MOSCOW (Reuters) - Russia’s central bank and finance ministry have started consultations on a green bond issue, a senior central bank official said on Tuesday, as Moscow seeks to enhance its sustainability credentials. Green bonds are a rapidly expanding category of fixed-income securities that raise capital for projects with environmental benefits, such as renewable energy or low-carbon transport. Germany entered the market last year, while the United Kingdom is planning to launch a green bond in 2021. Russia, whose economy is largely built on fossil fuels, mining and hydrocarbon production, has some way to go to convince investors of its environmental, social and governance (ESG) potential, but has identified the risk posed by failing to make transition efforts. “The ESG topic is very important for the Russian market,” Sergei Shvetsov, the central bank’s first deputy chairman, said at a repo forum on Tuesday. “We have started holding the first consultations with the finance ministry on issuing federal green bonds,” he said, adding that the need for green repos, clearing certificates and mortgages would also arise. Shvetsov described the transformation Russia needs to make as a costly but necessary step, and said Russia’s ESG potential was “very large”. Deputy Finance Minister Alexei Moiseev, speaking at the same forum, urged Russian companies to adopt ESG principles in corporate governance, as some Western funds have started divesting from companies they consider to be at odds with sustainable investment. Earlier this month, the City of Moscow said it was considering issuing green bonds to finance ecology-related projects. “Responsibility for the planet cannot be realised only by the government and officials, it is a general task and every person will participate in ESG issues to the best of their abilities and desires,” Shvetsov said.