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December 6, 2022
On December 1, 2022, the Interstate Consultants Engineers Guild in cooperation with the Association of Ukrainian Cities held the online forum on the topic “Green finance for reconstruction and sustainable development of Ukrainian cities”.
“This is the first joint event held within the framework of the signed memorandum between both organizations. The forum brought together heads of cities and communities, representatives of the legislative and executive bodies, financial and banking institutions and international organizations,” said Oleksandr Slobozhan, Executive Director of the Association of Ukrainian Cities, opening the online forum. “The cooperation of both organizations within the framework of this forum can increase the awareness of municipalities and small communities about the possibilities and specifics of obtaining green financing, which global market is already estimated at more than 2 trillion US dollars,” he added.
Vitalii Bezhin, Member of Parliament, Chairman of the Subcommittee on Administrative and Territorial Organization of the Verchovna Rada Committee on State Power Organization, Local Self-Government, Regional Development and Urban Planning addressed the participants of the forum. “The State at all levels is looking for tools and opportunities to attract funding for the restoration of territories,” said Vitalii Bezhin. “Green bonds are the global trend and can allow local governments to raise funds for reconstruction. The experience of DTEK and Ukrenergo, that issued the green bonds, confirms that this is the right way to attract financing,” he added. Vitaly Bezgin assured of unquestionable support at the legislative level of all initiatives aimed at the development of “green” financial instruments.
Olena Krivoruchkina, Member of Parliament, Deputy Chairman of the Verchovna Rada Committee on Environmental Policy and Nature Management, Ruslan Grechanyk, First Deputy Minister of Environment Protection and Natural Resources of Ukraine, Ihor Korhoviy, Deputy Minister of Communities and Territories Development of Ukraine for European Integration also made a welcome speech. The above speakers once again confirmed the huge potential and possibilities of attracting green financing to the reconstruction and development of cities and communities.
Opening the first panel “Sustainable development of cities: attraction of green financing and the impact of ESG factors”, forum moderator Yaroslav Bielov, Vice-President of the Interstate Consultants Engineers Guild noted that as a result of the russian invasion of Ukraine, cities and communities suffered enormous destruction. “Administrative buildings, medical facilities and educational institutions were damaged. Critical infrastructure facilities were destroyed. Damages are already estimated at billions of US dollars. But despite the fact that the war is still going on, there is a need to plan the restoration of the territories,” said Yaroslav Bielov. “Post-war reconstruction will encourage city leaders to look for sources and tools for attracting funding that will help to rebuild the territories taking into account social, economic and environmental factors”, he added.
“The issuance of green bonds can become a promising tool for attracting funds for the post-war reconstruction of cities,” said Yurii Shafarenko, a representative of the Directorate for Economic Policy of the Office of the President of Ukraine, who made speech in the first panel of the Forum. “Last year, Ukrenergo issued green bonds at the amount of 825 million US dollars and in November this year, despite the martial law, it made the first interest payment of 28.4 million dollars for these securities,” he added.
Oksana Remiga, Senior advisor for credit operations in neighboring EU countries of the European Investment Bank, spoke about the possibilities of sustainable financing for Ukraine and the programs of the European Investment Bank. Oleksandr Sushchenko, Head of the “Ecology and Energy” direction of the UNDP in Ukraine, shared with the attendees the results of a study on taxonomy of green financing in Ukraine and the need for ESG disclosure.
Nelly Petkova, Policy analyst of the Green Growth and Global Relations Division of the OECD Environment Directorate, told about the features of the “greening” of the debt capital market in Ukraine and other countries of the world. In her presentation, she showed trends in the attraction of green financing in the countries of Eastern Europe and Asia and compared the green bond markets of Ukraine and other countries.
“Ukraine has a huge potential for attracting green financing in the sustainable development of cities,” Ihor Kyrylchuk, National Coordinator of the Project UNIDO/GEF GCIP Ukraine said in his speech. He spoke about opportunities and programs for attracting green financing to environmentally friendly projects.
“Within the recovery of Ukraine, international investors will be interested in projects that take into account the principles of sustainable development and circular economy,” said Oleksii Savin, Director of the Department of Environmental Reengineering and Implementation of Resource Saving Projects of the Ukrgasbank. In his presentation, he showed the possibilities of financing sustainable development by Ukrgasbank.
In the second panel of the forum, “Green bonds as a financing tool for local environmental projects”, Andrii Frolov, Head of the Green Finance Center of the Interstate Consultants Engineers Guild, spoke first. He shared presentation and showed the international experience of green bonds issuing, told about the legal regulation and peculiarities of issuing green bonds in Ukraine.
“Green bonds make it possible to attract funds at more favorable rates,” said Oleksandr Koren, Director of the Department of Interbudgetary Relations and Local Budgets of the Ministry of Finance. He noted that currently not all cities and communities have the ability to borrow by issuing bonds. “But now the Ministry of Finance is studying the issue of lifting such restrictions,” he added.
Victoria Hnatovska, Acting General Director Energy Resource Efficient Policy Development Directorate of the Ministry of Energy, emphasized the importance of approving the action plan for the Concept of the introduction and development of the green bond market. “We need to do everything possible to make green bonds interesting for other market participants, in particular for municipalities,” said Viktoriya Hnatovska. “Now we are discussing the draft Action Plan for the implementation of the Concept for the introduction and development of the green bond market in Ukraine with all interested parties,” she added.
Viktor Bukovynsky, Deputy Director of the Department of Strategic Planning and Environmental Restoration of the Ministry of Environment, also spoke about the ministry’s initiatives to attract green financing. He also assured of work on the procedure for selecting and support environmental projects financed from the state and local budgets, stipulated by the Law of Ukraine “On Capital Markets and Organized Commodity Markets”, which introduces green bonds as a separate subtype of securities.
Closing the forum, Yaroslav Bielov, Vice-president of the Interstate Guild of Consulting Engineers noted that the development the procedure of the selection and support of environmental projects financed from the state and local budgets, is primarily necessary for municipalities in order to borrow funds by issuing green bonds. “Ukraine also needs to develop support programs and incentive mechanisms for local self-government bodies. First of all, attention should be paid to approaches to tax incentives,” he noted. “Also, local self-government bodies lack knowledge regarding the preparation of issuing green bonds. Therefore, the preparation of pilot projects for the issuance of green bonds by municipalities should be supported. At the first stage, such support could be provided to cities that had experience in local borrowing,” he added. “The issuance of green bonds by cities can create a multiplier effect and have a ‘chain reaction’. The positive stories of issuing green bonds will improve the investment attractiveness, business climate and competitiveness of cities,” said Yaroslav Bielov.
