MGIMO Centre for Sustainable Development and ESG Transformation Digest #5

MGIMO Centre for Sustainable Development and ESG Transformation Digest #5

22 June 2022

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

The fifth issue is focused on the latest news in the above-mentioned areas that were in the spotlight in Russia in May 2022. The originals of the news are available via active links in the text. The English version is published monthly.

Sustainable Finance

Russia continues to develop its sustainable financing infrastructure. In May 2022, Invest Consult and Mosgorexpertiza were included on the list of verifiers of financial instruments. As at now, there are 7 verifiers on the list.

There were also some news in the green bonds market:

  • Sber and the Moscow Government published reports on the placement of funds raised through the issuance of green bonds.
  • VEB.RF announced that five large issues of green bonds are in the pipeline, awaiting rates stabilization.
  • Rosselkhoznadzor claimed that it will buy bonds of the Russian environmental operator on 50 billion rubles. The Russian environmental operator also identified recipients of funds from the issue of green bonds.

The ESG agenda is also actively developing in the insurance industry:

  • On May 19, the All-Russian Union of Insurers held a forum «Responsible Insurance in the New Reality» in Moscow. The event was organized jointly with the National Rating Agency.
  • The National Rating Agency has prepared the 2nd annual analytical study «Implementation of ESG approaches in the Russian insurance market: readiness stage 2». The research indicates that the least developed ESG component in the insurance field is the environmental one. The trickiest task for insurance companies is to consider the environmental risk factors in their clients’ activities.
  • Ak Bars Insurance Company was the first Russian insurer published a non-financial report.

The largest Russian banks also continue their ESG transformation:

  • Sber has announced the launch of a new ESG service named «The Green Supply Chain», which helps large businesses to conduct an ESG assessment of their partners in their supply chains and makes possible for suppliers to obtain an ESG certificate.
  • Promsvyazbank has stated its plans to develop an ESG 2.0 digital platform, which will be used for analyzing non-financial business reports. The platform will streamline the process of collecting information of the companies’ non-financial reporting and sustainable development projects for investors.
  • Novikombank has sent proposals for the development of the financial sector to the Association of Russian Banks. Its initiatives include in particular the development of ESG banking.

Other news on the topic:

29.04.2022 Promsvyazbank Is Financing 210 Billion Rubles in Sustainable Development Projects
04.05.2022 Sber Has Opened an Eco-Friendly Office in the Village in the Irkutsk Region
26.05.2022 Carbon Units Operator to Be Launched in September, Gazprombank Officials Say

Climate Policy and Carbon Regulation

The Ministry of Economic Development has approved the rules for the implementation of climate projects, which will enter into force on September 1, 2022. The document contains the criteria for such projects, the order of their execution and reporting for legal entities and individuals. It is planned that from September 2022 two types of carbon units will appear in Russia: quotas and carbon credits produced as a result of the implementation of climate projects.

On May 16, the Government of the Russian Federation announced the adoption of the roadmap for the development of high-tech energy storage systems until 2030. Energy storage is of great importance for the electrification of transport and the renewable energy industry. According to the press release of the Russian Government, the activities of the roadmap are aimed at accelerating technological development and fostering Russia’s high-tech leadership in the world. The roadmap is expected to contribute to achieving the goals set out in the Concept for the development and use of electric motor transport in Russia for the period until 2030.

The League of Green Brands, Carbonlab and Deloitte have teamed up to develop a new methodology for assessing the climate responsibility of large companies. The methodology itself will be presented by autumn of this year, but it is already known that it will be used for the development of a carbon standard and a carbon certificate with the help of the state regulators. It should be noted that the idea to develop a Russian climate rating was previously put forward by the Federal Institute of Global Climate and Ecology.

In May-June, MGIMO held professional education program «Tools for sustainable development and ESG transformation». In one of its modules «Carbon Regulation: International and Current Russian Agenda» Anna Romanovskaya, Director of the Federal Institute of Global Climate and Ecology, Corresponding Member of the Russian Academy of Sciences, Doctor of Biological Sciences, delivered a lecture titled «Actual Climate Agenda: Monitoring of Greenhouse Emissions».

Anna A. Romanovskaya

«The relevance of the climate agenda in Russia should not be dependent on international cooperation, therefore, in the current situation, these issues should remain a priority. This relevance is determined by the direct and interrelated benefits from combatting climate change in economic, social and environmental spheres — to ensure climate-sustainable development of the country. For example, the reduction of emissions and the increase in the absorption of greenhouse gases in Russia happen primarily thanks to the energy and resource conservation measures, boosting resource efficiency in production and consumption. We estimate that if the existing potential to increase resource efficiency is successfully realized, „carbon neutrality“ Russia won’t need to reduce production volumes — and this is a beneficial difference from the situation in other developed countries. Almost all these measures have combined effects in the adaptation to climate change. This concerns mainly the measures to conserve natural resources, including forest and land: preservation of humus of arable soils is not only a guarantee of food security of the country, but it also increases the resilience of agricultural ecosystems to climate change and is accompanied by a reduction in carbon dioxide emissions. Thus, smart implementation of the climate agenda in Russia will make it possible to use the existing synergy of actions to prevent climate change and achieve the country’s sustainable development goals.»

Other news on the topic:

01.05.2022 Eight Solar Power Plants Are to Be Built in Dagestan By 2028
11.05.2022 Skoltech Has Proposed a New Method for Superhard Material Synthesis
15.05.2022 In Yakutsk, Experts Will Discuss Arctic Ecology and Energy Issues
19.05.2022 The Opening of a Carbon Polygon Took Place in The Voronezh Region
25.05.2022 Russian Exporters Will Spend More than $80 Billion on EU Carbon Tax By 2050, Expert Says
26.05.2022 Sberbank Launches a New Service of Installing Charging Stations for Electric Vehicles"
27.05.2022 EVRAZ Has Produced the First «Green» Rails in Russia

Corporate ESG Strategies

The ESG transformation in the real sector of the economy is proceeding. In spite of the economical restrictions, a number of companies, like Rusal, En+ Group, X5 Retail Group, Severstal and Evraz, have published their sustainable reports for 2021. Interfax has presented an innovation in the program for automated report compilation, which will make it possible to create reports on sustainable development.

In May, RAEX-Europe published a draft of the updated methodology for assigning Russian ESG corporate ratings. AK&M agency announced the start of the works on its ESG ratings. Also, a new ESG index has been announced by RBC and the National Credit Ratings agency. Over the past month, Transmashholding, Arkhangelsk Pulp and Paper Mill and Sibur received or improved one of their ESG ratings.

In Russia, green real estate standards are actively being developed in several areas. In particular, VEB.RF is overseeing a standard for commercial real estate and social facilities. It is also developing the already existing system for quality assessment and certification for infrastructure projects IRIIS. To provide an expert opinion on the compliance with the quality criteria and IRIIS certification, the ACRA rating agency has introduced a new ESG assessment service. DOM.RF is at the final stage of creating a green national standard — GOST — for multi-apartment residential buildings. In order to ensure convenience and transparency of certification, DOM.RF is developing its own online services.

Other news on the topic:

04.05.2022 A New National Environmental Standard Will Be Created in Russia
27.05.2022 The Board of Directors of Tatneft Approved Its Sustainable Development Policy
27.05.2022 SEZ Managers from 4 Regions Have Training on ESG Principles to Attract Investment
31.05.2022 The Best Companies in ESG and Sustainable Development Were Awarded in Moscow
01.06.2022 Russian ESG Reporting Needs Unification and Systematization, Experts Say
01.06.2022 Force Majeure Circumstances Do Not Reduce the Importance of Environmental Agenda, Arkhangelsk Pulp and Paper Mill Experts Say
03.06.2022 Magnitogorsk Iron and Steel Works Representatives Speak about Environmental Projects at the 19th Metallurgical Summit

Environmental Protection

In late May, the Government of the Russian Federation approved a regulation on monitoring of the municipal solid waste information system, which helps to obtain data on the volume of waste collection and tariffs in various regions. The Russian Environmental Operator will be responsible for the creation and development of the new system.

A draft law on conducting a public environmental assessment only by regional and municipal public chambers was submitted to the State Duma. So far, citizens could initiate this procedure and participate in it themselves. Because of that, representatives of environmental organizations and initiative groups appealed to the parliament with a request to preserve these public environmental expertise rights and to abandon the idea of taking away the authority to conduct such an examination from public associations.

The time limit to install the sensors to monitor the level of emissions in the cities within Clean Air federal project has been shifted for two years. According to Alexander Kozlov, Head of the Ministry of Natural Resources, the main problem is that the supplies of the necessary equipment largely depend on imports. Previously, it was planned to oblige polluting companies to install sensors by the end of 2022.

Other news on the topic:

01.05.2022 Putin Signed the Law on Protection from Construction in the Specially Protected Areas
11.05.2022 An Ecological Tour Operator Will Appear in Russia
11.05.2022 Large-Scale Forest Fires Jeopardize the Achievement of Russia’s Climate Goals
17.05.2022 Standards for the Accumulation of Municipal Solid Waste Will Be Clarified in Russia
18.05.2022 New Rules for the Creation and Maintenance of the State Register of Objects that Harm the Environment Have Been Approved
23.05.2022 Environmental Investments Will Have Preferential Interest Rates
30.05.2022 All Environmental Projects in Russia Will Be United in One Fund
31.05.2022 43 regions Will Receive a Subsidy to Purchase Containers for Waste Separation

Authors: Andrey Avramenko, Sofia Denisova, Polina Raikova, Egor Solovey.
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: mcur@inno.mgimo.ru.

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