Impact of Responsible Finance and ESG Criteria on Russian Banks' Operations

Our country is rich in natural resources, as a result of which the production of many companies and their financial condition depends on natural capital. Banks lending to these companies bear high risks, as any environmental incident entails deterioration of the company's financial position and, as a consequence, financial losses for the bank. By incorporating ESG criteria into their operations, banks can minimize the risks associated with lending to organizations that do not adhere to the principles of responsible finance, as well as motivate customers and other organizations to implement ESG in their operations. Currently, there is little research on ESG in Russia, and analysis of the impact of ESG on the banking industry is just beginning, although many banks are already beginning to incorporate ESG into their approach to clients. Therefore, research in the area of investing in environmentally oriented companies on Russian data is necessary. Analyzing responsible investment will help to create an effective ESG-risk management system for Russian banks.