Main trends of ESG development in Russia, what has changed after February 2022

Last week RBK organized the second congress for sustainable business called “ESG (R) Evolution”. The pool of the topics was rather wide including current challenges of ESG transformation and the future development of ESG initiatives for a wide range of stakeholders in new reality. The congress hosted speakers and representatives from public and private sectors that have a diverse activity profile with significant impact on social and environmental spheres.   

Last week RBK organized the second congress for sustainable business called “ESG (R) Evolution”.  The pool of the topics was rather wide including current challenges of ESG transformation and the future development of ESG initiatives for a wide range of stakeholders in new reality. The congress hosted speakers and representatives from public and private sectors that have a diverse activity profile with significant impact on social and environmental spheres.   

The ESG transformation “R” Evolution is an important strategical development pillar for authorities and private sector organizations where for example, these two bodies have created the Committee for Sustainable Finance to efficiently integrate regulatory and practical solutions (Vladimir Senin, The State Duma). The idea is to develop sustainable financial and capital markets infrastructure while considering also best practices of other emerging countries - especially China.

During the discussions, it was concluded that current geopolitical context changed the international ESG transformation initiatives, thus partially decoupled Russia from the cross-border sustainable development initiatives (e.g. S&P ESG Ratings suspended its activity with Russian Companies). The general conclusion is that Russian Federation will not cease or change its ESG agenda as other European countries are doing (because of the energy constraints). Indeed, it will be much more difficult due to the constraints in the access to foreign green technologies, nevertheless the national strategy of “import substitution” should account for achieving its climate targets, and sustainable development goals.

All the panel speakers agreed that strong cooperation between private sector and academia to develop green tech innovations through venture capital financing is a feasible solution to counter the climate change and environmental erosion within the current geopolitical context.

Different companies shared different views about their strategy for sustainable development. Some concluded that post COVID period brings more focus on social facet of the business (Ilya Torosov, Ministry of Economic Development), others consider that environmental impact is much more important and in the context of ESG transformation should be treated with priority (Aleksey Kozlov, Sibur Holding), the third category treats all three ESG components equally.

The ESG transparency was another debatable topic of discussions. There are still limitations to disclosure and increase the transparency of ESG information, this is mainly required by law. Nevertheless, digitalization, social media, and other non-conventional information channels will indirectly provide ESG information about the company. Due to this reason, Mr. Andrey Bugrov from Nornickel stated that companies should voluntarily increase the level of transparency about their ESG commitment to increase the level of confidence between company and stakeholders based on partnership principles and to implement efficiently social or other sustainable development initiatives.  

The ESG transformation, after February 2022, is having another track which is focused more on national social and climate challenges which ultimately is generating procedures and methodologies for creation and development national ESG ratings.