MGIMO Centre for Sustainable Development and ESG Transformation Digest #8

MGIMO Centre for Sustainable Development and ESG Transformation Digest #8

2 November 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 sixth issue is focused on the latest news in the above-mentioned areas that were in the spotlight in Russia in September 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 promote ESG financing at the state level. VEB.RF, for instance, has recently stated that it will give financial preference to ESG projects. The key areas for financing are energy, metallurgy and urban utilities.

Expert RA has carried out a study on ESG banking in Russia for the period from the 1st half of 2021 to the 1st half of 2022. It showed that the total amount of ESG loans from banks had increased from 0.4 to 1.2 trillion rubles. However, it has to be noted that there are no standard criteria for definitions of ESG loans and financing in Russia, banks can develop their own products, and unified criteria for social projects have not yet been developed.

ESG banking in Russia was also discussed at the round table at the 19th International Banking Forum titled «Banks of Russia in the 21st Century», which was held on September 22. In particular, Novikombank presented the results of the classification of sustainable development projects in its portfolio, and Center-Invest Bank presented the concept of sovereign ESG banking. The speakers’ presentations are available on the website of the Association of Russian Banks.

Sectoral insurance for the sustainable development of the agricultural industry is being discussed at the level of the National Union of Agricultural Insurers. Korney Bijov, its president, predicts that the development of the ESG agenda in agriculture, including the spread of organic farming, will create a need for a new insurance product.

Other news on the topic:

12.09.2022 «ESG Banking Can’t Exist without Digital Technologies, and Digitalization Without ESG Does not Make Sense»
18.09.2022 ESG Investments in Russia: A Myth or Reality
21.09.2022 Ingosstrakh Life Insurance Has Received the Highest Sustainable Development Rating at A1.esg
30.09.2022 A System for Assessing the Compliance of Hydroelectric Power Plants with the Criteria of Sustainable Development Has Been Developed

Useful materials:

ESG Agenda in the Middle East and Asia: A Report by Sber

Climate Policy and Carbon Regulation

Russia continues to lay the ground for the implementation of the 2050 low-carbon strategy for social and economic development. The government will finance low-carbon agenda and will invest about 1.8 billion rubles to create a monitoring system for climate-active substances. In total, 11 billion rubles will be allocated to finance the low-carbon agenda in the next three years, Mikhail Mishustin, Prime Minister of Russia, said.

On September 1, the Register of carbon units was launched, and a climate experiment to limit greenhouse gas emissions had started in Sakhalin. Within Federal scientific and technical program of environment and climate change for 2021-2030, a list of participating organizations has been approved until 2024.

On September 26, carbon credits were traded for the first time at the National Commodity Exchange, which is a part of the Moscow Exchange group. Two deals were signed, 20 carbon credits were sold (one unit is equal to a ton of carbon dioxide), and the weighted average price was 1,000 rubles. The auction was initiated by Dalenergoinvest, and its verified carbon credits were entered into the Register. The company had built 648 solar panels with an installed capacity of 250 kW on Iturup Island in the Sakhalin Region. Within its project, the company plans to further issue 1,832 carbon units by the end of 2031. One of the lots (10 carbon credits) was purchased by Sovtech Volgo-Vyatka (part of Sber group). The second lot was purchased by Tamak, a manufacturer of eco-friendly houses. The first transactions are rather symbolic. Further deals will be made as more carbon credits enter the market. As Svetlana Bik, Head of Infragreen, a thinktank, notes, «the first carbon credits deal has shown that all the main elements of the new market ecosystem have been created, however, in order for experiments and pilot projects to become a market, more demand, more liquidity and more transparency are needed».

Other news on the topic:

06.09.2022 Russian Ministry of Energy to Present a New Energy Strategy in Mid-2023
13.09.2022 Novosibirsk Is the First Region of Russia with a Calculated Carbon Balance
13.09.2022 If No Measures Are Taken, Warming in the 21st Century May Reach 2.8 Degrees Celsius, WMO Experts Say
15.09.2022 Gazprombank Experts Spoke about the Carbon Units Market at Petersburg International Gas Forum
16.09.2022 This Summer Was One of the Hottest in 240 Years, Climate Expert Says
27.09.2022 A New Solar Power Plant with a Capacity of 25 MW to Be Built in Chechnya
30.09.2022 The 57th Session of the Intergovernmental Panel on Climate Change (IPCC) Was Joined by Russian Experts

Useful materials:

How to Build a Low-Carbon Future: The Case of En+ Group

Corporate ESG Strategies

In September 2022, many Russian companies received ESG ratings from Russian rating agencies. AK&M Agency assigned or updated ratings of the following companies: MTS, Rostelecom, Rosseti North-West, OMK, Unipro, Salakhin Energy, Polyus. These companies have received a high or the highest ESG reporting rating. In turn, ACRA assigned ESG ratings to Garant-invest, FGC UES and Rosseti.

The systemic ESG transformation of Russian business is underway: in particular, OGK-2, a subsidiary of Gazprom, has approved a sustainable development policy. Unipro and Step Agroholding have approved their ESG strategies.

ESG-related topics became part of the agenda of the Eastern Economic Forum and the Baikal Risk Forum. At the Eastern Economic Forum, a session titled «How to Save the Planet in a World without Trust?» was organized. It was attended by representatives of the ministries of the Russian Federation and Kazakhstan, regional authorities, major companies and business associations. The Baikal Risk Forum held a Day of Sustainable Development, at which ESG risks, territorial interaction and the development of human capital were discussed.

Other news on the topic:

02.09.2022 An Analogue of Bloomberg Terminal Called «Mirida» Will Appear in Russia
06.09.2022 Industrial Sustainability in a New Light. Russian Companies with Effective Corporate Governance Lead in ESG transformation
06.09.2022 Udokan Copper and RusHydro to Cooperate in the Field of Sustainable Development
06.09.2022 Relations between Norilsk Nickel and the Indigenous Peoples of the North Are Based on Mutual Respect
14.09.2022 T Plus Has Released its First ESG Report for 2021
15.09.2022 National Rating Agency Has Assigned an ESG Rating to Smart Batteries at «A.esg»
19.09.2022 ISS ESG Has Raised Sustainable Development Rating of Metalloinvest
19.09.2022 Skolkovo Technology Search in the Field of Ecology and Sustainable Development
19.09.2022 EuroChem-VolgaKaliy Supports Women’s Leadership
23.09.2022 Rosatom Has Published Sustainable Development Report for 2021
27.09.2022 Top 25 Directors for Corporate Social Responsibility and Sustainable Development (by industry)

Environmental Protection

The damage caused to the Nord Stream 1 and Nord Stream 2 gas pipelines carries at least two environmental threats. Firstly, it is harmful to the marine flora and fauna. The second threat is climate change. Methane affects fish the most, for them it is toxic. At the same time, experts hold different opinions on the consequences of the accident for the ecosystem of the Baltic Sea. There are both catastrophic forecasts as well as opinions that there should be no long-term repercussions for the Baltic flora and fauna. According to Filip Sapozhnikov, senior researcher at the Institute of Oceanology of the Russian Academy of Sciences, the structure of the ecosystem will change, but the visible consequences of the accident will disappear within two weeks due to bacterial activity. However, advanced technical study is needed to accurately assess the consequences of the incidents. When it comes to the impact on the climate, Russian scientists have assessed the volume of methane entry into the atmosphere resulted from the damage to gas pipelines. Calculations show that if all-natural gas contained in gas pipelines, mainly consisting of methane, is released into the atmosphere, emissions may amount to about 740,000 tons. This value is twice the annual methane emissions from the Russian oil and gas industry and about 6 percent of the total annual anthropogenic methane emissions in Russia.

Other news on the topic:

02.09.2022 Moscow Has the Cleanest Air in the World
06.09.2022 Extended Manufacturer’s Responsibility as a Tool for Transition to a Circular Economy
07.09.2022 Budget for Nature
14.09.2022 MAI Has Created a Device for Assessing the Anthropogenic Impact on the Atmosphere
19.09.2022 Draft State Report on the State and Environmental Protection of the Russian Federation in 2021 Has Undergone Public Discussion
20.09.2022 A Water Purification System Based on Solar Modules is to Be Developed
22.09.2022 No Territories with Serious Soil Contamination Left in Moscow
23.09.2022 The Federal Service for Supervision of Natural Resources Has Identified the Cleanest and the Dirtiest Regions of Russia
28.09.2022 How Oil and Gas Reserves in Russia are Estimated — an Interview with Evgeny Petrov, Head of Federal Agency for Mineral Resources

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