SPIEF BUSINESS BREAKFAST: OECD STANDARDS ON RESPONSIBLE CONDUCT FOR DEVELOPMENT INSTITUTIONS, 8 of June, St.Petersburg

Start/End Date
2019-06-07 / 2019-06-07

The SPIEF's event "OECD STANDARDS ON RESPONSIBLE CONDUCT FOR DEVELOPMENT INSTITUTIONS" convened representatives of different organizations across the world to discuss the future of responsible business conduct in project finance.

Antonina Levashenko (The Head of Russia-OECD Centre), welcomed the participants of the business breakfast. She noticed that OECD standards for responsible business conduct have now become the benchmark of company behavior and a powerful tool for reducing both non-financial and financial risks of enterprises.

Representatives of the private sector agreed with Antonina's speech. Maxim Nazimok (The Deputy General Director for Finance, Polymetal) said that his company has already expressed the pressure from European financial institutions about the company's non-financial risks. The agreement between ING Bank with Polymetal took into account the non-financial performance of the company, and the credit rate is tied to non-financial indicators.

Natalia Beneslavskaya (The Head of Sustainable Development and Environmental Protection IKEA) is also said that IKEA is responsible for consuming 1% of all wood in the world, so the quality of resource management by IKEA's suppliers is a critical topic for the company.

Irina Zhukova (Director for Sustainable Development and Corporate Programs, Philip Morris International Inc) is also shared the company's view on the future of responsible business conduct. Today Philip Morris is looking for diversification of their business activities and participates in an OECD pilot project on responsible business conduct in Agriculture.

Alexander Griaznov (Corporate Ratings Director, S&P Global Ratings Russia) also noticed that non-financial risks today affect corporate credit ratings of companies. For now, environmental and climatic problems have affected corporate ratings in 717 cases (about 10% of corporate ratings). The critical issues of assessing non-financial risks today are the quality of the information and the absence of harmonized indicators.

Mathilde Mesnard (Deputy Director for Financial and Enterprise Affairs, OECD) noticed that today, about 20% of disputes at NCP are related to the financial markets. OECD is currently developing the standards for responsible business conduct in the financial sector. Now the Guideline on Responsible Business Conduct for Institutional Investors has been published.

The next OECD step will be about project finance and how financial institutions can implement the RBC standards in their work. The development institutions are playing a significant role in this kind of finance. The OECD invites development institutions to participate in this work. This work will also give a room for an OECD side project with development institutions on RBC implementation.

The participated development institutions positively responded to the OECD invitation. Grigory Chernenko (Special Advisor to the President, Black Sea Trade and Development Bank) said that the harmonized rules on non-financial risks evaluation would help to develop projects faster and better.

Yuriy Korsun (Deputy Chairman, State Development Corporation "VEB.RF") also noted that evaluation of non-financial risks is essential in the project finance. VEB.RF is interested in harmonizing international approaches and work with OECD on further developments.

Dmitry Tvardovsky (First Deputy General Director, VEB Infrastructure) also agreed that the development of harmonized infrastructure standards would reduce the risks of projects.

Antonina Levashenko noted that the development institutions of Japan, India, the New Development Bank of BRICS, the World Bank also expressed interest in preparing a guide on responsible business conduct for development institutions.

Andreas Schaal (Director of Global Relations, Organisation for Economic Co-operation and Development) noted that the development of harmonized standards for development institutions would reduce the risks of infrastructure projects. Today, the OECD is considering the project for governments and companies on infrastructure development. Andreas invited VEB.RF and other development institutions to participate in the project.

Stanislav Georgievsky (Deputy Director of Trade Policy, Eurasian Commission) also noted that a harmonized approach to non-financial risk assessment could reduce the trade barriers.

In conclusion, Nikolay Shmatkov (Director, FSC in Russia) has also supported the idea of a harmonized approach to non-financial risks in project finance. He also noted that FSC standards would allow reducing the risks in infrastructure projects.

Nataliya Ponomaryova (representative of Belgian-Luxembourg Chamber of Commerce) said that the development of harmonized standards for development institutions could help develop responsible investment.

Maksim Titov (Executive Director of the Research Center ENERPO, European University at St. Petersburg) also agreed on the need to develop harmonized standards for development institutions.

The possible next steps: Gather the development institutions in OECD to launch the project on RBC implementation in development institutions (Fall).