Tatiana Pechegina
Journalist
Vladimir Vainer
Director, Positive Changes Factory
The sustainability of the social sphere, particularly its economic constituents like social enterprises and non-governmental organization, is intrinsically linked to the position and sustainability of businesses, whether large or small. The more sustainable the business, the more effectively it bolsters the development of the entire social sector. Well-being represents a broad spectrum of factors that encompass addressing social challenges from the global scale down to the local level of individual lives and their families.
Traditionally, social initiatives rely on what is termed “corporate social responsibility”: through philanthropy and patronage, sponsorship, social investments, and innovative social entrepreneurship projects. However, in recent years, the familiar acronym “CSR” is progressively being supplanted by the abbreviation “SDG,” representing the 17 UN Sustainable Development Goals and their respective national applications.[16]
The recognition that all major businesses should embrace CSR has evolved into a strategic pursuit of sustainable development goals, subsequently forming an ESG agenda, which dictates that businesses meet developmental criteria across three domains: environmental, social, and governance. ESG serves as a financial mechanism to incentivize and quantify the SDGs. These mechanisms include preferential terms for lending, bonds and other forms of borrowing within the global financial system and national finance frameworks. In Russia, this particularly refers to the “green” and “social” taxonomies. Furthermore, the Bank of Russia has formulated recommendations for developing a methodology and assigning ESG ratings.[17]
The National ESG Alliance was also established, with a mission to “fortify the national sustainable development agenda in Russia by uniting the efforts of large-scale business and the government.”[18] In 2022, the Alliance launched the ESG Ecosystem Atlas, which features over 30 sections detailing the roles of regulators, standards and taxonomy developers, data aggregators, and professional users of non-financial data, as well as creators of services and authors involved in diverse projects in this domain. Simultaneously, it is envisaged to considerably scale up the national ESG agenda within Russia, incorporating not just prominent ESG transformation leaders but also small and medium-sized enterprises, as well as the society at large, by 2030, which is beyond the immediate horizon.
Discussing ESG indicators, it is crucial to understand the stance of the state. In 2021, the Russian President expressed his viewpoint as follows: “ESG is a comprehensive gauge of how a state envisions its progression for the near future and beyond into the medium and long term. Undoubtedly, such development must place the individual at its core, which is what it does. The Russian government fully recognizes this, not merely to keep to the trend but because our entire policy is founded around the individual. At least that’s what we are certainly striving to do.”[19]
In 2022, Vladimir Putin, after convening with members of the Business Russia organization, directed the Russian Government to “explore defining criteria for classifying investment projects in line with the standards of environmental, social, and governance responsibility (ESG), and to consider state support for such project participants.”[20]
In 2023, the Accounts Chamber of the Russian Federation conducted an evaluation of the UN SDGs ratified by Russia in its 85 regions and acknowledged positive trends in the majority of indicators.[21] Yet, the actual understanding of SDGs within the regions, as well as public awareness of the topic, remains at a modest level, with the implementation by local authorities being highly contingent upon regional specificity and the engagement of senior officials.
Based on a 2023 study by hh.ru and the ecological service “Save the Forest,” it appears that the majority of Russia’s economic sectors have decreased the salaries of ESG specialists and scaled back their recruitment.[22]
The reality is, despite the ratification of UN SDGs by Russia, the national ESG agenda as a basis for financial stability – upon which large investments were forecasted and decisions for significant international financial dealings were made – has seen substantial shifts over the past couple of years. Consequently, the nation’s leading figures have repeatedly emphasized the necessity of creating a bespoke, local ESG agenda.
By mid-2023, Russia had established the conditions necessary for reevaluating and forming a novel concept, one that would naturally incorporate a human-centered, social agenda addressing the development of transparency and engagement with society, inclusivity, support of volunteer and other civic initiatives, and the overall contribution to and assessment of positive social changes. This approach rests on a broader comprehension of sustainable development, not restricted to a narrow set of ESG benchmarks. Let us now consider a number of recent initiatives that have been introduced, fostering the development of the ESG discourse in Russia.
In November 2023, the Ministry of Economic Development of the Russian Federation published the document “On Approval of Methodological Recommendations for the Preparation of Sustainable Development Reporting.”[23] It refers to that very Reporting Standard that, at the moment of publishing, was still in the phase of development.
At the WeAreTogether forum during the “Russia” exhibition in December 2023, experts discussed this approach, suggesting significant refinements for the forthcoming iteration of the standard. This discussion was held within the framework of the strategic session titled “Sustainability Reporting Standard as a tool for fostering volunteerism and social engagement among residents, businesses, and territories.”[24]
Irina Filippova, the Deputy Director of the Department of Corporate Regulation at the Russian Ministry of Economic Development and Trade, stated in the discourse that the issue of standardizing the assessment of the SDG achievement was initially raised in the 2017 development concept of public non-financial reporting, with the Ministry actively working on it following government directives. This subject was revisited in April last year during the RSPP Congress, leading to a directive issued by the President of the Russian Federation. The culmination of this work was the methodological guidelines developed by the Russian Ministry of Economic Development, approved and then published on the ministry’s website.
“I want to highlight that this is a discretionary, advisory document,” said Irina Filippova. “We consider it a fundamental set of guidelines that enables companies not yet engaged in sustainability reporting processes to exhibit their work results.”
The document contains recommendations for organizing stakeholder engagement in report preparation, and for revealing historical data for at least the past three years to understand the development dynamics of the company. Additionally, to prevent dishonest practices and errors, it is advised that reports be professionally verified – through auditing firms (according to the existing draft of the Sustainable Development Reporting Standard available to the editorial board).
The set of indicators was compiled from an analysis of various reporting standards of companies, with the United Nation’s UNCTAD standards on economic, social, governance, and environmental aspects being the baseline at the initial stage.[25]
“In