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Sustainability Report 2013


Investment Management

We are among the leaders of the Russian financial market in terms of both investment scale and the extent of our impact on the domestic social and economic situation. The Bank’s investments are focused on fundamental changes in entire economic sectors and regions. By supporting investment projects, we are working towards a better environment, a higher quality of life, increased receipts to the budgets at different levels, and more new jobs.

Investment priorities

Vnesheconombank runs its investments operations in strict compliance with the Memorandum on Financial Policies that sets out key business lines and investment targets of the Bank. Our strategic goal consists in increasing project financing with respect to the key business lines and priorities set out in the Memorandum, primarily those aiming to modernise the Russian economy. The top priority projects financed by the Bank include:

  • projects seeking to upgrade and modernise the existing competitive Russian businesses;
  • projects that focus on setting up new operating capacities that will release knowledge-intensive products enjoying high demand in global markets.

We are involved in major investment projects that lack access to the necessary resources offered by commercial financial institutions due to their extensive payback periods, sophistication and capital intensity. These primarily include projects that meet the development priorities set for the Russian national and regional economies, as well as projects that aim to set up infrastructure facilities supporting the operation of special economic zones across Russia.

Vnesheconombank’s investment activities are governed by the following principles set out in the Memorandum on Financial Policies.

No competition against commercial financial institutions

We give preference to investment projects that rule out the Bank’s competition against commercial financial institutions. As a rule, Vnesheconombank enters investment projects if they cannot be financed by commercial financial institutions on terms comparable to those offered by Vnesheconombank.


We run our investment and financial operations on a publicity and transparency basis in line with the best corporate governance practices.


We do not enter non-viable investment projects.

Public private partnership

We give preference to projects that are implemented through private public partnership mechanisms.

Environmental responsibility

We avoid investment projects that fail to meet environmental requirements and environmental efficiency standards.

Key areas of focus and sectoral priorities of Vnesheconombank’s investment

Investment decision making mechanisms

Vnesheconombank’s investment decisions rely on the due diligence of projects applying for financing that includes environmental risk assessment and is performed with engagement of independent expert firms. As of today, we are Russia’s only financial institution that has voluntarily assumed responsible finance commitments within the framework of adhering to the United Nations Environment Programme Finance Initiative (UNEP FI).

By doing so, we have re-confirmed our commitment to sustainability principles and our willingness to improve our approaches to the environmental and social stewardship of the Bank’s investment activities in line with best international practices.

Our evaluation of the feasibility and expediency of investment projects relies on the results of preliminary due diligence exercises run in line with the Regulations on Due Diligence of Investment Projects. Under the exercise scenario, the Bank checks whether the project meets the following basic criteria:

  • project’s conformity to key business lines and sectoral priorities of the Bank’s investment activities;
  • positive effect for the economy and society;
  • high quality of investment project.

Project due diligence is run by Vnesheconombank’s investment subdivisions within their respective scopes of competence and responsibility. To prevent any potential conflict of interests, the Bank engages specialised independent firms to run due diligence. For some projects, due diligence is also supported by VEB-Engineering, a special vehicle of Vnesheconombank Group set up specifically to support the Bank’s investment operations.

In making its investment decisions, Vnesheconombank always assesses the environmental impact of projects and their compliance with the requirements of national environmental laws. Additionally, the Bank may request the project initiator to run an independent environmental due diligence where such an exercise is required by the country in which the project is delivered, or is a pre-requisite for a foreign legal entity to participate in the project financing.

For some projects, an independent expert evaluation is mandatory at the due diligence stage. This applies to all projects subject to approval by Vnesheconombank’s Supervisory Board. Moreover, projects for the construction of real property or manufacturing facilities must undergo an independent expert evaluation for energy efficiency and resource saving. Vnesheconombank’s management may decide that major investment projects that require approval by the Supervisory Board should be examined by the Bank’s Expert Council.

Vnesheconombank’s procedure and criteria for examination of investment projects

Project proposal

  • investment units investment units

    Vnesheconombank’s investment subdivisions responsible for due diligence

    Checking project eligibility

    Determining whether Vnesheconombank can finance the project

    Preliminary due diligence

  • investment units investment units

    Presentation to Vnesheconombank’s Investment Development Committee


    Decision on expediency of due diligence and inclusion in the list of projects under examination

  • investment units investment units

    Vnesheconombank’s investment subdivisions responsible for due diligence

    Business plan and financial model analysis; assessment of project stakeholders’ financial position

    Analysis of collateral quality and ability to monitor that the funds are used for intended purpose; negotiation of loan agreement terms and preliminary terms of project follow-up

    Proposals on terms of Vnesheconombank’s project financing

    Vnesheconombank’s specialised investment subdivisions
    Independent specialised firms

    Due diligence

  • investment units investment units


    Engaged by Vnesheconombank’s management

  • investment units investment units

    Presentation to Vnesheconombank’s Credit Committee

  • investment units investment units

    Submission of a project financing proposal to the management for consideration

  • investment units investment units

Monitoring investment project efficiency and assessment of social and economic efficiency of Vnesheconombank’s operations

In 2013, we continued enhancing our investment operations while building a framework for monitoring efficiency of investment projects supported by Vnesheconombank and assessing the social and economic efficiency of the Bank’s lending and investment operations.

The comprehensive systemic efficiency assessment of Vnesheconombank’s operations as a development bank primarily relies on a system of indicators that reflects the impact of our lending and investment operations on key national development indicators specified, inter alia, in the Executive Order “On Long-Term State Economic Policy” by the Russian President and in Key Areas of Activities of the Government of Russia.

Key principles of assessing Vnesheconombank’s operating efficiency as a development bank

  • The development bank’s operating efficiency is equivalent to the efficiency of its investment in the national economy.

    Unlike commercial banks, we need to evaluate and plan the impact of our investment operations on the country’s social and economic development.

  • Application of a system of indicators aligned with international standards for multi-criteria assessment of operations run by development institutions.

    The multi-criteria approach advocates using an array of indicators of economic, budgetary, social and environmental impact, and value and physical indicators that reflect how the Bank’s operations affect the country’s key macroeconomic development indicators, and its individual regions and economic sectors.

  • Drafting a list of qualitative indicators of economic, budgetary, environmental and social efficiency of the Bank’s operations aligned with the strategic goals of Russia’s economic and investment policies.

    The follow-up of investment projects by Vnesheconombank includes financial and technical monitoring and investment project efficiency monitoring. We begin monitoring and supporting an investment project as soon as Vnesheconombank’s management makes a positive decision on the Bank’s involvement in the project financing and until the date when all project stakeholders fully meet their respective obligations under the terms of lending and security documents.

Embedding responsible finance principles into Vnesheconombank’s investment operations

In 2013, Vnesheconombank actively worked on implementing and developing responsible finance practices. To this end, the Bank set up a Responsible Finance department within its structure. The department’s operations focus on integrating the principles of environmental and social responsibility into the investment decision making process.

In 2013 Vnesheconombank approved its corporate Responsible Finance Policy. Its core goals and objectives are as follows:

  • increase social and environmental responsibility of the Bank;
  • efficiently contribute to environmental protection;
  • improve the framework for managing environmental and social risks in line with best international practices of financial institutions for development.

In 2013, to implement the principles of its Responsible Finance Policy, Vnesheconombank launched a number of measures to enhance its methodology of environmental and social evaluation of investment projects in line with best international practices.

In parallel, we were working to promote the leading sustainability and responsible finance approaches across the Russian financial community. For this purpose, in December 2013, Vnesheconombank jointly with UNEP FI arranged a series of focused training events:

  • a master class “Management of Environmental and Social Risks: Mutual Benefits to Business and Society” held as part of the 4th “Investment in Sustainability. Unlocking an Innovative Business Potential” international business conference organised by Vnesheconombank;
  • a training workshop for employees of Vnesheconombank Group “Analysis of Environmental and Social Risks of Investment Projects”.