MGIMO Centre for Sustainable Development and ESG Transformation Digest #15

MGIMO Centre for Sustainable Development and ESG Transformation Digest #15

10 July 2023

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

The fifteenth issue is focused on the latest developments in the above-mentioned areas that were in the spotlight in May 2023. The originals of the news are available via active links in the text.

Sustainable Finance

Russia’s sustainable financing market continues its development, and May 2023 was marked by the following remarkable events:

  • The Department of Finance of Moscow officially announced that it has issued green bonds for the general public, raised funds will be used to purchase electric buses and modernize the city’s bus fleet. The issue was verified by Expert RA.
  • Developer “Legend”, which constructs residential and commercial buildings in St. Petersburg, issued 3 billion rubles’ worth of green bonds. The funds raised will be used to partially refinance the construction of residential apartment buildings with an energy efficiency class not lower than A (“very high”). The issue was certified by Expert RA, registered at the Moscow Stock Exchange and was included in the segment of sustainable development bonds.

The Bank of Russia continues to create a regulatory framework for sustainable financing. It has recently published an information letter with recommendations for financial institutions on disclosing information about financial products for sustainable development.

Russian financial institutions also continue their ESG transformation:

  • The Moscow Stock Exchange has approved its Environmental Policy that sets two key objectives: to facilitate the transition to a closed-loop and low-carbon economy and to minimize its own direct and indirect negative impact on climate and the environment.
  • LockoBank has launched a joint environmental project together with Save the Forest service. Its customers can now contribute to the restoration of forests in Smolenskoye Poozerye National Park and monitor the amount of carbon dioxide consumed by the planted trees.
  • Promsvyazbank has announced that the portfolio of its green projects amounts to 260 billion rubles and that it is considering the issuance of the “blue” bonds to finance irrigation projects in the Volga-Akhtuba floodplain.
  • Sber has adopted its Energy Policy, which sets out the bank’s priorities in the field of energy conservation and energy efficiency.

Other news on the topic:

11.05.2023 Russian Government Has Announced Preferential Loans for Participants of Federal “Clean Air” Project

16.05.2023 The Amount of Funds Raised Through Green Bonds across EAEU Has Reached $4.9 Billion

22.05.2023 Expert RA Has Assessed SOPF Infrastructure Bonds by Social Bonds Standards

25.05.2023 Gazprombank and Krasnoyarsk Krai Authorities Have Agreed to Cooperate in The Field of ESG Finance

26.05.2023 The Bank of Russia May Extend Financial Institutions’ Right to Keep Sensitive Information Undisclosed for 2024

Useful materials:

Moscow’s Green Bonds for the General Public

Climate Policy and Carbon Regulation

Preparation for the next UN Conference on Climate Change (COP28), which is scheduled to take place from November 30 to December 12 in Dubai, UAE, is underway.

The Petersberg Climate Dialogue, which is an annual meeting of representatives of 40 countries and has been held in Berlin since 2010, precedes the conference. Until 2021, the German Ministry of the Environment organized the event, and since 2022 it has been run by the Ministry of Foreign Affairs. This year the 14th Petersberg Climate Dialogue was held on May 2-3. The main issues on the agenda were expanding the use of renewable energy sources and financial support for countries that suffer most from the consequences of the climate crisis. In his speech at the forum, Sultan Ahmed Al Jaber, COP28 President, called on rich countries to finally deliver on their promise made back in 2009 to transfer $100 billion a year, starting from 2020, to vulnerable economies. It has to be noted that in 2020 rich countries actually provided $83.3 billion. However, a significant part of these funds is given to developing countries not in the form of grants, but in the form of loans. According to German Foreign Minister Annalena Berbock, in 2023 industrialized countries will be able to allocate $100 billion to combat the climate crisis. However, she highlighted, this investment is insufficient and should amount to several trillion dollars, but that will require mobilization of large amounts of private capital, additional funds from the IMF, as well as restructuring of developing countries’ debt.

The report of the International Energy Agency titled “Emissions from Oil and Gas Operations in Net Zero Transitions” has been published. The report notes that a twofold reduction of greenhouse gas emissions from oil and gas production worldwide by 2030 will require initial investments totaling $600 billion. The report is part of a broader study on the low-carbon development of the oil and gas industry, which will be published later.

Apart from COP28, this year the UAE will also host the 13th WTO Ministerial Conference. As Maxim Reshetnikov, Russia Minister of Economic Development, noted at the AIM Global 2023 Investment Forum, “many countries use the green and climate agenda to distort the basic principles of the WTO and to substitute concepts. Environmental issues are important and should be taken seriously, but it is free trade that brings prosperity to countries. Therefore, it is important to take both of these goals into account”. He also pointed out that “the fact that both COP28 and WTO conferences are held in the UAE this year is a unique opportunity to combine both of these concepts and at least to start developing reasonable and fair approaches.”

Other news on the topic:

05.05.2023 Climate Agenda in the US Election Campaign

12.05.2023 Biden’s Latest Climate Action Threatens the US Energy System

15.05.2023 May 15, International Climate Day

16.05.2023 Weapons Have Been Recognized Carbon Neutral Commodity in the EU

16.05.2023 Green Energy Development Prospects in Azerbaijan

18.05.2023 Environmental Benefits and Threats of Artificially Grown Meat

18.05.2023 Russia Has Ample Scientific Potential to Adequately Respond to Climate Change, Government Officials Say

24.05.2023 WMO: The Global Mechanism for Tracking Greenhouse Gas Emissions Is a Historic Step

25.05.2023 A Five-Party Agreement on Developing Decarbonization Measures Has Been Signed in Russia

25.05.2023 Clean Energy Investment Is Extending Its Lead over Fossil Fuels, Boosted by Energy Security Strengths – IEA

Event announcements:

CLIMATE 2023 Conference

Corporate ESG Transformation

The ESG agenda in Russia is being embraced so far mainly by a small number of the largest Russian companies. For example, Rusal has adopted its sustainability strategy for the period until 2035. Some big Russian businesses have just embarked on the ESG transformation track:

  • Metafrax Group, a chemical holding, has started working on a roadmap for the implementation of sustainable development principles.
  • STEP’, an agricultural holding, has undergone an independent assessment of its ESG strategy and sustainable development activities, carried out by RAEX agency.
  • CEO of Yadro, a design agency, has spoken about the impact of the ESG agenda on the landscape design market.

Although more and more companies start their ESG transformation, it is still not a large-scale trend. For mass implementation of ESG strategies, state support is needed. Vladimir Chistyukhin, First Deputy Chairman of the Bank of Russia, said that it “has been suspended, that incentive measures would put an extra financial burden on the state budget, and penalties would strain those who have already embraced the agenda, but do not meet the requirements. Since February 2022, both the government and companies have been dealing with noticeable additional costs, so it would make sense to postpone the implementation for some time. In any case, we are not writing it off.”

At the same time, there has been significant progress in establishing mandatory non-financial reporting in Russia:

  • MMK and Polyus have published their sustainable development reports for 2022, and Norilsk Nickel and Severstal have presented their reports to stakeholders.
  • Tatneft and Gazprom Group have publicly verified their non-financial reports at the Russian Union of Industrialists and Entrepreneurs (RSPP).
  • The new standard for ESG reports is being developed by the IFRS Foundation and will be published in June. A Bank of Russia official believes that its implementation will be a challenge for Russian companies.
  • Russia’s government, the central bank and the RSPP are expected to jointly work out guidelines for non-financial reports by June 1, 2023. The bill on non-financial reports has been a subject of discussion for several years, but it was suspended last year. The Club of Compilers of ESG ratings proposes to stimulate corporate ESG reporting by standardizing its indicators, promoting best practices, automation, as well as reducing the frequency of environmental and labor inspections of companies that have disclosed non-financial data.

In May, several business awards in the field of sustainable development were given, like Green Eurasia Climate Competition or 2022 Leaders of Russian Business by the RSPP.

Other news on the topic:

02.05.2023 Russia’s Government, the Central Bank and The RSPP Will Work Out Guidelines for Non-Financial Reporting by June 1

03.05.2023 AK BARS-Med Has Received A Rating at ESG-III(c) with A Positive Outlook by Expert RA

03.05.2023 RSPP Will Establish an Award for Socially Responsible Companies

04.05.2023 Dun & Bradstreet Expands ESG Rankings to 74 Million Companies

15.05.2023 Russian Ministry of Economic Development Is Deepening Cooperation with Friendly Countries across SCO in Sustainability

15.05.2023 RAEX: Top 50 Green Energy Transition Companies

15.05.2023 ISSB Is Discussing Next Steps to Form a Global System of ESG Standards

17.05.2023 DOM.RF to Teach Developers Green Standard at HSE

17.05.2023 National Forum on Sustainable Development

24.05.2023 Developers Have Assessed the Prospects of Green Construction in Russia

26.05.2023 The National Rating Agency Has Confirmed ESG Rating of AK BARS Insurance at “A.esg”

31.05.2023 Mandatory ESG Reporting Doubted by Russian Big Business

Useful materials:

“Sustainable Development in Strategies of Russian Businesses”, a 2023 Compilation by the RSPP

Event announcements:

“Corporate ESG Transformation Strategies and Sustainable Finance”, a career development program at MGIMO

Environmental Protection

On May 20, 2023, the Concept of Technological Development for the Period until 2030 was approved by the governmental decree No. 1315-р. The document addresses, among others, environmental issues.

  • The impact of climate change on the global economy, the spread of energy-effective and green technologies as well as restrictive measures on imports and consumption of hydrocarbons and raw materials are identified as important contributors to Russia’s main technological development threat, namely the threat of “insufficient ability of the national economy to adapt to systemic global trends, which may lead to structural deformations of the economy and increase social tension.”
  • The Concept also provides a list of measures, the implementation of which will allow eco-unfriendly industrial facilities to comply with the best available technologies, or to begin the necessary modernization, by the end of 2024.
  • It also sets three technological development goals that should be achieved by 2030. One of the goals named “Technological support for the sustainable functioning and development of production systems” is measured by “the proportion of goods produced at facilities that have a negative impact on the environment, classified as category 1, using the best available technologies, in the total volume of shipped goods produced at industrial facilities that have a negative impact on the environment, classified as category 1.”
  • The preliminary list (Appendix 2 to the Concept) of general-purpose technologies (technological areas), lists, among others, geodata and geoinformation technologies, hydrogen energy and technologies of reducing anthropogenic impact.

Other news on the topic:

08.05.2023 United Nations Forum on Forests

10.05.2023 The Clean Air Program Has Been Extended until 2030

11.05.2023 Global Green Agenda in the EAEU

16.05.2023 UNEP: Plastic Pollution Can Be Reduced by 80 Percent by 2040

17.05.2023 President Putin Has Supported the EPR Law Coming into Force from 2024

17.05.2023 Beyond Growth 2023 Conference

18.05.2023 The Challenges of Tropical Deforestation for the World

19.05.2023 Russia Will Create a State System of Permafrost Monitoring

26.05.2023 Russia Will Not Support the West in the Anti-Plastics Treaty

26.05.2023 Sustainable Development in Russian Regions Was Discussed at the 10th Nevsky International Ecological Congress

Useful materials:

United Nations. SDG Progress Report Special Edition

Event announcements:

Sustainable Development Week 2023

Challenges 2030. Sustainable Development of Regions Conference

Authors: Andrey Avramenko, Sofia Denisova

Editor-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