MIL OSI Translation. Region: Russian Federation –
The Minister of Economic Development of the Russian Federation Maxim Reshetnikov held the first meeting of the Expert Council on Sustainable Development under the Ministry of Economic Development of Russia. The event was attended by heads and representatives of the largest Russian companies and leading experts.
The participants noted the high importance of the 2030 Agenda and the UN Sustainable Development Goals in Russia for business. Companies are already integrating the SDGs into their strategies and have developed plans to implement sustainable development projects for 2021.
“The trend towards sustainable development is gaining strength on a global scale and creates both new niches and new opportunities for our companies and for the country as a whole. It is safe to say that this will be one of the main trends that will significantly affect the activities of companies both within the country and foreign economic activity, ”said Maxim Reshetnikov.
He recalled that the Government of the Russian Federation has taken an active position on a sustainable agenda, especially on the climate part. “We want to receive feedback from you: what ideas do you have, what projects you are implementing, what challenges and opportunities do you face in foreign markets in order to promptly correct decisions that are made, perhaps develop new solutions based on your position – the position of practitioners, ”he stressed.
One of the topics for discussion was the prospects for introducing a border corrective carbon mechanism in the EU. The participants agreed that the European cross-border tax, like other forms of carbon pricing that will eventually emerge in the world, will pose a challenge to the Russian economy. It is necessary to think over the reaction on a wide range of dimensions: from negotiations with the European Union to the necessary measures for the structural transformation of the Russian economy.
During the discussion, topics for further meetings were identified, including preparations for the Conference of the Parties to the UNFCCC in Glasgow, the development of sustainable financing instruments, a more active reflection of the social aspects of ESG, and improvement of carbon regulation in Russia.
Among the companies and centers of expertise that took part in the discussion were Rosatom, Sberbank, Rosbank, Metalloinvest, UC Rusal, ALROSA, Gazprom Neft, Inter RAO, Sakhalin Energy, as well as NRU HSE and MSHU Skolkovo.
Rosatom General Director Alexei Likhachev said that for the State Corporation Nuclear Power is a low-carbon source of generation, there are no direct greenhouse gas emissions during its production. Given the global priority of combating climate change, it is fundamentally important to recognize nuclear energy – both in Russia and in the world – as sustainable and green energy ”. Rosatom has its own initiatives that are comparable to each of the 17 Sustainable Development Goals in their importance and are certainly interested in working together to implement the SDGs at the level of our country. At one time, we were actively involved in sponsoring the world headquarters of WorldSkills and formed a world expert community for personnel training around us. We even had the courage to utter the 18th Sustainable Development Goal called “Human” to create conditions for unlocking human potential and forming a human-centered, talent-centered training system, ”he said.
RSPP President Alexander Shokhin noted that the RSPP considers it important to interact with the Council on the entire range of topics and issues related to sustainable development and promotion of the UN 2030 Agenda.
“One of the most important topics for the RUIE is the climate agenda. In 2020, the RSPP created the Committee on Climate Policy and Carbon Regulation. Special attention is required to issues related to the possible introduction of cross-border carbon regulation in the European Union and the development, together with the state, of a set of measures to reduce the risks associated with this for Russian business, as well as the consequences of climate change. The business association is ready to join the negotiations with the EU on this topic, ”said Alexander Shokhin.
He drew attention to the need to expand the practice of responsible investment, create favorable conditions for this, as well as develop quality assessment tools. “The growing importance of sustainable development factors generates a request for their analysis and assessment in the activities of companies, including within the framework of indices and ratings of sustainable development (ESG-indices). Such an assessment serves to support both investors and responsible companies, contributes to the promotion of best practices, ”stressed Alexander Shokhin.
Among the important tasks, the President of the Russian Union of Industrialists and Entrepreneurs noted the creation of a system for regular monitoring and evaluation of the results of achieving SDG-2030, including participation in this business. “Given the importance of adequately reflecting the contribution of business to achieving the Sustainable Development Goals, it will be useful if the Ministry of Economic Development of Russia prepares recommendations for companies to include a set of relevant indicators in their voluntary non-financial reports. This will help ensure greater comparability of disclosures and better accounting for business contributions. The Council, within the framework of its activities, could support this work, ”he said.
Tatyana Zavyalova, Senior Vice President of Sberbank for ESG, spoke about specific projects the bank is working on as part of the sustainable development concept. First, it is a correct and timely assessment and consideration of ESG risks and consequences of the introduction of cross-border carbon regulation, as well as other possible regulatory mechanisms and investor requirements. “We have stress-tested our portfolio in terms of carbon tax, as well as analyzed ESG risks for 28 subsectors in Sberbank’s portfolio, this work will continue in 2021. Based on the results of this analysis, it is obvious to us that comprehensive measures are required to adapt economic sectors to new economic conditions, take into account ESG risks in the banking sector, form ESG ratings / ESG profiles of companies that can be used by banks, conventionally, by analogy with credit histories ” , – she said.
Secondly, the bank is developing mechanisms for responsible financing and a package of measures to modernize the economy, Tatiana Zavyalova continued. “This is not only about green instruments, which are increasingly being discussed at various venues, including the specialized working group of the Ministry of Economic Development, but also social instruments, for example, social bonds. It is important, in parallel with the creation of the banking products themselves, to connect incentive mechanisms at various levels, ”she said.
Rosbank Chairman of the Board Ilya Polyakov noted that sustainable development is one of the main focuses of the bank’s development strategy until 2025. “We see concrete opportunities to expand sustainable financing products to support Russian companies. These include green loans, green and social bonds, and green trade finance products. The mission of banks is to engage in dialogue with companies on sustainable development. In order to move the topic forward, it is necessary to accelerate discussions on subsidy or concessional funding mechanisms for banks that are related to sustainable development, ”he said.
“The Societe Generale Group has been working on sustainable development for over 20 years. We, as part of the Societe Generale Group, will be happy to share our international experience that has already been implemented in the Russian market. In 2021, we plan to register our own program of green and social bonds, which will comply with Russian legislation and take into account the best international experience of Societe General, ”he said.
“Climate change is on the agenda today, requiring joint efforts of business, society and the state to reduce emissions and move towards a low-carbon, cyclical economy,” said PhosAgro CEO, head of the Russian Fertilizer Producers Association Andrey Guryev.
He added that the prompt implementation of the practice of regular assessment of the impact on the climate and the formation of targets for reducing CO2 emissions at both the state and corporate levels is an especially relevant topic, given the announced introduction of transboundary carbon regulation in the EU. Andrey Guryev emphasized that the instruction of the Expert Council on the possibility of Russia’s involvement in international climate initiatives is important and timely and requires elaboration in the professional and scientific community.
Patrik Anthony, Chairman of the Board of Directors of the Ingka Group of Companies (IKEA) in Russia, proposed to include a number of items on the agenda of the Expert Council. In his opinion, in the field of renewable energy, such could be “the creation of transparent mechanisms for purchasing green energy on the market, improving conditions for investment and the development of private generation, additional conditions to stimulate the transition of enterprises to renewable energy, including for exporting enterprises” … In the field of environmentally friendly transport, Patrick Anthony proposed to discuss “incentive mechanisms to expand the use of ecological transport in commercial transport, increase the availability of commercial electric transport on the market, and develop infrastructure for electric transport.” Another topic, he said, is the development of the waste processing industry and increasing the availability of processed raw materials. “In this direction, we are ready to share our experience and knowledge on the use of more environmentally friendly technologies in the production of goods,” he said.
Commenting on the topic of carbon neutrality, Oleg Vaitman, Director of Government Relations of UC Rusal, drew attention to the positive indicators of the company, given that aluminum production is energy-intensive by definition. “Now one of our aluminum grades has a carbon footprint of 2.6 tons of CO2, with an average European figure of 4.2, and a world average of 13. At the same time, a trend is already emerging in the world when large customers are beginning to look at what products are supplied to them. And some are even willing to pay a premium for a low carbon footprint. Therefore, we will propose in the Council to go to the platform of the European Commission with questions on sectoral regulation of pricing for certain goods that have a carbon footprint, ”he said.
According to Sergey Vakulenko, Head of the Strategy and Innovation Department of Gazprom Neft, one of the directions of the Expert Council’s work may be “the formation of a common negotiating position of the Russian Federation in the development of new regulatory, fiscal and tariff mechanisms aimed at achieving the goals of the climate agenda.” “Mechanisms are needed to ensure fair competition between different technological ways of achieving these goals, and not preferential treatment of a particular technology or sector of the economy. In particular, projects for capturing, storing and using carbon dioxide can be quite cheap and easier to implement and scalable than many of the measures that are now heard. Currently, there are no market mechanisms to stimulate the development of such projects, but the emergence of an internationally recognized national system for accounting for emissions and sequestration, which allows monetizing CCUS projects, will create such an opportunity. This would be a good opportunity for oil companies to use their competencies, ”he said.
Natalya Gonchar, Head of the Corporate Relations Department of Sakhalin Energy Investment Company Ltd, noted “the driving role of the Ministry of Economic Development, the Russian Union of Industrialists and Entrepreneurs and the Russian network of the UN Global Compact in achieving sustainable development goals”. “These are not only special events. The most important thing is practical and methodological tools, which are actively disseminated in the Russian business community. We are actively involved in this and very much support the efforts of the state towards achieving the Sustainable Development Goals, ”she said.
Alexander Plakida, Chairman of the Governing Council of the UN Global Compact National Network Association in the Russian Federation, stated that “the importance of the Sustainable Development Agenda is growing, achieving SDG-2030 is becoming a strategic priority for both the corporate sector and states”. He called the creation of the Expert Council under the Ministry of Economic Development “one of the steps necessary and expected by business”, since “joining efforts will give a multiple of greater results.”
“We consider the key task to develop a national plan or a document similar in status and essence, which will determine Russia’s policy in the sustainable development agenda, priorities and tasks,” said Alexander Plakida. In his opinion, “the issues that determine the current priorities and challenges for business lie in the field of practice and expertise.” “Business wants to know what to do to launch the transformation process, how and what KPIs to establish, how to form a long-term strategy taking into account the SDGs and successfully implement it. All participants in the transformation and transition to a new development paradigm (this is the state, and business, and society) need expertise – a library of knowledge, training and educational platform, scientific research for making informed decisions, ”says Alexander Plakida.
Igor Makarov, Head of the Research Laboratory for the Economics of Climate Change at the Higher School of Economics, expressed confidence that climate change and the reduction of greenhouse gas emissions will play a key role on the international agenda in the coming decades. “And in order to maintain competitiveness, it is not enough for large Russian companies to simply move forward – it is important to do this at least not slower than their competitors,” he stressed.
“It is cheaper to cut emissions in Russia than in the European Union, and therefore our country would benefit from the introduction of full-fledged market-based emission reduction instruments and their integration with European ones. Businesses are wary of carbon regulation in the country, as they see it as an additional tax burden. However, there are many ways to make such regulation fiscal neutral. There is significant potential for introducing carbon pricing into energy taxation. For example, when the MET is partially replaced by a tax on energy consumption with its differentiation by energy sources depending on their carbon footprint, incentives are created to save energy and use cleaner energy sources, but this does not lead to an increase in the fiscal burden on the business as a whole, or to increase in energy prices, ”said Igor Makarov.
EDITOR’S NOTE: This article is a translation. Apologies should the grammar and / or sentence structure not be perfect.