MGIMO Centre for Sustainable Development and ESG Transformation Digest #12

MGIMO Centre for Sustainable Development and ESG Transformation Digest #12

27 April 2023

The English version of the MCUR Digest (MGIMO Centre for Sustainable Development and ESG Transformation) is a regular information source accumulating the main news of Russia and the Eurasian Economic Union in the sphere of sustainable development and ESG transformation, responsible finance and climate agenda.

The twelfth issue is focused on the latest news in the above-mentioned areas that were in the spotlight in Russia in March 2023. The originals of the news are available via active links in the text. The English version is published monthly.

Sustainable finance

The recent bankruptcy of Silicon Valley Bank stirred up criticism against the ESG agenda. Elena Borisenko, Vice Chairman of the Management Board of Gazprombank, believes that ESG «had little to do with» the bankruptcy of SVB and calls for creating a «smart ESG», which will be based on critical thinking, consistency, adaptability and priority of substance over form.

The first issue of Russian sustainable development bonds took place in March. The bonds issued by Rosbank PJSC are aimed at refinancing environmental and social projects. The issue complies with Russian and international (ICMA) standards, as verified by ACRA. As far as the banking sector is concerned, the environmental projects of Russian Agricultural Bank should be noted — the bank has issued an EcoCard, the holders of which will be able to take part in the programs of the bank’s Ecology Fund. It has also approved a plan of joint environmental projects with Rosprirodnadzor (Federal Service for Supervision of Natural Resources).

There have also been changes in the regulatory sphere — the Russian Government has expanded the taxonomy of green and adaptation projects and has made changes to the requirements for the verification system of sustainable financial instruments.

Other news on the topic:

08.03.2023 Vasily Vysokov, CEO of Tsentr-Invest: Sovereign ESG Banking as a Risk Management Tool
08.03.2023 Motives for Green Investment of Russian Companies
22.03.2023 Lietaer’s «Yin Vectors» of Financial Markets
22.03.2023 Sber’s ESG Report for 2022: Sustainable Finance Portfolio Reached 1.3 Trillion Rubles

Useful materials:

Annual Report 2022 — Central Bank of Russia
Green and Responsible. ESG Requirements Around the World. An Analytical Report by Sber

Climate policy and carbon regulation

The Russian Government continues its work on adaptation to global climate change in order to prevent its negative impact on the economy and the people’s standard of living. The national action plan for the second stage of adaptation to climate change has been approved and signed by Prime Minister Mishustin. The plan is designed for the period until 2025 and contains 17 measures, which are grouped into federal, sectoral and regional modules. The plan also provides for organizational, legal, scientific, methodological and informational support for the necessary adaptation measures.

Other news on the topic:

07.03.2023 Share of Sales of Electric Vehicles in Russia Has Reached 1 Per Cent
20.03.2023 New Emission Commitments to Be Discussed at UN Conference in Dubai, Experts Say
27.03.2023 Italy’s Giving up on Russian Gas Has Made It Difficult to Meet Environmental Goals
29.03.2023 Russia’s Climate Policy under Sanctions — the Regulatory Aspect
29.03.2023 St. Petersburg International Commodity Exchange and Institute of Global Climate and Ecology Have Signed A Cooperation Agreement

Useful materials:

Climate in Russia in 2022. A report by the Institute of Global Climate and Ecology
World Climate Policy. A Digest by the Green Party of Moscow
The Era of Universal Fragmentation. An Article by War and Peace Portal
The EU’s Response to the Energy Crisis. Materials by the Russian International Affairs Council
An Interview with Alatash Sedat, Researcher at the Scientific and Educational Laboratory of Climate Change Economics of HSE

ESG infrastructure

The implementation of green procurement practices is one of the recent developments in the ESG infrastructure in Russia. It was discussed at the round table titled «New Environmental Requirements for Public and Corporate Procurement», held in early March. In accordance with the Regulation of the Russian Government No.1224 on green public procurement, it is now obligatory to specify the proportion of recycled materials in any procurement. According to the participants of public procurement, there are not enough transparent data and standards for these requirements to be met properly. Nowadays businesses are developing and using their own ESG criteria, so further development of green public procurement depends on standardization of ESG requirements.

Another important sphere of ESG infrastructure and ESG transformation of Russian SMEs is the creation of sustainable supply chains. X5 Group, the largest Russian retailer, and SberFactoring have launched a joint pilot project of green factoring for suppliers, unique for Russia. The solution allows a discount off the current financing rate for X5 suppliers who have received an ESG rating not lower than the desired level.

Mikhailov&Partners, a business agency, has conducted a survey of top managers and experts to get an up-to-date picture of ESG agenda in Russian companies. The study showed that about half of the companies adjust their ESG strategies, the same share of respondents do not reduce budgets for ESG initiatives, and the focus is shifting towards social problems. At the same time, 84 per cent of companies consider ESG to be a factor of employee loyalty and communicate actively with their employees on ESG-related issues.

President Putin attended the Congress of Russian Industrialists and Entrepreneurs and spoke about the creative role and responsibility of business. The President proposed to establish an award for the most responsible companies, and stressed the need for public non-financial reporting. It should be noted that work on the bill on mandatory non-financial reporting, which began in 2017, was suspended again in 2022.

Infragreen, an expert platform, has presented its report titled «ESG, Decarbonization and Green Finance in Russia 2022», which is a unique source of aggregated information on many aspects of the ESG agenda in Russia. The report contains an assessment of ESG consulting market, an overview of ESG bonds issues, an assessment of the total ESG portfolio of Russian banks and the results of the Consolidated 2022 Ranking carried out by Infragreen.

Other news on the topic:

16.03.2023 Norilsk Nickel to Launch a Remuneration Program for Digital Investor Employees
17.03.2023 Norilsk Nickel Is Preparing for IRMA Certification
20.03.2023 MTS Has Launched an Internal Survey on ESG Issues
20.03.2023 Yulia Katasonova, Manager at RA Expert, Spoke on Issues of ESG Ratings Regulation
29.03.2023 ACRA Has Published a New Methodology for Assigning ESG Ratings

Useful materials:

Ratings Market in Russia. A review by the Central Bank of Russia

Environmental protection

Sustainable development is one of the key integration priorities of the Eurasian Economic Union. It is vital to mobilize not only all existing resources, but also to use more incentives for scientific and technological development, economic assistance and «greening» of the economy. This was said by Dmitry Volvach, Deputy Minister of Economic Development of Russia, at the opening ceremony of the 8th International Youth Forum on Sustainable Development, which was held on March 27-29 at MGIMO.

Other news on the topic:

13.03.2023 The Role of Forests in the Conservation of Water Resources and Prevention of Desertification
17.03.2023 International Environmental Cooperation Within the EAEU
20.03.2023 Recycling Spots Are Now Visible in Yandex.Maps
24.03.2023 Legal Aspects of Lake Baikal Protection and Socio-Economic Development of the Baikal Region

Useful materials:

Roshydromet (Russian Federal Service for Hydrometeorology and Environmental Monitoring) Report for 2022

Authors: Andrey Avramenko, Sofia Denisova
Editors-in-chief: Capitolina Tourbina
Translator: Stanislav Shurygin
Designer: Maria Bakhireva

Disclaimer: The point of view of the MGIMO Centre for Sustainable Development and ESG Transformation may differ from the opinions of the authors of the news cited in the analytical publication. All materials are for reference only, and the MCUR is not responsible for their implementation in practice. The links to news sources used in the compilation of the MCUR Digest are indicated in the text and are active only in online format. The Digest does not use external copyrighted materials or reproduce them. If you have any questions, please contact:

The MCUR Digest is being issued as part of the implementation of the strategic academic leadership program «Priority 2030».

Department of International Complex Problems of Nature Management and Ecology
MGIMO Centre for Sustainable Development and ESG Transformation