional Russian industries and increase the share of new high-tech industry products in the gross domestic product, given the structural changes in the Russian economy.” The Strategy for the Economic Security of the Russian Federation for the period until 2030, approved by the Decree of the President of the Russian Federation May 13, 2017, No. 208, considers the development of green technology as one of the 25 main challenges and threats to economic security, the answer to which will require “..an increase in labor productivity, resource and energy efficiency of production processes”. The Federal law of January 10, 2002 no. 7-FZ “On environmental protection” (as amended from 29.07.2017) intro- duces mandatory financing of measures to prevent and (or) reduce the negative impact on the environment, or eliminate the consequences of this impact by the legal entities and individual entrepreneurs who are engaged in economic and other activities that lead or may lead to environmental pollution. The Law requires a fee to be paid for having a negative impact on the environment. The state measures serving as a stimu- lus include a statutory deduction from the amount of payment for negative impact on the environment towards expenditure for the implementation of measures to reduce the negative impact on the environment, actually produced by enterprises and organizations, obliged to pay a fee. The legislation recognizes the cost of implementing measures to reduce negative impacts on the environment as being the financial expenses of activities included in the action plan for the protection of the environment or the program to increase environmental efficiency and implementation costs of measures to ensure the use and disposal of associated petroleum gas. The law defines the aims of state support for the following measures (in the form of tax benefits, benefits with respect to payment for negative environmental impact and allocation of funds from the Federal budget and budgets of the subjects of the Russian Federation): 1. Implementation of the best available technology. 2. Design, construction and reconstruction of circulating and non-waste water supply systems; water disposal systems; facilities for wastewater treatment, processing of liquid household waste; installations for the disposal of emitted pollutants, treatment and purification of gases before releasing them into the atmosphere, the use of associated petroleum gas. 3. Installation of equipment for improving the fuel combustion, for waste disposal; systems for controlling wastewater, composition of pollutants and the volume of them emitted into the atmosphere; systems for monitoring the environment etc. The Order of the Government of the Russian Federation no. 3 dated January 3, 2014 approved the Rules for granting subsidies from the Federal budget to Russian organizations to compensate for part of the cost of paying interest on loans

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received from Russian credit institutions for implementing new complex investment projects in priority areas of civil industry. The Order of the Russian Government no. 418 dated April 6, 2018 extended the mechanism of state support providing subsidies from the Federal budget to Russian organizations partially compensating expenses for interest payments on the loans received in the Russian credit organizations, Vnesheconombank, the international financial organizations for the implementation of comprehensive investment projects in priority areas of civil industry or coupon payment on bonds issued in the years 2014-2019 as part of the implementation of complex investment projects in priority areas of civil industry. The Federal budget provides funds amounting to 24.05 billion rubles for the implementation of such a mechanism of state support (including 6.86 billion rubles in 2018, 8.6 billion rubles in 2019, 8.59 billion rubles in 2020). The Decree of the President of the Russian Federation “On the national goals and strategic objectives. Develop- ment of the Russian Federation for the period up to 2024” from May 7, 2018, provides for the development of the National Environment Project within the period of until 1 October 2018. The project includes 10 federal projects: “Clean Country”, “Integrated System of Municipal Solid Waste Management”, “Infrastructure for Waste Management of Hazard Classes I and II”, “Clean Air”, “Clean Water”, “Volga River Rehabilitation”, “Preservation of Lake Baikal”, “Preservation of Unique Bodies of Water”, “Protection of Biological Diversity and Development of Eco-tourism”, “Forest Conservation”. At present, targets and financial indicators have been determined for each federal project. One of the paragraphs of the May Decree of the President of the Russian Federation concerning the development of the national environmental project deals with the use of BAT at all objects that have a significant negative impact on the environment. In September 2018, the Ministry of Industry and Trade and the Ministry of Natural Resources and the Environment of the Russian Federation, in accordance with the instruction given at the meeting of the the Presidium of the Russian Presidential Council for Strategic Development and National Projects, supplemented the structure of the National Environment Project with the eleventh federal project “Introduction of Best Available Technologies”. The result of the federal project on the implementation of BAT will be: 1. Shaping the regulatory legal framework for the transition to BAT and the development of a new area of Russian industry: environmental engineering. 2. Maintaining the system of integrated environmental permits issuance by all objects of category I in terms of environmental impact (about 7 thousand objects). 3. Ensuring the accelerated growth of investments in fixed assets through a large-scale program of technology upgrade. 4. Stimulating the production of environmental protection equipment and the production of environmental mechanical engineering by supporting pilot batches of BAT equipment. According to preliminary estimates, this will lead to a decrease in the volume of imported equipment in environmental mechanical engineering from 50 percent in 2018 to 34 percent in 2024 (the corresponding target is recorded in the national project) 5. Formation of an expert community for the implementation of BAT as part of the Bureau of the Best Available Technol- ogy. 6. The launch of the green bonds mechanism as a distinct new tool to stimulate investment projects on BAT. The implementation of the project will require additional funds from the Federal budget. The volume of budget allocations requested from the Ministry of Finance of the Russian Federation and included in the document draft of the National Envi- ronment Project is 27.44 billion rubles, of which 27.3 billion rubles is to support businesses moving over to the best available technology (green bonds), and 0.14 billion rubles is for building the best available technology evaluation system and the expert community at the Bureau of the Best Available Technology. In order to execute the Decree of the President of the Russian Federation no. 204 dated May 07, 2018 “On the national goals and strategic objectives. Development of the Russian Federation for the period up to 2024”, the Ministry of Industry and Trade of the Russian Federation has prepared Rules for the granting of subsidies from the Federal budget to Russian organizations. The rules are on partially compensating expenses for coupon pay-ments issued as part of the implementation of investment projects on the introduction of best available technolo-gies at objects that have a significant negative impact on the environment, and also apply to associated applica-tions of best available technology. In accordance with the Rules, there are plans to reimburse part of the costs for coupon payments for bonds issued in the framework of investment projects for the introduction of environmental protection equipment at objects that have a signifi-

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cant negative impact on the environment and related to the areas of application of the best available technology. Currently, the proposed Rules are being discussed by experts.

The list of regulatory legal acts that have laid the legal foundation for the formation of the green financial instruments sector in Russia is specified in Annex 4.

5. PLAYERS OF THE GREEN FINANCE MARKET PLAYERS IN RUSSIA 5.1. NATIONAL DEVELOPMENT INSTITUTIONS Currently in Russia, the following development institutions, by virtue of their authority and capabilities, can have a significant influence on the formation of the green finance market. Vnesheconombank In July 2018, the Russian Government approved a new version of the “Report on Vnesheconombank’s Financial Policy”, which defines the main aims and indicators of investment, foreign economic and financial activities, and activities to support exports of projects implemented in Russia and abroad. According to the new version of the Memorandum, Vnesheconombank participates in implementing projects in the Russian Federation in the following key areas as part of its investment activities: the development of infrastructure and lifting infra- structural constraints on economic growth, the increase of efficient use of natural resources, environmental protection and improvement of the environmental situation (green economy), participation in implementation of projects on the principles of public-private partnership, municipal partnership. In July 2013, Vnesheconombank was the first Russian organization to join the international initiative in the area of responsible finance: the United Nations Environment Programme Finance Initiative (UNEP FI). In 2013, Vnesheconombank Responsible Financing Policy was approved. At the end of 2013, Vnesheconombank and IFC signed a Memorandum of Understanding, aimed at broadening cooperation in various fields. The main focus is primarily on the development of high-tech environmentally friendly and safe industries, as well as projects related to waste processing and wastewater treatment. Vnesheconombank, with assistance from IFC, has developed a mechanism for assessing the energy efficiency of investment projects, as well as a draft methodology for calculating project energy efficiency indicators. The UN Global Compact Network in Russia was formally established in 2008. Since 2013, Vnesheconombank has chaired and led the Network. In 2015-2016, The UN Global Compact in Russia transforms into a successor Association, the UN Global Compact Network Russia, the main structure representing Russia worldwide. The IDF Russian Industrial Development Fund, serves to provide loans for the development of new high-tech products, modernization, and competitive production based on the best available technologies. Rules have been developed, according to which the Fund can channel funds within the context of PPP for the introduction of the best available technologies. According to the Order of the Government of the Russian Federation no. 1458 dated December 23, 2014 “On determining technology as the best available technology, as well as the development, updating and publication of information and technical manuals on best available technology”, technology is recognized as the best available technology based on the following criteria: 1. the lowest level of negative impact on the environment per unit of time or volume of goods produced, work performed, services provided or compliance with other environmental impact indicators stipulated by international treaties of the Russian Federation, 2. cost-effectiveness of introduction and operation, 3. the application of resource- and energy-saving methods, 4. introduction period, 5. industrial introduction of technological processes, equipment, techniques, methods at 2 or more facilities in the Rus- sian Federation, where a negative impact on the environment is produced. The Fund offers preferential conditions for co-financing projects aimed at the development of new high-tech products, technical upgrade and the creation of competitive industries based on the best available technologies. The Fund provides targeted loans at rates of 1 percent, 3 percent and 5 percent per annum for up to 7 years ranging in

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volume from 50 to 750 million rubles to implement new industrial projects, stimulating the flow of direct investment in the real sector of the economy. State Corporation “Fund for Assistance to Reforming Housing and Communal Services” (FSR) provides financial support to the subjects of the Russian Federation and municipalities for major renovation of apartment blocks and the resettlement of citizens from the Emergency Housing Fund. Since 2013, the Fund has also allocated resources for the modernization of public utility infrastructure systems, including projects to create facilities for the management of municipal solid waste. 5.2. COMMERCIAL BANKS AND INSURANCE COMPANIES Currently in Russia, the following development institutions, by virtue of their capabilities and background of experience, can have a significant influence on the formation of the green finance market and become direct market players. Sberbank of Russia proposes that green bonds issued by issuers for financing (refinancing) projects that qualify as green should be given consideration as pilot products. The objective (model) is to create a green bond market (credit-linked notes) issued by project companies (without recourse to the balance sheets of the largest market players.) The Bank is ready to carry out the “Codification” of the concept of an “environmental project”, to work out the content and form of an issuer’s relevant statement (declaration), the tenor of “default” as a violation of obligations, the consequences of defaults, risk management, in cooperation with the “Environmental Regulator”, “Financial Regulator” and “champions of the market” of green investment. According to the Federal Law “On environmental protection” of 10.01.2002 no. 7-FZ, environmental insurance serves to protect the property interests of legal entities and individuals in the event of environmental risks. Mandatory state environmental insurance may be provided in the Russian Federation. A number of Russian companies offer insurance of civil liability for environmental pollution. 5.3. GREEN BOND ISSUERS Within the Russian market, there are a number of companies and organizations in various branches of the economy (energy, metallurgy, construction, petrochemical industry, housing and utility services, etc.), who identify themselves as green market players. On September 1, 2018, about 50 of these companies had issued corporate or concessionary bonds, which are currently traded on the Moscow Exchange or are planned to be displayed: over 420 issues in circulation worth 6.5 trillion rubles, and 37 issues worth 1.3 trillion rubles are planned for listing (issues are included in the list of securities, accepted for trading by Moscow Exchange PJSC). Unlabeled green bonds, although they are actually green bonds, is a description that already applies to bond issues of 7 issuers and concessionaires, which were made available for financing concessionary projects in utilities, transport and other areas (20 issues worth 48.4 billion rubles are in circulation). In the prospectuses for these issues, the objectives of the issues are consistent with ESG principles. These issuers include: –– Waste Management-NN CJSC (one issue of bonds to the amount of 1.15 billion rubles), –– Volga-Sport JSC (two issues to the amount of 3.3 billion rubles.), –– Water Supply Concessions LLC (five issues amounting to 7.5 billion rubles), –– Heat Supply Concessions LLC (two issues totaling 4 billion rubles), –– Waste Management JSC (four issues totaling 8.1 billion rubles) –– Transport Concession Company LLC (three issues have been sold, amounting to 6.7 billion rubles, two issues are planned at 5,126 billion rubles), –– Main Road JSC (three issues to the amount of 17.57 billion rubles). Another 18 companies (148 issues in circulation to the amount of 1,328 trillion rubles and 2 issues are planned amounting to 15 billion rubles) used their the issue prospectuses to indicate all information in relation to the goals, plans, objectives related to environmental preservation and reducing the negative impact on the environment. They include companies in the chemical and petrochemical industry, metallurgy, energy, engineering, etc. The remaining companies (256 issues in circulation to the amount of 2.1 trillion rubles and 31 planned to the amount of 1,345 trillion rubles) participate in activities that may conditionally be classified as green finance.

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The list of potential issuers of green bonds (CoLTI expert sample) is presented in Appendix 5. The expert sample by the Concessionaires and Long-term Infrastructure Investors National Association (CoLTI) has been prepared explicitly for the assessment of the potential green bond market and includes a number of assumptions. Since there are not even the most common standards of identification of green bonds in Russia, and there are incom- mensurable definitions of the parameters of attribution to green bonds, CoLTI has included companies in the sample that identify themselves in various ways as participants in the green market, who at the same time have issued corporate and concessionary bonds, which are currently traded on the Moscow Exchange or are planned to be placed. To prepare the sample, the following activities among potential issuers of green bonds were taken into consideration, which defined the company’s green identification: 1. The RSPP (Russian Union of Industrialists and Entrepreneurs) Responsibility and Transparency Index http://pcnn.pcp/simplepage/890 2. The RSPP (Russian Union of Industrialists and Entrepreneurs) Vector of Sustainable Development Index http://pcnn.pc|)/simplepage/890 3. The RSPP (Russian Union of Industrialists and Entrepreneurs) National Register of Corporate Non-Financial Reports http://pcnn^ / simplepage/475 4. The ERAX Environmental Stock Index https://interfax-era.ru/agentstvo/proekty/erax 5. The Social Charter of Russian Business http://pcnn^/simplepage/474 6. The UN global Compact Network in Russia http://www.globalcompact.ru/ 7. AK&M “Social efficiency at major Russian companies” rankinghttp://www.akmrating.ru 8. The ESG rating of the corporate sector, RAEX-Europe https://www.raexpert.eu 9. Recommendations for sustainable development and green investment from the Concessionaires and Long-term Infra- structure Investors National Association https://investinfra.ru/ 5.4. EXCHANGE AND TRADING SYSTEMS Currently in Russia, the Moscow Exchange has all the tools to become an important avenue for promoting a green financial system, allowing trading of green bonds and encouraging issuers to increase transparency. The green sector on the stock exchange: –– will allow investors to easily identify green bonds for making informed investment decisions, –– provide green bond issuers with access to a broader (global) investor base, –– facilitate the consolidation of green bond supply and demand, –– ensure disclosure of information that is specific to the green bond is carried out in line with to common rules, –– it will grant regulators an opportunity for targeted preferences for the development of the segment, –– it will support the green finance market and shape appropriate business practices. The following criteria may provide the basis for the inclusion of bonds in the green sector: –– meeting the requirements for inclusion in level I, II or III of the list, –– Issuer Statement on the compliance of the issue with green bonds standards; –– the Issuer has a corporate policy aimed at ensuring environmental transparency (for example, a description of the green projects selection process), –– the presence of relevant information in the bonds prospectus detailing the use of proceeds for green bonds only in certain (accepted) environmental projects, –– publication of an independent expert opinion on the compliance of the bond issue, an issuer or target project with the requirements of ICMA and/or CBI for green projects, for which funds are attracted from the bond issue for project implementation. The list of verifying organizations is approved by the Stock Exchanges,and an issuer’s accepts the obligation to disclose regular information on the implementation of green projects up to the maturity date.

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At present, the Moscow Exchange does not have the expertise to determine the greenness of bonds. In this regard, for purposes of determining approaches to creating and developing the market, a survey has been conducted among the members of the Moscow Exchange Bond Issuers Committee. 5.5. REVIEW AND CERTIFICATION Currently, there are several organizations in Russia that specialize in the assessment of environmental projects, reviews, and the development of environmental certification in the field of construction. Interfax-ERA environmental and energy rating agency is a special unit of the Interfax Information Group, set up to ana- lyze the environmental performance and energy efficiency of the economy. The Agency consists of experienced specialists who have devoted over 30 years to the analysis of environmental management problems. In 2000-2009 they provided ratings for the largest Russian enterprises within the framework of Independent Environmental Rating Agency (ANO “NERA”). Currently, the rating system includes parameters of energy consumption, production efficiency, regional and social aspects, etc., which not only makes the economic and financial consequences of the processes more clear, but also the physical operational reality at technical complexes in countries, regions and enterprises. The unique methodology of the analysis of environmental performance and energy efficiency allows us to monitor the performance of sustainable development programs in the country as a whole, in individual Russian regions and in enterprises of all industries and activities: The Rat- ing of the fundamental efficiency of the 150 largest companies in the real sector in Russia, the Ratings of the fundamental efficiency of 5424 enterprises by industry groups, the Rating of regions of Russia on environmental and energy efficiency of business, etc. https://interfax-era.ru/ The NRA Analytical Centre is an independent company providing consulting and analytical services in the field of finance and management. The work of NRA Analytical Centre is not related to issues of assigning ratings. The company’s key products are related to the provision of services in the field of risk management and analytics, analysis and assessment of a wide range of tools, audit, individual research. The company also composes environmental ratings: rating of the environmental responsibility of oil and gas companies in Russia, the social and environmental responsibility of companies in the forestry sector in Russia, as well as ratings of the environmental transparency of pulp and paper companies in Russia’s forest sector. http://www. ra-national.ru/ Rating-Agentur Expert RA GmbH (RAEX trademark) rating agency is a business unit of RAEX international group in the European Union, which, apart from credit ratings, develops methodologies and assigns ESG ratings to Russian companies and regions. The ESG rating represents the rating agency’s opinion on the environmental, social and managerial strengths and weaknesses of the region, the company, https://raexpert.eu/ AK&M rating agency is an independent national rating Agency in Russia. The core activity of the AK&M rating agency is the assignment of ratings to various objects, the composing ratings, positioning companies and regions, conducting comprehensive analytical studies. The agency provides the “Social efficiency at major Russian companies” ranking, which involves the study of the social and environmental activities of leading Russian companies, as well as the analysis of efficiency in terms of impact on the social environment and the ecosystem. http://www.akmrating.ru The association of organizations promoting the development of environmental certification in construction “Na- tional Center of Green Building” (NCBG Association) deals with the establishment of a national system of green certification in construction, the development of a national system of green certification, the development of the principles of green building in the investment and in construction in the Russian Federation, the formation of a national institute of certification for green constructions, http:// ruso.zzkk.ru/ The “National Environmental Audit Chamber” Association incorporates 54 environmental audit organizations and 612 environmental auditors. It was established in 2005 as a professional association of environmental auditors and environmental audit organizations. The Chamber plays an active roll in the development of proposals for developing legislation of the Russian Federation on environmental auditing. Environmental auditors, brought together by the Chamber, carry out an independent review of draft legislative and other regulatory legal acts in the field of environmental audit, http://ecopalata.ru/ The non-profit partnership “Center for Environmental Certification—Green Standards” is engaged in the development of a Green Standards System (“Green” Construction), accredits and authorizes the certification of real estate in accordance with GOST R 54964-2012 (national standard of the Russian Federation) “Conformity Assessment. Environmental requirements for real estate”, http://www.mnr.gov.ru/ activity/directions/zelenye_standarty/akkreditatsiya/ A working group on the development of criteria for voluntary environmental certification based on international experience in the creation and application of green standards was established in the summer of 2009 with the support

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of the Ministry of Natural Resources and the Environment of the Russian Federation. As a result of the working group’s work, in February 2010 the Federal Agency on Technical Regulation and Metrology registered the first Russian national system of voluntary certification of real estate objects: the Green Standards System. 5.6. COUNCILS, EXPERT GROUPS, NON-GOVERNMENTAL ORGANIZATIONS AND OTHER EXPERT STRUCTURES At present, public, non-profit organizations, expert groups, councils, initiatives, hosew activities are related to environmental protection and the promotion of the principles of responsible investment, are well established and operating in Russia. The Russian Union of Industrialists and Entrepreneurs (RSPP) is nationwide Russian organization representing the interests of business communities both in Russia and at the international level. The Russian Union operates through two legal entities with different legal statuses: the all-Russian association of employers (AAE RSPP) and all-Russian non- governmental organization (RSPP). Concessionaires and Long-term Infrastructure Investors National Association (CoLTI) was established in 2015 for the formation and development of the long-term infrastructure investment market in Russia. CoLTI is one of the network partners of the international PRI Association for responsible investment, and plays an important role in promoting the principles of responsible investment in Russia. CoLTI has developed recommendations for sustain-able development and green investment. The Association believes that when making financial and investment decisions, members of the Association should not only take economic factors into account, but also social and environmental factors. These issues are particularly relevant when implementing major infrastructure projects, as they affect the living conditions of society as a whole. The Interdepartmental Working Group on Climate Change and Sustainable Development at the Presidential Ex- ecutive Office, established in accordance with the Order of the President of the Russian Federation no. 563-rp dated 13 December 2012 to coordinate the activities of federal executive authorities, other state bodies, public associations, scientific organizations and other organizations on implementing the Concept of the Russian Federation’s transition to sustainable development, approved by the Decree of the President of the Russian Federation dated 1 April 1996, no. 440, and the Cli- mate doctrine of the Russian Federation, approved by Order of the President of the Russian Federation dated 17 December 2009 no. 861-rp. Working group on responsible financing (ESG-finance), including green financing, was created at the Central Bank of the Russian Federation Expert Council on the Long-Term Investment Market on the basis of Protocol No. ESTI-4 of the Expert Council meeting on the long-term investment market on 20 March 2018. They are working on creating conditions for the development of the green finance market in Russia. The UN Global Compact Network in Russia was formally established in 2008. Since 2013, Vnesheconombank has chaired and led the Network. In 2015-2016, the UN Global Compact Network (UNGC) was reorganized into the “National Network of the Global Compact” Association, which was the legal successor to the UN Global Compact Network in Russia and the main structure, representing the Russian Global Compact Network globally. The UN Global Compact is an international UN initiative for business in the area of corporate social responsibility and sustainable development. At the heart of UNGC participant activities is the sustainable development concept, which combines three main aims: economic, social and environmental. In their daily work, the organizations implement projects aimed at implementing the Sustainable De- velopment Goals and the Ten Principles of the UNGC. Over 50 Russian companies and organizations are members of the UNGC, including Vnesheconombank, MMC Norilsk Nickel PJSC, Severstal PJSC, UC RUSAL, NK Rosneft PJSC, LUKOIL PJSC, etc. http://www.globalcompact.ru The Russian Business Social Charter was adopted by the RSPP (Russian Union of Industrialists and Entrepreneurs) Conference in 2004, the updated version was adopted in 2008. By October 31, 2017, 265 organizations had joined the Social Charter, which are published in the dedicated Register of participating organizations. http://pcnn^/simplepage/474 The World Wildlife Fund (WWF Russia) is a national Russian organization aimed at preserving the biological diversity of forests, marine ecosystems, at limiting the impact of anthropogenic climate change, and at reducing Russia’s ecological footprint at national and regional levels, etc. The Fund’s work is particularly aimed at the transition of the Russian economy to the principles of green development, increasing the responsibility of companies and reducing their negative impact on the environment, the development of responsible principles for the use of biological resources which will not lead to their exhaustion, as well as promoting responsible behavior among end users. The first WWF projects in Russia began in 1989, in 1994 the Russian representative office of WWF was opened. https://wwf.ru/ The National Financial Association self-regulatory organization is a professional association of Russian financial mar- GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 20 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

ket players, established in January 1996 by the largest Russian banks and investment companies of the state securities market, with the support of the Ministry of Finance of the Russian Federation and the Central Bank of the Russian Federa- tion. In September 2018, the NFA SRO conducted a survey of members of the Russian Council for the Primary Capital Market to determine the current state of the green bond market and prospects for its development. As the results of the study have shown, since the Russian green bond market is still in the process of formation, investment and market drivers, supported by favorable state and regulatory policies, can significantly contribute to the development of the green economy in the country. The results of the survey as part of the report “The Formation of the Green Bond Market in Russia, Taking into Account Best International Practices into Account. The Results of the Survey of Members of the Russian Council on the Primary Capital Market “ are published on the official NFA SRO website http:// new.nfa.ru The Commission on the Economics of Climate change and Sustainable Development, formed as part of the Rus- sian National Committee of the International Chamber of Commerce, World Business Organization (ICC Russia), began its work in 2018. The purpose of the Commission’s work is to create favorable conditions for identifying restrictions and barriers to the development of the green finance market, and to facilitate their removal as soon as possible. It is a com- munication platform for all of those involved in the process of shaping the national green economy, in particular the green financing market and innovative production in Russia, http://www.iccwbo.ru/

6. MECHANISMS FOR THE FORMATION AND DEVELOPMENT OF THE GREEN FINANCE MARKET IN RUSSIA 6.1. METHODOLOGIES AND STANDARDIZATION At present, distinct instruments for the development of the green finance market have been set up in Russia. In February 2010 the Federal Agency on Technical Regulation and Metrology registered the first Russian national system of voluntary certification of real estate objects: the Green Standards System. Since April 2011, there is a second enhanced version of the system of voluntary certification of real estate in place—the Green Standards System. Based on the system of voluntary certification of real estate—the Green Standards System, the national standard GOST R 54694-2012 has developed the «Conformity assessment. Environmental requirements for real estate». This is the first national Russian standard for environmental requirements in construction, it was approved By Order of Rosstandart No. 257- ST, and entered into force on March 1, 2013. The standard forms the regulatory and methodological basis for implementing a comprehensive system of real estate quality assurance, and for assisting work on the unification of the requirements for the impact of real estate on the environment and the individual. 6.2. ENVIRONMENTAL RISK ASSESSMENT In the field of environmental risk assessment in Russia, the following situation has unfolded. The Federal Law «On environmental protection» no. 7-FZ dated 10.01.2002 defines environmental risk as «the probability of an event having adverse consequences for the natural environment and caused by the negative impact of economic activities and other activities, by natural and man-made disasters». National standard of the Russian Federation: “National Standard of the Russian Federation of Environmental Man- agement System. Requirements with guidance for use” (ISO 14001:2015, UTE GOST R IS014001-2016). By Order of the Federal Agency on Technical Regulation and Metrology no. 285-st dated April 29, 2016, the Standard adopted and put into force in Russia is identical to the international standard ISO 14001:2015 “Environmental Management System. Re- quirements with guidance for use” (ISO 14001:2015 “Environmental management systems — Requirements with guidance for use”). The standard provides practical guidance to organizations for the development, implementation and support of functioning or the improvement of environmental management, including guidelines for identifying, predicting and controlling the impact on the environment, achieving environmental objectives and ensuring compliance with legislative requirements. National standards for environmental management that meet international standards: – ISO 19011:2011 — IDT — GOST R ISO 19011-2012 “Guidelines for the audit of management systems”, – ISO 31000: 2009 — IDT — GOST R ISO 31000-2-10 "Risk management. Principles and guidelines", – ISO 50001: 2011 — IDT — GOST R ISO 50001-2012 "Energy management Systems. Requirements with guidance for use" – ISO Guide 73:2009 — IDT — GOST R 51897-2011/ISO guide 73: 2009 "Risk management. Vocabulary", A generally accepted methodology of environmental risk assessment has not yet been developed in Russia.

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6.3. ENVIRONMENTAL AUDIT Environmental audit is considered an important tool for ensuring environmental safety and the sustainable development of the Russian economy, as it contributes to a more sustainable management of profit by the economic entity, reducing the negative impact of its economic activities on the environment, as well as increasing the competitiveness of products in the global market and the investment appeal of the business. The significance of environmental audit development is formalized in a number of strategic documents: - The Concept of the long-term socio-economic development of the Russian Federation for the period up to 2020, approved by the Directive of the Government of the Russian Federation no. 1662-r dated November 17, 2008. The Document empha- sizes the key role of the State in developing the rules for environmental audit. - The Environmental Doctrine of the Russian Federation approved by the Directive of the Government of the Russian Federation no. 1225-p dated August 31, 2002. One of its tasks is assisting the development of ecological audit of operating enterprises, business in the area of environmental protection and voluntary certification. - The Energy strategy of Russia for the period up to 2030, approved by Directive of the Government of the Russian Federa- tion no. 1715-p dated November 13, 2009. This document indicates the need to support strategic initiatives for the development of a system of environmental audit applicable to all organizations, regardless of their form of ownership, engaged in economic activities in the fuel and energy industry. The Federal Law «On Environmental Protection» no. 7-FZ dated 10.01.2002 defines environmental audit as «an independent, comprehensive, documented evaluation of compliance by a legal entity or individual entrepreneur with requirements, including standards and regulations, federal rules and regulations on environmental protection, the requirements of international standards, and the preparation of recommendations to improve such activities.» At present, environmental audit is carried out on a voluntary basis on the initiative of economic entities and in their interests. Currently, companies are guided by the Federal Law of January 10, 2002 no. 7-FZ «On environmental protection» or GOST R ISO 19011-2012 when carrying out environmental audit, which contains guidelines for the audit of management systems. The National Environmental Audit Chamber Association is made up of 54 environmental audit organizations and 612 environmental auditors. It was established in 2005 as a professional association of environmental auditors and environmental audit organizations. 6.4. INDICES AND RATINGS Currently, several indices and indicators for sustainable development, an environmental measurement of corporate responsibility, and disclosure on environmental impact have been developed and administered by expert institutions in Russia. The Responsibility and Transparency Index has been calculated by RSPP (Russian Union of Industrialists and Entrepreneurs) since 2014. The index compares the real level of corporate CSR disclosure to the ideal level. The index is calculated by taking a set of 50 indicators (labor productivity, remuneration of labor, staff training costs, greenhouse gas emissions, energy efficiency, etc.), which reflect the economic, social and environmental dimensions of corporate responsibility, as well as the quality of management in CSR and corporate governance. Source: public corporate reporting of the largest Russian companies in terms of production volume as part of the rating of the largest Russian companies RAEX-600 and RBC-500. Leading companies are those whose individual index values are higher than 0.45, i.e. companies that disclose half or more of the established indicators. http://pcnn.рф/simplepage/890 The Responsibility and Transparency Index has been calculated by RSPP (Russian Union of Industrialists and Entrepreneurs) since 2014. The index is calculated as somewhat of an analog of the Directional Movement Index, which is used to determine market trends. To calculate the index, the actual values of the indicators are not recorded, but the indi- cation of their changes, positive and negative signals on 10 basic indicators reflecting the results of companies’ economic, social and environmental impact on society: labor remuneration, social support of personnel, social investments, use of energy, water sources, waste management, etc. The index is based on the ratio of positive and negative signals, which indicate the course of changes in the array of reporting data over 3 years. The basis for the calculation is information in the reports of leading companies in the Responsibility and Transparency Index. The results of the index are published here http://pcnn.рф/simplepage/890 Since may 2017, the RSPP (Russian Union of Industrialists and Entrepreneurs) Responsibility and Transparency Index and Vector for Sustainable Development Index have been included in the international database of the Global

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Initiative for Sustainability Ratings — GISR. The database contains about 250 independent assessment tools in this area, including S&P, Dow Jones Indices, Thomson Reuters ratings, country indices, indices of exchanges and other organizations. ERAX Stock Index is an environmental stock index calculated by the environmental energy rating agency Interfax-ERA since 2012 as part of the NERAX-Eco family of stock environmental indices, created by the Independent Environmental Rat- ing Agency (ANO “NERA”) in 2007. The ERAX Index includes 75 issues of shares of various Russian companies regarded as leaders of the Interfax-ERA 2011 Fundamental Efficiency Rating (ranked according to 5 criteria: energy and resource efficiency, technological efficiency, ecosystem efficiency, efficiency dynamics (developments in efficiency since2005), transparency). For shares of companies which are fundamental efficiency leaders, weighting factors are set, inversely proportional to the ranking. The higher the position, the greater the weighting factor to the capitalization of the company’s total issued shares, and vice versa. Thanks to this algorithm, a stock indicator that meets the requirements of Antimonopoly legislation is obtained, in which none of the companies has a total contribution to the index portfolio of more than 10 percent. The existence of this condition allows ERAX to be used as a legitimate benchmark measure in stock trading and its derivatives https://interfax-era.ru/agentstvo/ proekty/erax The “Social efficiency at major Russian companies” ranking has been calculated by the AK&M rating agency since 2018. The agency provides the “Social efficiency at major Russian companies” ranking, which involves the study of the social and environmental activities of leading Russian companies, as well as analysis of efficiency in terms of their impact on the social environment and the ecosystem. The purpose of the rating is to reveal the companies bringing maximum benefit to society with minimal impact on the environment. The list of participants is generated from the list of 300 largest industrial energy and transport companies in terms of revenue. The resulting rating is a ranked list of companies based on the assessment of the company’s social efficiency, which is calculated using two groups of indicators: the impact on the environment and social impact of activities, http://www.akmrating.ru/ The ESG rating of the Russian corporate sector has been calculated by Agentur Expert RA GmbH rating agency since 2018, a business unit of RAEX international group in the European Union. The environmental, social and corporate governance (ESG) ranking allows companies to assess their exposure to ESG risks and demonstrate quality in compliance with relevant practices to investors. Sample: 50 largest companies in Russia in terms of production volume for 2017, with the exception of companies in sectors with minimal impact on the environment, as well as branches of major international corporations. The ESG-rating is based on the principle of assessing the optimal set of 8 indicators reflecting the level of the company’s environmental and social impact, as well as the degree of the company’s exposure to social and management risks, https://raexpert.eu The environmental responsibility rating of oil & gas companies has been calculated by the National Rating Agency since 2014. This is a joint project of the CREON group and the World Wildlife Fund (WWF), with the participation of the Ministry of Natural Resources and the Environment of the Russian Federation (UNDP/GEF project) and the Ministry of Energy of the Russian Federation. The rating consists of three sections: environmental management, environmental impact and disclosure. The purpose of the rating is to contribute to reducing the strain on the environment and improving the efficiency of fossil fuel consumption, as well as promoting socially responsible business in Russia, https://wwf.ru The environmental responsibility rating of mining and smelting companies is calculated on the initiative of the World Wildlife Fund (WWF) of Russia and the UNDP / GEF / The Ministry of Natural Resources and the Environment of the Rus- sian Federation project: “Mainstreaming biodiversity conservation into Russia’s energy sector policies and operations”. The results of the first rating were presented in 2017. The National Rating Agency (NRA) acts as a technical contractor. The purpose of the rating is to increase the corporate responsibility of mining and metallurgical companies and to create effective feedback mechanisms with stakeholders in the industry. The rating consists of three sections: environmental management, environmental impact and disclosure, https://wwf.ru 6.5. REGISTERS OF NON-FINANCIAL REPORTS AND DISCLOSURES Currently, the following registers of non-financial reports on sustainable development are developed and administered by expert institutions in Russia. The National Register of Corporate Non-Financial Reports has been administered by the RSPP (Russian Union of Industrialists and Entrepreneurs) since 2006 and is a Register comprised of companies that publish social, environmental, integrated, industry, and sustainability reports, as well as a Library of non-financial reports that contains electronic versions of officially published non-financial reports of companies operating in Russia and some large multinational companies. By August 2, 2018, 173 companies had been included in the National Register of Non-Financial Reports, 881 reports have

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been registered, which have been issued since 2000. These include: environmental reports (ER) — 81, social reports (SR) — 316, sustainable development reports (ESD) — 317, integrated reports — 141, industry reports — 26. http://рспп.рф/ simplepage/475 The register of infrastructure market players who follow CoLTI recommendations in the area of sustainable devel-opment and green investments. In 2018, Concessionaires and Long-term Infrastructure Investors National Association developed recommendations for sustainable development and green investment. NACDI recommends that members, as well as organizations that share the principles and approaches of sustainable development, take into account environmen-tal, social and corporate governance (ESG-factors) in investment analysis and decision-making in the implementation of infrastructure projects, as well as to disclose information about the activities of the organization in the field of sustainable development and green investment in the non-financial part of the reporting. On August 31, 2018, 10 CoLTI members sup-ported the initiative and are included in the CoLTI register. https://investinfra.ru/greeninvestments/ 6.6. VERIFICATION AND CERTIFICATION Despite the creation of a regulatory framework for the assessment of green projects, a system of verification and certification of green bonds and other financial instruments have not been established in Russia. In Russia there are no unified principles of green finance, nor are there any methods to verify and certification them in this regard, the first step would be identification on behalf of the market players, the disclosure of relevant information with existing institutions of environmental review to develop the verification and certification of green financial instruments.

7. AN APPROXIMATE ESTIMATE OF THE SIZE OF RUSSIA’S GREEN MARKET AND ITS DYNAMICS

The Paris agreement of the UN framework Convention on climate change recommends the adoption of a C02 emission tax (the so-called “carbon tax”), in connection with which all countries that have signed the Agreement (including Russia), are

considering its introduction. The proposed tax amount varies between $ 10 to $ 60 per ton of C02. Based on expert estimates, if the decision to introduce a carbon tax is made, its aggregate value in the Russian Federa- tion could be up to 1 trillion rubles per annum by 2020 and up to 3 trillion rubles by 2035. Even if we understand that these figures are a generous expert estimate in business, we are still looking at the subtraction of hundreds of billions of rubles a year from traditional industries (metallurgy, chemical industry, transport, heat and electricity). According to the logic of the carbon tax, these funds should be redirected towards the development of renewable energy and increasing energy efficiency. The implementation of the Agreement on climate has another international dimension. As previously noted, emission inten- sity is increasingly the reason used for introducing restrictive measures on market access, used as a competitive force. New transparent and unspoken standards are being brought in, preventing the development of traditional industries. As a result, the new regime of international cooperation on climate change is leading to fundamental changes in the world commodity and financial markets, in the international division of labor. This will inevitably have a significant impact on the activities of Russian exporters. The erection of informal and then formal barriers to the export of carbon-intensive commodities and technology will significantly change the business environment outside Russia at the initial stage, and may have a negative impact on the competitiveness of domestic exports. Thus, the need for investment in creating infrastructure in the waste processing industry alone is estimated at over 150 billion rubles for the next 3 years. These investments are gradually penetrating the industry, but there need to be ten times more for tangible industry development. Such levels of investments can only be attracted to a developed market, which can be achieved by promoting it and covering Vnesheconombank’s basic credit risks. According to expert estimates, the transformation of the Russian economy and its transition to the green development model requires long-term investments in the region of 6 billion euro annually. This volume is necessary to implement profit- able projects for the modernization of various branches of Russian industry. However, the specific nature of the Russian economy requires a significantly larger amount of investment, taking into account the need to modernize the unprofitable and underdeveloped areas, which are nevertheless important for the economy to function. According to experts, the housing and communal services sector (HCS) alone, within the framework of improving domestic energy efficiency requires investments, in the region of 100 billion euro for the next 20 years. At the same time, green investments, or funds that are attracted to finance environmental projects, account for less than 1 percent of investments in fixed assets in Russia. There are no available funds in this region in the Federal Budget, which neither covers energy efficiency or renewable energy projects, nor recycling and waste management projects etc. Moreover, financing for the state program

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 24 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

“Energy Efficiency and Energy Development”, approved by the Order of the Government of the Russian Federation no. 321 dated 15.04.2014 was reduced by 27 percent in 2017. Investment demand for production projects to the modernize processing plants and refineries 2018-2026 The “environmental reform” of the secondary sector of the economy has been established by the legislation and is being implemented. It is the “order” for many (hundreds of thousands of) “production projects” to modernize processing plants and refineries based on the principles of the best available technologies (BAT). These production projects will be implemented both in the format of corporate financing and in the form of project financing (through the use of service contracts, outsourcing). Technical analysis (The Ministry of Industry and Trade of the Russian Federation, Sberbank) indicates a new investment demand for projects on the «BAT control of emissions, effluents, industrial waste» (1), as well as projects to modernize a large proportion of production by introducing «technological BAT» (2). Expected cost increases for project type (1) are no less than 250 billion rubles per annum, and for project type (2) up to 1 trillion rubles per annum. A bottom-up assessment was also carried out based on current pollution indicators, without taking the possible in-depth modernization of BAT references into account. In relation to the overall assessment, the current pollution indicators roughly outline the sector with 30-35 percent out of all possible upgrades. At the same time, estimates that set the size of the market at 24193 million dollars (1.4 trillion rubles) show the same 25-30 percent of the total expenditure projected by the Ministry of Industry and Trade of the Russian Federation. In addition, the environmental project category should include projects carried out in regulated markets (PPP, tariffs, etc., markets for municipal waste management, modernization of water and heat supply, urban transport), amounting to at least 150 billion rubles a year. Environmental projects are driven by public needs and are for the sake of the public, for the improvement of the quality of life and environmental conservation, and have important social externalities. Financial and environmental regulators should design special mechanisms (products) for the debt and equity financing markets (ESMs) to cater for new investment activity

8. A ROAD MAP FOR THE FORMATION OF A GREEN FINANCE MARKET IN RUSSIA For the formation and development of the green finance market in Russia, the following set of measures are proposed as the Road Map for implementation.

The development of the ideology and consolidated position of regulators in relation to the green finance market 1 at the national level 2 A set of measures to create a shared national brand in the field of green finance (Methodological Center) 3 A set of measures for creating and adopting principles, standards and taxonomy 4 A set of measures on the formation of the system of verification for green financial instruments 5 A set of measures on the creation and development of green finance market infrastructure

Lobbying for the preparation and implementation of a system of state support measures for green financial 6 instruments (bonds) in Russia 7 A set of measures for international cooperation

The “Road Map” with measures for the formation of the green finance market in Russia is presented inAnnex 6.

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 25 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

ANNEX 1 THE SUSTAINABLE DEVELOPMENT GOALS 1. End poverty in all its forms everywhere 2. End hunger, achieve food security and improved nutrition and promote sustainable agriculture. 3. Ensure healthy living standards and promoting well-being for people of all ages 4. Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all 5. Achieve gender equality and empower all women and girls at all levels 6. Ensure availability and sustainable management of water and sanitation for all 7. Ensure access to affordable, reliable, sustainable and modern energy for all 8. Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all 9. Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation 10. Reduce inequality within and among countries 11. Make cities and human settlements inclusive, safe, resilient and sustainable 12. Ensure sustainable consumption and production patterns 13. Take urgent action to combat climate change and its impacts 14. Conserve and Sustainably Use Oceans, Seas and Marine Resources for Sustainable Development 15. Protection, restoring ecosystems and promoting their rational use, sustainable forest management, combating deserti- fication, and halting and reversing land degradation and halting the process of biodiversity loss 16. Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels 17. Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development.

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 26 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent 2.10 ANNEX 2 1.50 - sions conclu Number 2506 70.40 262 7.40 62 1.70 53 + - 67 1.90 - Accreditation CBI ICMA - + + + + 74 + + + + standards) (according to CBI tification is provided Sectors in which cer- - All sectors All sectors All sectors All sectors All sectors Company specialization Non-profit research center specializing in environmental research, climate change, green finance. It was set up in 1990 by the Government of Norway. The center developed its own rating system for green bond issues, Shades of Green, in 2015 Consulting services, strategy development in the area of responsible investment, as well climate change risk management for asset managers. Analysis of invest- Development of ESG ratings. ment portfolios for compliance with the principles of responsible investment Consulting services in the areas of responsible investment (ESG) , integration of ESG-factors in the process of investment decision-making, climate risk assessment of companies, evaluation investment portfolios, research in the field of green financing Audit, consulting, taxation, consulting support for transactions, business restructuring and attraction of financing Classification, certification, technical supervision, external expertise and consulting for marine, oil gas, and energy companies Audit, consulting, taxation, consulting support for transactions, business restructuring and attraction of financing Global Global Global Global Global The Nether- lands France Global Great Bri tain. lands LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES no. Company name Country Scope 1 . CICERO Norway 2. Sustainalytics 3 . Eiris Vigeo 4. EY 5. DNVGL Norway 6. KPMG The Nether-

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 27 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent 0.40 0.30 0.20 0.10 - sions conclu Number 1614 0.40 11 10 0.281 5 + - - - 6 0.20 - Accreditation CBI ICMA - -- 18+ 0.505 + - + ++ 7 + standards) Sectors in which (according to CBI certification is provided All sectors - - All sectors wind power and Solar, ma- geothermal energy, rine renewable energy, low-carbon building, low-carbon transport, water infrastructure - All sectors carbon transport Company specialization Development of credit ratings, as well independent research in the field of credit risk Development of credit ratings, as well independent research in the field of credit risk Audit, consulting, taxation, consulting support for transactions, business restructuring and attraction of financing environmental protection dent research in the field of credit risk Audit, consulting, taxation, consulting support for transactions, business restructuring and attraction of financing Consulting in the field of sustainable development low wind power, Solar, Global Global Global excluding the US and Canada USAGreat Britain - China China Consulting in the area of energy conservation and ChinaChina China ChinaGreat Bri Development of credit ratings, as well indepen- tain. Chinese nationwide rating agency India Global, LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES Ratings Deloitte Consult- CECEP ing Rating China Chengxin Credit Manage- ment Co., Ltd. PWC Emergent Ventures no. Company name Country Scope 8. Moody’s9. Global S&P USA 10 11 12 China Bond 13 14 15

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 28 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent 0.10 0.11 0.14 0.10 0.14 0.10 - sions conclu Number 4 5 5 5 4 - - - Accreditation CBI ICMA + + 3 + + + -- -- standards) Sectors in which (according to CBI certification is provided All sectors All sectors wind power and Solar, ma- geothermal energy, rine renewable energy, low-carbon building, low-carbon transport, water infrastructure All sectors - - Company specialization Testing, inspection and certification in the areas of Testing, environmental protection and social safety, quality, Certification of management systems responsibility. and second-party audits (second-party opinion) in the area of quality systems, environment and safety. Inspection of buildings, structures and equipment Research in the field of green finance. Member of the Research Center for Climate and Energy Finance Environmental engineering and consulting in the field of environmental management systems and validation of greenhouse (EMS). Verification gas emissions (GHG). Certification and quality assurance services in the areas of sustainable development, green bonds, carbon footprint, etc. Environmental consulting, involving the reduction of greenhouse gas emissions, as well the sustainable development of companies. Verification and expert review in the field of green finance Consulting in the field of responsible investment. Mobilization of capital and financing sustainable development projects Global France Global China ChinaChina Consulting in the field of green finance China USA China China LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES Bureau Veritas SynTao Green SynTao Finance Zhong-cai Green Financing Con- sultants Ltd First Environment Lianhe Equator Environmental Assess- Impact ment Co no. Company name Country Scope 21 17 18 19 20 16 SITAWI Brazil Brazil

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 29 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent 0.03 0.03 0.03 0.03 0.03 - sions conclu Number 1 1 2 0.03 1 1 1 Accreditation CBI ICMA -- -- + + -- - - 2 0.06 ------2 0.06 - - 2 0.06

standards) Sectors in which (according to CBI certification is provided - - Solar, wind, low-carbon Solar, construction, low-carbon transport, water infrastructure - - - - Company specialization Development of credit ratings, as well independent research in the field of credit risk Consulting in the field of responsible investment. Mobilization of capital and financing sustainable development projects Development of credit ratings, as well independent research in the field of credit risk Environmental consulting, on areas including the reduction of greenhouse gas emissions, as well as the sustainable development of companies Consulting in the field of sustainable development Development of credit ratings, as well independent research in the field of credit risk consult- Engineering and construction company, ing, design, construction, maintenance, project management in the field of construction Development of credit ratings, as well independent research in the field of credit risk Development of credit ratings, as well independent research in the field of credit risk China (Hong Kong) Global Europe ChinaGreat Britain China Great Britain China (Hong Kong) Austria Malaysia Malaysia Japan Japan LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES - Dagong Global Credit Rating The Green In- vestment Bank RFU (Mag. Re- inhard Friesenbi chler Unterneh- mensberatun) RAM Holdings (Malaysia) Japan Credit Rating Agency no. Company name Country Scope 26 27 28 Pengyuan 25Trust Carbon Great Britain 29 24 30 CH2M Hill USA USA 23 22 Golden Credit China China

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 30 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent - sions conclu Number ------Accreditation CBI ICMA + + + + + + + + +

standards) Sectors in which (according to CBI certification is provided Low-carbon construction, Low-carbon construction, water infrastructure All sectors wind power and Solar, geothermal energy, marine renewable energy, low-carbon building, low- carbon transport, water infrastructure All sectors Solar, wind power Solar, All sectors Company specialization Services in the field of engineering and environmental design, verification in the field of environmental construction, energy efficiency, low-carbon strategy development for companies Consulting in the field of sustainable development validation of greenhouse gas emis- Verification, sions (GHG), sustainable development assessment, independent review (third-party audit) Certification and verification of activities in the field of environment and health safety (EHS) (according to standards ISO 14001 and OHSAS of green bonds and climate 18001). Verification bonds. Consulting and training in the field of environmental management Consulting services and strategy development in the area of responsible investment (ESG), as well climate change risk management for asset managers Audit, consulting, taxation, consulting support for transactions, business restructuring and attraction of financing Great Britain, the USA, Qa- Thailand, tar, Singapore, Australia ASEAN, as well as Hong Kong, China, Singapore Global Global Europe National (India) Great Bri tain. China (Hong Kong) China ChinaIndia Certification center Great Bri tain. France LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES Atelier Ten Carbon Care Asia Limited (CCA) China Qual- ity Certification Centre (CQC) EPIC Sustain- ability ERM Certifica- tion and Verifica- tion Services EthiFinance no. Company name Country Scope 31 32 BDO India33 Belgium 34 35 36 37

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 31 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent - sions conclu Number ------Accreditation CBI ICMA + + + + + +

provided standards) certification is Sectors in which (according to CBI All sectors Solar, wind, low- Solar, carbon construction, low-carbon transport, water infrastructure Solar, wind and geo- Solar, low- thermal energy, carbon construction, low-carbon transport Solar energy, wind, Solar energy, water infrastructure Solar and wind energy Solar energy, wind, Solar energy, water infrastructure Company specialization Consulting in the field of green finance Development of standards, testing, certification, audit, inspection, consulting in the field of sustainable development for companies, environmental audit, greenhouse gas emissions. Certification of building materi- water, food products, machinery, als, etc/ Engineering company in the field of industrial Verification of construction and energy efficiency. green bonds in the field of renewable energy Verification of climate bonds and green bonds, Verification development of green bond criteria for companies (Green Bond Framework), reporting on projects financed by green bond issues Rating agency Verification and certification in the field of green Verification finance. Provides services in the areas of environmental management, environmental protection, safety Global Global, exclud- and ing the USA Canada Global Global, exclud- and ing the USA Canada China China USA Norway USA Mexico Mexico China (Hong Kong) LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES Raising Clean-tech Investment Con - sulting Co., Ltd. Multiconsult ASA Kestrel Verifiers Hong Kong Qual- ity Assurance Agency no. Company name Country Scope 43 42 NSF 41 40 39 HR Ratings 38

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 32 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing share, Market percent - sions conclu Number -- --- Climate Bonds Initiative (CBI) non- Accreditation CBI ICMA + + +

provided standards) certification is Sectors in which (according to CBI All sectors All sectors https://www.moodys.com. Company specialization Moody’s international rating agency Moody’s Consulting services in the field of responsible investment (ESG), collection and provision of information on the carbon footprint of companies, analysis investment portfolios for the presence of climate risks (portfolio environmental analytics)–this analysis was carried out for the first time in 2005 Certification of management systems, personnel as engineer- well as goods in various industries (energy, ing, consumer goods, food security) https://www.climatebonds.net, Great Britain, North America, Asia Europe, Great Bri tain. Germany Global LIST OF COMPANIES THAT PROVIDE EXTERNAL REVIEW OF GREEN BOND ISSUES OUTSIDE THE RUSSIAN FEDERATION PROVIDE EXTERNAL THAT LIST OF COMPANIES TÜV NORD CERT no. Company name Country Scope 44 Trucost 45 https://www.icmagroup.org, Association (ICMA) https://www.icmagroup.org, structure and analytics are based on information from the International Capital Market Source: CoLTI profit organization in the field of green finance

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 33 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

ANNEX 3 GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE) CoLTI expert sample and analytics on October 18, 2018

Number of no. Green bond issuers Verifier (second opinion) issues, units The Luxembourg Green Exchange https://www.bourse.lu/green The first green bond was issued in 2007, in October 2016 the Green Exchange was established.The total number of listings is 167 issues of 42 issuers. The issues comply with the following principles and standards: The issues comply with the ICMA Green Bond Principles, CBI standards, the Sustainability Bond Guidelines (SBG) or the PBoC Green Bond Endorsed Project Catalogue of projects which may be financed through the issuance of green bonds, etc, produced by the People’s Bank of China. 1 ALD (Positive Impact Bond) 1 Vigeo Eiris 2 DZBank 1 S&P 3 Aslan Development Bank 7 CICERO 4 ChinaConBanCo 1 E&Y Hua Ming 5 BN Paribas 2 Oekom 6 DeutHypBk 4 Oekom

7 IBRD 24 CICERO 8 Lietuvos Energij 2 CICERO 9 Province of Quebec 3 CICERO 10 Raiffeisen Bank Int 1 Sustainalytics 11 NRWBank 5 Oekom 12 Iberdrola 9 Vigeo Eiris 13 Banque Europeenne D’lvestlssement 29 KPMG 14 Kommuninvest i Sverige 6 CICERO 15 Rail Transit International Development Company 1 Sustainalytics 16 Prolog Is International Funding 1 Sustainalytics 17 the Republic of Poland 2 Sustainalytics 18 Province of Quebec 2 CICERO 19 Kreditanstalt Fuer Wiederaufbau 13 CICERO 20 SpareBank 1 Bolligkr 1 DNV GL 21 Enel Finance Int. 2 Vigeo Eiris 22 Landesbank Baden-Württemberg 1 Oekom

The verifier is accredited by CBI and ICMA The verifier is not accredited by CBI or ICMA The verifier is accredited by CBI No independent review was conducted The verifier is accredited by ICMA * The issues have been assigned a credit rating by Moody’s Rating Agency

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 34 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of issues, no. Green bond issuers Verifier (second opinion) units 23 Orsted 1 CICERO 24 Nederlandse Waterschapsbank 9 CICERO 25 IFC 3 CICERO 26 Naturgy Finance 1 Vigeo Eiris 27 Industrial and Commercial Bank of China 3 CICERO; Zhongcai Green Financing 28 The Province of Jujuy 1 Sustalnalytlcs 29 Export Development Canada 3 CICERO 30 NordeaBank 1 Oekom 31 Intesa Sanpaolo 1 Vigeo Eiris 32 Banco Nacional de Desenvolvimento Econômico e 2 Sustalnalytlcs Socia 33 National Australia Bank 1 DNVGL 34 African Development Bank 4 CICERO 35 Suzano Austria 2 Sustalnalytlcs 36 Kommuninvest i Sverige 6 CICERO 37 Bank of China 4 E&Y Hua Ming 38 BRF S. A. 2 Sustainalytics 39 Unibail-Rodamco-Westfield SE (previously Unibail- 2 Vigeo Eiris Rodamco SE) 40 Vestas Wind Systems 1 DNVGL 41 Verbund 1 Oekom 42 Hera S. P. A. 1 DNVGL Section (list) of green bonds on the Oslo Stock Exchange https://www.oslobors.no In January 2016, a separate segment for green bonds was created. A total of 25 bonds issued by 18 issuers have been placed. 1 Vasakronan 2 CICERO 2 Vardar 1 DNVGL 3 Scatec Solar 1 DNVGL 4 SpareBank 1 Bolligkredit 1 DNVGL

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 35 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of no. Green bond issuers Verifier (second opinion) issues, units 5 AB Stena Metall Finans 1 CICERO

6 Sogn og Fjordane Energi AS 2 CICERO 7 Oslo Kommune 1 CICERO

8 OBOS Forretningsbygg AS 1 CICERO 9 Nord-Trøndelag Elektrisitetsverk 2 DNVGL

10 Nelja Energia AS 1 DNVGL 11 Lyse AS 1 CICERO 12 Kommunalbanken AS 3 CICERO

13 Entra ASA 2 CICERO 14 Eidsiva Energi AS 1 CICERO 15 DnB Bank ASA 1 DNVGL

16 Clemens Kraftverk AS 2 CICERO 17 BCS 1 CICERO

18 Eidsiva Energi AS 1 CICERO London Stock Exchange Green Bonds Segment https: //www.Iseg.com/green The first issue of green bonds was in 2012, in July 2015 a separate segment for green bonds was created.A total of 71 bonds issued by 26 issuers have been placed. The exchange adheres to ICMA’s Green Bond Principles 1 Anglian Water Services Financing 1 DNV GL

2 Axis Bank Limited 1 KPMG 3 Banco Bilbao Vizcaya Argentaria 1 DNV GL 4 Barclays 1 The Carbon Trust 5 Bazalgette Finance 6 S&P Global Ratings 6 City of Gothenburg* 7 CICERO

7 Corporación Andina De Fomento 1 - 8 Crédit Agricole Corporate and Investment Bank 3 Sustainalytics 9 Development Bank of Japan 1 Sustainalytics 10 European Bank for Reconstruction and Development 7 CICERO

11 Fingrid 1 CICERO

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 36 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of no. Green bond issuers Verifier (second opinion) issues, units 12 First Abu Dhabi Bank 1 VIGEO EIRIS 13 International Finance Corporation 7 CICERO 14 City of Malmo Fltng 2 Sustalnalytlcs 15 Municipal Finance 3 CICERO 16 Nordic Investment Bank 9 CICERO 17 Orsted 1 CICERO 18 Renewl 1 Sustalnalytlcs 19 Sbab Bank AB (Publ) 4 CICERO 20 SSE 2 DNV GL 21 Stockholms Lans Landsting 6 CICERO 22 T. H. F. C. 1 - 23 Toyota Motor Credit Corporation 1 Sustalnalytlcs 24 Transport For London 1 DNV GL 25 Unilever 1 DNV GL 26 Westpac Banking Corporation 1 EY Mexican Stock Exchange green bond segment http://www.bmv.com.mx/ In August 2016, a separate segment for green bonds was created. In total 6 issues of 4 issuers have been placed. The bond issues comply with the Green Bond Principles MX, developed by the CCFC (Consejo Consultivo de Finanzas Climaticas), Mexico’s Climate Finance Advisory Group. The principles are based on ICMA Green Bond Principles Grupo Rotoplas S. A. B. de C. V. (Sustainability Sustainalytics 1 Bond) 1 2 Mexico City 1 Sustalnalytlcs 3 The Nacional Financiera (Mexican development bank) 2 Sustainalytics 4 Mexico city Airport* 2 Sustainalytics Shanghai Stock Exchange green bond segment In March 2016, a separate segment for green bonds was created. A total of 15 bonds issued by 9 issuers have been listed. The bond issues conform with the green bond catalogue of the People’s Bank of China (PBoC), the guidelines published by the National Development and Reform Commission of the People’s Republic of China (NDRC) or the guidelines published by the China Securities Regulatory Commission (CSRC). Information on the bond issues listed is available on the Luxembourg Green Exchange website, https://www.bourse.lu/green 1 China Three Gorges Corporation 4 E&Y Hua Ming 2 Beijing Enterprises Water Group Limited 1 Syntao Green Finance

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 37 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of no. Green bond issuers Verifier (second opinion) issues, units 3 China Huadian Corporation 4 E&Y Hua Ming 4 Poten Environment Group 1 E&Y Hua Ming 5 China Three Gorges Corporation 1 E&Y Hua Ming 6 China Datang Corporation Renewable Power Co. 1 E&Y Hua Ming Ltd. 7 CECEP Wind-Power Corporation 1 CECEP Consulting 8 Century Concord Wind Power Investment 1 KPMG Huazhen 9 Beijing Enterprises Water Group (China) Investment 1 Syntao Green Finance Ltd. The Taipei Exchange (Taiwan Stock Exchange) green bond segment http://www.tpex.org.tw/ In May 2017, a dedicated segment for green bonds was created. A total of 22 bonds issued by 15 issuers have been listed. The issues comply with the Green Bond Taiwanese requirements set by the Taiwanese Government, the principles of green bonds developed by exchanges, as well as the principles of transformative finance (Principles for Positive Impact Finance) developed by the UN Environment Programme (UNEP) Societe Generale Bank Ltd. Taipei Branch (Positive 1 3 - Impact Bonds) 2 Chi Mei Industrial Corporation 1 KPMG 3 Taipei Fubon Commercial Bank 2 Deloitte Taiwan 4 Taishin International Commercial Bank Co. 1 Deloitte Taiwan 5 Evergreen Marine Corporation 1 - Taiwan Power Company (Taiwan Electric Power - 6 Corporation) 2 7 CTBC Bank 2 Deloitte Taiwan 8 E. Sun Commercial Bank 2 Deloitte Taiwan 9 KGI Bank 1 Deloitte Taiwan 10 Bank SinoPac 1 Deloitte Taiwan 11 The Export-Import Bank of Korea 1 CICERO 12 Far Eastern New Century (Far Eastern Textile Limited) 1 DNV GL 13 CPC Corporation 1 Deloitte Taiwan 14 Crédit Agricole Corporate and Investment Bank 2 Sustainalytics 15 Taipei Fubon Commercial Bank Co. 1 Deloitte Taiwan

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 38 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of no. Green bond issuers Verifier (second opinion) issues, units The Johannesburg Stock Exchange Green Bond Segment https://www.jse.co.za/ In October 2017, a separate segment for green bonds was created. A total of 4 bond issues by 4 issuers have been listed. 1 City of Johannesburg 1 - 2 Growthpoint Properties 1 Green Building Council South Africa 3 IFC 1 CICERO 4 City of Cape Town (Metropolitan Municipality)* 1 KPMG Australian Stock Exchange https://www.asx.com.au/ There is no dedicated green bond segment. 14 bonds issued by 6 issuers have been listed 1 Monash University* 3 EY 2 NAB (National Australia Bank) 3 DNV GL 3 ANZ Bank 1 EY 4 FlexiGroup Ltd 3 DNV GL 5 Westpac Bank 3 EY 6 Treasury Corporation of Victoria 1 DNV GL Nasdaq Baltic Stock Markets in the Baltic States There is no dedicated segment. Two issues were listed that comply with green bond principles developed by the state company Latvenergo (Latvenergo AS Green Bond Framework). The Latvenergo Group is the largest electricity trader in the Baltic States 1 Latvenergo* 2 CICERO NYSE New York Stock Exchange https://www.nyse.com/ There is no dedicated green bond segment. 8 bonds issued by 5 issuers have been listed. 1 Hannon Armstrong * 3 Bureau Veritas District of Columbia Water and Sewer Authority Vigeo Eiris 2 Green Bond* 2 Upper Mohawk Valley Regional Water Finance 3 1 Moody’s Rating Agency Authority* Metro Gov’t, of Nashville & Davidson Cnty, TN 4 1 Moody’s Rating Agency Water & Sewer* 5 East Bay Regional Park District* 1 Moody’s Rating Agency

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 39 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of no. Green bond issuers Verifier (second opinion) issues, units

The Stock Exchange of Hong Kong https://www.hkex.com.hk/ There is no separate segment on the Exchange. The issuance complies with the green bond principles developed by The People’s Bank of China (РboС)

Bank of Communications (China)* 1 Moody’s Rating Agency

Private placements (outside the stock exchange) A total of 17 bonds issued by 4 issuers have been placed. Bond issues comply with green bond principles of ICMA

1 The HERO green bond platform is an asset-backed 8 Sustainalytics (ABS) green bond platform. It is managed by the American state company Renovate America, responsible for the implementation of the financing program for the use of innovative technology in the field of energy efficiency and renewable energy in home improvement: Property Assessed Clean Energy (PACE). Since the launch of the platform, 8 issues of secured bonds totaling $1.7 billion have been placed. *

2 The US financial company Renew Financial has 4 Moody’s Rating Agency developed the PACE state program, allowing property owners to access financing to introduce technology in the field of renewable energy in home improvement. The placement was organized by the American subsidiary of the Natixis French banking group–Natixis Securities Americas LLC. *

3 Ygrene Energy Fund is a private American company 2 Sustainalytics specializing in the implementation of the PACE state program, allowing property owners to obtain financing for the introduction of the technology of renewable energy in home improvement. The company placed two issues of securitized bonds in the amount of $176.5 million*.

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 40 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

GREEN BOND ISSUES: LISTING ON STOCK EXCHANGES OUTSIDE RUSSIA AND PRIVATE PLACEMENTS (OUTSIDE THE EXCHANGE)

Number of no. Green bond issuers Verifier (second opinion) issues, units

Obvion is a Dutch company, a subsidiary of the Dutch Bank Rabobank, and provides loans for the purchase of real estate. In 2016, it issued Europe’s 4 3 Sustainalytics first green mortgage bonds (Residential Mortgage Backed Securities, RMBS). In total, it has issued 3 of these bonds with a total volume of € 1.7 billion*

TOTAL 135 352

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 41 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

ANNEX 4 FEDERAL LEGISLATION AND REGULATORY LEGAL ACTS WITH A SIGNIFICANT INFLUENCE ON THE DEVELOPMENT OF THE GREEN FINANCE MARKET 1. Decrees and Executive Orders of the President of the Russian Federation –– Decree of the President of the Russian Federation no. 889 dated June 4, 2008 “On some measures to improve the energy and environmental performance of the Russian economy” –– Decree of the President of the Russian Federation no. 120 dated January 30, 2010 «On approval of the Doctrine of food security of the Russian Federation» – «Fundamentals of state policy in the sphere of environmental development of the Russian Federation for the period until 2030», approved by the President of the Russian Federation on April 30, 2012 –– Decree of the President of the Russian Federation no. 476 dated 8 may 2013 defines Rossotrudnichestvo (the Federal Agency for the Commonwealth of Independent States Affairs) as the authorized agency for ensuring the participation of the Russian Federation in promoting international cooperation on a bilateral basis. –– Decree of the President of the Russian Federation no. 752 dated September 30, 2013 «On reduction of greenhouse gas emissions» – Decree of the President of the Russian Federation no. 259 dated 20 April, 2014 approved a new Concept of the state policy of the Russian Federation in the field of international development, aimed at more pragmatic use of the funds allocated by the state. –– Decree of the President of the Russian Federation no. 208 dated 13 May, 2017 «On the Strategy for Economic Security of the Russian Federation for the period until 2030» – Order of the President of the Russian Federation no. 861-rp dated 17 December, 2009 «On the Climate doctrine of the Russian Federation» 2. Federal Laws of the Russian Federation – Federal Law no. 39-FZ dated 25 February, 1999 (as amended on 26.07.2017) «On investment activities in the Russian Federation in the form of capital investments» – Federal Law no. 7-FZ of 10 January, 2002 «On environmental protection» – Federal Law no. 184-FZ dated 27 December, 2002 «On technical regulation», – Federal Law no. 261-FZ dated 23 November, 2009 «On energy saving and energy efficiency, and on amendments to certain legislative acts of the Russian Federation» – Federal Law no. 412-FZ dated 28 December, 2013 «On accreditation in the national accreditation system» – Federal Law no. 488-FZ dated 31 December, 2014 «On industrial policy in the Russian Federation» – Federal Law no. 503-FZ dated 31 December, 2017 «On amendments to the Federal Law On production and consumption waste, and certain legislative acts of the Russian Federation» – Federal Law no. 221-FZ dated 19 July 2018 «On amendments to the Federal Law on energy saving and energy efficiency and on amendments to certain legislative acts of the Russian Federation and article 9.16 of the Code of Administrative Offences of the Russian Federation» – Federal Law no. 252-FZ dated 29 July 2018 «On amendments to the Federal Law on environmental protection, and articles 1 and 5 of the Federal Law on amendments to the Federal Law on environmental protection, and certain legislative acts of the Russian Federation regarding the creation of automatic control systems for emissions of pollutants and effluents» 3. Orders and Directives of the Government of the Russian Federation –– Order of the Government of the Russian Federation no. 1016 dated December 14, 2010 “On the approval of rules used to select investment projects and principals for provision of state guarantees of the Russian Federation in respect of loans or bonded loans raised to implement investment projects”

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 42 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

–– Order of the Government of the Russian Federation no. 321 dated April 15, 2014 «On approval of the state program of the Russian Federation: Energy Efficiency and Energy Development» – Order of the Government of the Russian Federation no. 758 dated 29.06.2018 «On the rates of payment for negative environmental impact from municipal solid waste of the IV hazard class (low-hazard) and on amendments to certain acts of the Government of the Russian Federation.» – Directive of the Government of the Russian Federation no. 1225-r dated 31 August 2002 «On the Environmental Doctrine of the Russian Federation» – Directive of the Government of the Russian Federation no. 1662-r dated November 17, 2008 «On approval of the Concept of long-term socio-economic development of the Russian Federation for the period up to 2020» – Directive of the Government of the Russian Federation dated November 13, 2009 no. 1715-r «On the Energy strategy of Russia for the period up to 2030» – Directive of the Government of the Russian Federation no. 1-r dated 8 January, 2009 «On the main directions of the state policy guidelines to boost the energy efficiency of power industry based on renewable energy resources by 2020.» – Directive of the Government of the Russian Federation no. 730-r dated April 25, 2011 «On approval of a comprehensive plan for the implementation of the Climate Doctrine of the Russian Federation for the period up to 2020» – Directive of the Government of the Russian Federation no. 504-r dated April 2, 2014 «On the action plan to ensure the reduction of the volume of greenhouse gas emissions to no more than 75% of the 1990 baseline emissions by 2020» – Directive of the Government of the Russian Federation no. 716-r dated April 22, 2015 «On the Concept of forming a system of monitoring, reporting and verifying the volume of greenhouse gas emissions in Russia» – Directive of the Government of the Russian Federation no. 2914r-P13 dated May 14, 2015 «Main aims of the Government of the Russian Federation for the period up to 2018 (new draft)» – Directive of the Government of the Russian Federation no. 876-r dated 5 May 2017 «On the Concept of development of public non-financial reporting and action plan for its implementation» – Directive of the Government of the Russian Federation no. 1801-r dated August 28, 2018 «On approval of key indicators for the implementation of the target model of the thermal energy market» 4. Regulatory legal acts of the Federal Ministries, Services and Agencies –– Directive of the Ministry of Natural Resources and Environment of the Russian Federation no. 75-r dated December 30, 2009 “On voluntary environmental certification of real estate, taking into account international experience in the application of green standards” –– Order of the Ministry of Natural Resources and Environment of the Russian Federation no. 19-r dated May 24, 2010 «On voluntary environmental certification of real estate, taking into account international experience in the application of green standards» – Federal Agency on Technical Regulation and Metrology (Rosstandart) no. 257-st. dated August 30, 2012 «On approval of the national standard GOST R 54964-2012 Conformity Assessment. Environmental requirements for real estate» – Order of the Federal Agency on Technical Regulation and Metrology (Rosstandart) no. 1611-st dated November 29, 2012 «On approval of GOST R ISO 26000-2012. National Standard of the Russian Federation. Guidelines on social responsibility»

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 43 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

ANNEX 5 POTENTIAL GREEN BOND ISSUERS CoLTI expert sample To prepare the sample, the following activities of potential issuers were taken into consideration green bonds, where the company’s green identification is recorded: 1. The Responsibility and Transparency Index has been calculated by RSPP (Russian Union of Industrialists and Entrepreneurs) since 2014. The index compares the real level of corporate CSR disclosure to the ideal level. The index is calculated by taking a set of 50 indicators (labor productivity, remuneration of labor, staff training costs, greenhouse gas emissions, energy efficiency, etc.), which reflect the economic, social and environmental dimensions of corporate responsibility, as well as the quality of management in CSR and corporate governance. Source: public corporate reporting of the largest Russian companies in terms of production volume as part of the rating of the largest Russian companies RAEX-600 and RBC-500. The leading companies are those whose individual index values are higher than 0.45, i.e. companies that disclose half or more of the established indicators. http://рспп.рф/simplepage/890 2. The Vector of Sustainable Development Index has been calculated by RSPP since 2014. The index is calculated as somewhat of an analog of the Directional Movement Index, which is used to determine market trends. To calculate the index, the actual values of the indicators are not recorded, but the direction of their changes, positive and negative “signals” on 10 basic indicators reflecting the results of companies’ economic, social and environmental impact on society (remuneration of labor, social support of personnel, social investments, use of energy, water sources, waste management, etc.). The index is based on the ratio of positive and negative signals, which indicate the course of changes in the array of reporting data over 3 years. The basis for the calculation is information in the reports of leading companies in the Responsibility and Transparency Index. The results of the index are public and published here http://рспп.рф/simplepage/890 Since may 2017, the RSPP (Russian Union of Industrialists and Entrepreneurs) Responsibility and Transparency Index and Vector for Sustainable Development Index have been included in the international database of the Global Initiative for Sustainability Ratings — GISR. The database contains about 250 independent assessment tools in this area, including S&P Dow Jones indices, Thomson Reuters ratings, country indices, indices of exchanges and other organizations. 3. The National Register of Corporate Non-Financial Reports has been administered by the RSPP (Russian Union of Industrialists and Entrepreneurs) since 2006 and is a Register comprised of companies that publish social, environmental, integrated, industry, and sustainability reports, as well as a Library of non-financial reports that contains electronic versions of officially published non-financial reports of companies operating in Russia and some large multinational companies. By August 2, 2018, 173 companies had been included in the National Register of Non-Financial Reports, 881 reports have been registered, which have been issued since 2000. These include: environmental reports (ER) — 81, social reports (SR) — 316, sustainable development reports (SDR) — 317, integrated reports — 141, industry reports — 26.http://рспп.рф/simplepage/475

4. ERAX Stock Index is an environmental stock index calculated by the environmental energy rating agency Interfax-ERA since 2012 as part of the NERAX-Eco family of environmental stock indices created by Independent Environmental Rating Agency (ANO “NERA”) in 2007, the ERAX Index includes 75 stock issues in various leading Russian companies in the Interfax-ERA 2011 fundamental efficiency rating (ranked according to 5 criteria: energy and resource efficiency, technological efficiency, ecosystem efficiency, efficiency dynamics (developments in efficiency since 2005, transparency). For shares of companies which are fundamental efficiency leaders, weighting factors are set, inversely proportional to the ranking. The higher the position, the greater the weighting factor to the capitalization of the company’s total issued shares, and vice versa. Thanks to this algorithm, a stock indicator that meets the requirements of Antimonopoly legislation is obtained, in which none of the companies has a total contribution to the index portfolio of more than 10 percent. Adhering to this condition allows ERAX to be used as a legitimate benchmark measure in stock trading and its derivatives https://interfax-era.ru/agentstvo/proekty/erax 5. The Russian Business Social Charter was adopted by the RSPP (Russian Union of Industrialists and Entrepre- neurs) Conference in 2004, the updated version was adopted in 2008. It is a a code of basic principles of socially responsible business practices, which specifies relationship of the employee with the employer, civil society institutions, the local community, as well as the principles associated with environmental safety, environmental protection. By October 31, 2017, 265 organizations had joined the Social Charter, which are published in the special Register of Participating Organizations. http://pcnn^/simplepage/474

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 44 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

6. UN Global Compact Network in Russia based on the Russian UNDP office was founded. Since 2013, Vnesheconom- bank has chaired and led the Network. In 2015-2016, the UN Global Compact Network (UNGC) was reorganized into the “National Network of the Global Compact” Association, which was the legal successor to the UN Global Compact Network in Russia and the main structure, representing the Russian Global Compact Network globally. The UN Global Compact is an international UN initiative for business in the area of corporate social responsibility and sustainable development. At the heart of UNGC participant activities is the sustainable development concept, which combines three main aims: economic, social and environmental. In their daily work, the organizations implement projects aimed at implementing the Sustainable Development Goals and the Ten Principles of the UNGC. Over 50 Russian companies and organizations are members of the UNGC, including Vnesheconombank, MMC Norilsk Nickel PJSC, Severstal PJSC, UC RUSAL, NK Rosneft PJSC, LUKOIL PJSC, and others. http://www.globalcompact.ru/ 7. The “Social efficiency at major Russian companies” ranking has been calculated by the AK&M rating agency since 2018. The agency provides the “Social efficiency at major Russian companies” ranking, which involves the study of the social and environmental activities of leading Russian companies, as well as analysis of efficiency in terms of their impact on the social environment and the ecosystem. The purpose of the rating is to reveal the companies bringing maximum benefit to society with minimal impact on the environment. The list of participants is generated from the list of 300 largest industrial energy and transport companies in terms of revenue. The resulting rating is a ranked list of companies based on the assessment of the company’s social efficiency, which is calculated using two groups of indicators: the strain on the environment and social impact of activities. http://www.akmrating.ru/ 8. The ESG rating of the Russian corporate sector has been calculated by Agentur Expert RA GmbH rating agency since 2018, a business unit of RAEX international group in the European Union. The environmental, social and corporate governance (ESG) ranking allows companies to assess their exposure to ESG risks and demonstrate quality in compliance with relevant practices to investors. Sample: 50 largest companies in Russia in terms of production volume for 2017, with the exception of companies in sectors with minimal impact on the environment, as well as branches of major international corporations. The ESG-rating is based on the principle of assessing the optimal set of 8 indicators reflecting the level of the company’s environmental and social impact, as well as the degree of the company’s exposure to social and management risks, https://raexpert.eu 9. The Concessionaires and long-term infrastructure investors National Association recommendations for sustainable development and green investments. Developed in 2018. CoLTI recommends that members, as well as organizations that share the principles and approaches of sustainable development, take environmental, social and corporate governance (ESG-factors) into account in investment analysis and decision-making in the implementation of infrastructure projects, as well as to disclose information about the organization’s activities in the field of sustainable development and green investment in non-financial reporting. On 31 August, 2018, 10 members of CoLTI supported the initiative, https://investinfra.ru/greeninvestments

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 45 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues in circulation on the Moscow Stock Exchange

Concession- Corporate bonds ary bonds no. Issuing companies Industrial sector Number of issues Number of issues Volume, billion rubles Volume, billion rubles Volume,

1 MMC Norilsk Nickel PJSC Metallurgy 1 15 2 JSCo RZD (Russian Railways) Transport 35 597.2

3 Gazprom PJSC Petrochemical industry 5 70

4 RusHydro PJSC Energy 7 70

5 SIBUR Holding PJSC Petrochemical industry 3 30

6 Uralkali PJSC Chemical industry 2 30

7 Transneft PJSC Petrochemical industry 14 296

8 MCC EuroChem JSC Chemical industry 3 30.01

RUSAL Bratsk Aluminum Plant JSC (UC 9 Metallurgy 2 25.0 RUSAL Group of companies)

10 ROSNEFT Oil Company PJSC Petrochemical industry 46 2961

Mechanical engineering and 11 KAMAZ JSC 11 40 Metalworking

12 United Aircraft Corporation PJSC Transport 1 46.28

13 Acron PJSC Chemical industry 6 24.12

Moscow United Electric Grid Company 14 Energy 6 43 PJSC

15 IDGC of Centre PJSC Energy 3 15

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 46 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues planned to be placed on the Moscow Ex- change

Corporate Concessionary bonds bonds Index Reports ESG corporate sector rating companies” ranking CoLTI recommendations CoLTI The UN Global Compact EPAX Environmental Stock Index EPAX Social Charter of Russian Business Green focus in the prospectus of issues Vector of Sustainable Development Index Vector AK&M “Social efficiency at major Russian Number of issues Number of issues RAEX-Europe The 2017 Responsibility and Transparency Transparency The 2017 Responsibility and National Register of Corporate Non-Financial Volume, billion rubles Volume, billion rubles Volume,

+ + + + + + + +

+ + + + + + +

+ + + + + +

2 25 + + + + + +

+ + + + + +

+ + + + +

+ + + +

+ + +

+ +

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 47 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues in circulation on the Moscow Stock Exchange

Concessionary Corporate bonds bonds no. Issuing companies Industrial sector Number of issues Number of issues Volume, billion rubles Volume, billion rubles Volume,

16 Mostotrest PJSC Construction, 2 10 17 IDGC of Urals OJSC Energy 2 6.6

18 Enel Russia PJSC Energy 1 5

19 Main Road JSC Road infrastructure / conces- 3 17.57 sions Housing maintenance and 20 Waste Management JSC 4 8.1 utilities / concessions

Housing maintenance and 21 Water Supply Concessions LLC 5 7.5 utilities / concession

22 Transport Concession Company LLC Public transport / concession 3 6.78

Housing maintenance and 23 Heat Supply Concessions LCC 2 4 utilities / concession

Creation of social infrastruc- 24 Volga-Sport JSC 2 3.3 ture / concession

Housing maintenance and 25 Waste Management - NN CJSC 1 1.15 utilities / concession

Housing maintenance and 26 Water Supply Concessions Saratov utilities / concessions

27 Public Joint-Stock Company Sistema Financial sector 7 63.2 Joint-Stock Financial Corporation Siberian Coal Energy Company (SUEK) 28 Energy 6 48 JSC, SUEK-Finance

29 Holding Company Metalloinvest OJSC Metallurgy 9 65

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 48 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues planned to be placed on the Moscow Exchange

+ +

2 5.126 + +

1 1.1 + +

+ +

1 1.15 + +

+ + + + + +

+ + + + +

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 49 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues in circulation on the Moscow Stock Exchange

Concessionary Corporate bonds bonds no. Issuing companies Industrial sector Number of issues Number of issues Volume, billion rubles Volume, billion rubles Volume,

30 Russian Grids PJSC Energy 5 31

31 Rostelecom PJSC Network provider 5 50

32 Sberbank of Russia PJSC Financial sector 22 262.3 OAO Trubnaya Metallurgicheskaya 33 Kompaniya (Pipe Metallurgical Company Metallurgy 3 20 OJSC) The state corporation Bank for Devel- opment and Foreign Economic Affairs 34 Financial sector 28 410 (Vnesheconombank), Russian government-owned development bank 35 MTS PJSC Network provider 9 100

36 Russian Agricultural Bank JSC Financial sector 37 282

37 Gazprombank JSC Financial sector 24 197.4

38 VTB Bank PJSC Financial sector 22 155.4

39 Gazprom Neft PJSC Petrochemical industry 11 140

40 Bashneft PJSCOC Petrochemical industry 17 125

41 Alfa Bank JSC Financial sector 15 92.14

42 ROSBANK PJSC Financial sector 11 55.81

43 Mechel PJSC Metallurgy 8 40

Mechanical engineering and 44 Power Machines PJSC 7 40 Metalworking

45 Center-Invest Bank PJSC Financial sector 5 7.69

46 Cherkizovo Group OSJC Food industry 1 5

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 50 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues planned to be placed on the Moscow Ex- change

+ + + + +

+ + + +

3 4.5 + + +

+ + +

12 240 + +

+ +

1 20 +

15 1 080 +

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 51 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues in circulation on the Moscow Stock Exchange

Concessionary Corporate bonds bonds no. Issuing companies Industrial sector Number of issues Number of issues Volume, billion rubles Volume, billion rubles Volume,

Public Joint Stock Company IRKUT Re- Mechanical engineering and 47 1 5 search and Production Corporation Metalworking

48 Lenenergo PJSC Energy 1 2.4

49 Ashinsky Metallurgical Works PJSC Metallurgy 1 1

URALSIB Bank PJSC (Ural-Siberian 50 Financial sector 1 0.215 Bank) Total 404 6 487,77 20 48.4

424 issues worth 6536,17 billion TOTAL rubles (in circulation)

Sources: CoLTI structuring and analytics on the basis of information on the official websites of the Moscow Exchange www.moex.com, RSPP www.rspp.ru, CoLTI www.investinfra.ru,db.investinfra.ru, environmental and energy rating agency Interfax-ERA www.interfex-era.ru, National Network of the UN Global Compact in Russia www.globalcompact.ru the AK&M “Social efficiency at major Russian companies” ranking www.akmrating.ru the RAEX-Europe ESG rating of the corporate sector www.raexpert.eu

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 52 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing

POTENTIAL GREEN BOND ISSUERS IN RUSSIA CoLTI expert sample and analytics

Bond issues planned to be placed on the Moscow Ex- change

33 1369.5 4 7.376

37 issues worth 1376,876 billion 26 14 13 21 17 13 6 14 14 8 rubles (planned for placement)

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 53 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing - Potential participants The Central Bank of the Russian Federation, Ministry Economic Development of the Russian Federation, Ministry of the Russian Federation, Ministry En Trade Industry and ergy of the Russian Federation, Ministry Construction, Housing and Utilities of the Russian Federation, Vnesheconombank Central Bank of the Russian Federation, relevant ministries, Vnesheconombank, self-regulatory organization (SRO), CoLTI, Wildlife Fund (WWF Russia) World Methodological Center Measures A ROAD MAP FOR THE FORMATION OF A GREEN FINANCE MARKET IN RUSSIA A OF FOR THE FORMATION ROAD MAP A Development of ideology and the consolidated position regulators in relation to green finance market at national level Statement / press release alternate method to publicly express the position of one or more regulators regarding the development of green finance market in Russia set of measures to create a shared national brand in the field green finance (Methodological Center) A Preparation and approval of organizational financial processes for creating a shared na - mechanism of management and financing, location) tional brand (status, form of legal entity, The Methodological Center is proposed to be created in the form of a non-profit organization that will accredit verifiers, maintain a register of financial instruments, train verifiers develop the methodology, and issuers Registration of a legal entity and its resulting stage capacity basic Provisions on membership, etc., depending Development of draft regulatory documents (Charter, on the chosen institutional and legal form) set of measures to create and approve principles, standards taxonomy A Development and approval of principles, standards other ideological documents, as well the work plan of Methodological Center The principles should represent voluntary rules, the main objectives of which are transparency information disclosure, as well promoting uniformity in market development by providing clarification The principles can be developed taking international practice into account, and adapted of approaches. for the national market Development and approval of the taxonomy matrix, development consolidation terminology related to sustainable development and green finance no. 1. 1.1 2. 2.1 2.2. 3. 3.1. 3.2. ANNEX 6

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 54 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing - Potential participants Moscow Exchange, Methodological Center public organizations, NGOs of the green Methodological Center, SRO, auditors, rating CoLTI, and financial markets: RSPP, Wildlife World agencies, consultants, working groups on ecology, Fund (WWF Russia) Methodological Center, public organizations, NGOs of the green Methodological Center, SRO, auditors, rating CoLTI, and financial markets: RSPP, Wildlife World agencies, consultants, working groups on ecology, Fund (WWF Russia) Methodological Center, public organizations, NGOs of the green Methodological Center, SRO, auditors, rating agen CoLTI, and financial markets: RSPP, Wildlife Fund World cies, consultants, working groups on ecology, (WWF Russia) - - - ’s acceptance of ’s The Methodological Center should pro Measures A ROAD MAP FOR THE FORMATION OF A GREEN FINANCE MARKET IN RUSSIA A OF FOR THE FORMATION ROAD MAP A vide accreditation of verifiers, as well training for verifiers and issuers set of measures on the creation and development green finance market infrastructure A Creation of a separate green segment / stock exchange list green bonds Possible reasons for including bonds in the green sector / list of on exchange: compli ance with the eligibility requirements for I, II or III level of securities list admitted to trading, an issuer’s statement on the compliance of issue with green bond standards, an issuer’s corporate the presence of substantial information on policy aimed at ensuring environmental transparency, use of green bond proceeds exclusively in certain (acceptable) projects the prospectus, an independent conclusion on compliance with the green criteria (verification), an issuer the obligation to regularly disclose information on implementation of green projects throughout term of the green bond circulation on basis existing disclosure systems agement of environmental risks, organization joint work with these participants to create mechanisms and professional standards for environmental risk assessment the objectives of green finance market Organizing interaction with market participants who specialize in the identification, analysis and man A set of measures on the formation system verification for green financial instruments A Preparation and approval of methods for verification green financial instruments Development and approval of the procedure for accreditation verifiers green financial instruments Creation of a pool consultants, rating agencies, verifiers green financial instruments and other market participants for the external evaluation of instruments. Organization of interaction with market participants who specialize in the field environmental audit, organization of joint work with these participants to create mechanisms and professional standards environmental audit for the objectives of green Finance market no. 5. 5.1. 5.2. 4. 4.1. 4.2. 4.3. 5.3.

GREEN FINANCE: THE AGENDA FOR RUSSIA Diagnostic Overview 55 EXPERT COUNCIL ON THE LONG-TERM INVESTMENT MARKET UNDER THE CENTRAL BANK OF THE RUSSIAN FEDERATION Working group on responsible financing (ESG-finance), including "green" financing Potential participants Trade of the Russian Federation, Ministry Trade Methodological Center, development institutes, World wildlife development institutes, World Methodological Center, Fund (WWF Russia) The Central Bank of the Russian Federation, Ministry Economic Development of the Russian Federation, Ministry of Industry and Energy of the Russian Federation, Ministry Construction, Housing and Utilities of the Russian Federation, Ministry Natural Resources and the Environment of Russian Federa- development institutions tion, Methodological Center, Central Bank of the Russian Federation, Methodological Center Moscow systems: disclosure information existing of operators and Wildlife Fund (WWF Russia) World CoLTI, Exchange, RSPP, - Measures A ROAD MAP FOR THE FORMATION OF A GREEN FINANCE MARKET IN RUSSIA A OF FOR THE FORMATION ROAD MAP A x rates on coupon income, capital gains and other areas Compensation of expenses for accessing an independent opinion (verification) Issuance of state guarantees Reduced capital reserve rate of credit institutions for investments in bonds Investments of specialized funds state support in bonds Issue of green bonds state institutions, subjects and municipalities the Russian Federation for strategic market support Subsidy of the interest rate on bonds Creating an opportunity to invest pension funds Preferential ta national initiatives and associations (BRICS, G20, IFC, UNEP FI), national initiatives and associations (BRICS, G20, IFC, UNEP change of experience and practices tions (PRI, Climate Bonds Initiative, ICMA’s Green Bond Principles etc.) tions (PRI, Climate Bonds Initiative, ICMA’s system and the global of green financial instruments, its recognition by international institu ------Lobbying for the preparation and implementation of a system state support measures green financial instruments (bonds) in Russia The instruments of state support may be: - Development and organization of Russian information disclosure standards, maintenance green finance databases, creation of indices, indicators and other market assessment tools no. 7.2. participation in this area, created within the framework of leading inter- Stepping up the working groups’ 7.3. Interaction with development institutions outside Russia on expert and analytical issues, the ex- 7.7.1. Complex of measures for international cooperation Interaction with participants of the international green finance market on integration national 6. 6.1. 5.4.

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