MOSCOW (S&P Global Ratings) May 17, 2021 -- Environmental, social, and governance (ESG) factors are increasingly significant for banking regulation and the market environment.
For banks in Russia, the Commonwealth of Independent States (CIS), Ukraine, and Georgia, ESG-related regulation is set to rapidly evolve over the next few years, and will provide business opportunities, new regulatory requirements, and additional costs, said S&P Global Ratings in a report published today (see attached).
As the influence of ESG on banks in Russia, CIS, Ukraine, and Georgia increases, we believe the most immediate impact will stem from governance factors, since these have historically constrained our ratings on a number of banks in the region.
Customer relations and workforce management, in our view, will increasingly affect banks' ability to build successful business models.
We also expect the impact of environmental factors on banks' asset quality to grow over time, given the high exposure of some regional economies to carbon-intensive sectors.
As the influence of ESG on banks in Russia, CIS, Ukraine, and Georgia increases, we believe the most immediate impact will stem from governance factors, since these have historically constrained our ratings on a number of banks in the region.
Customer relations and workforce management, in our view, will increasingly affect banks' ability to build successful business models.
We also expect the impact of environmental factors on banks' asset quality to grow over time, given the high exposure of some regional economies to carbon-intensive sectors.
