Recently, the head of Rosprirodnadzor has been categorically speaking about the international ESG agenda, which has become fashionable in Russia. According to her, in this area it is necessary to adopt clear rules.
“In half the cases, the ESG agenda is fake”
Head of Rosprirodnadzor Svetlana Radionova has repeatedly stated the need to introduce clear and unified requirements for the environmental friendliness of Russian enterprises. At the same time, a significant part of companies distort information using the ESG agenda. So, at one of the meetings of the Scientific and Technical Council of the department, Svetlana Radionova noted that non-financial reporting on the environmental responsibility of business most often does not correspond to reality.
“In half of the cases, the ESG agenda is a pure fake, in another half of the cases it is a fake that doesn’t make much sense,” the head of the environmental department concluded. In her opinion, the ESG strategies of many corporations are just a set of measures and a declaration of intent.
Why a business needs an ESG assessment
The abbreviation ESG stands for “environmental” – the environment, “social” – social development, “governance” – corporate governance. Companies, declaring adherence to the principles of ESG, inform the public and investors that they stand for successful development based on the principles of social and environmental responsibility and highly qualified management.
The reason for the interest of businesses in the declaration of principles of ESG is simple. According to the audit and consulting company Ernst & Young, 97% of foreign investors pay attention to the ESG index when making a decision to invest.
Today, more than 400 different agencies and rating companies in the world issue such an assessment. To determine compliance with the criteria for environmental friendliness and social orientation, they developed their own ratings, similar to credit ones.
The legal framework of Russia, which meets the requirements of the ESG, is today based on the norms of the Paris Agreement and the Kyoto Protocol. Domestic legislation is regulated by Decrees of the President of the Russian Federation No. 204 dated May 7, 2018 and No. 474 dated July 20, 2020, dedicated to the national development goals until 2024 and until 2030, respectively. The above documents are framework and do not contain precise criteria for evaluating the activities of companies.
As Svetlana Radionova has repeatedly stated, Russian corporations take advantage of the lack of clear standards. According to the head of the environmental department, today anything can be considered an environmental measure to improve the rating, up to painting the fence green.
Solving the problem at the state level
The implementation of national standards will help to maximize the reliability of ESG ratings and reports. Moreover, there is already a viable project prepared by the Expert Center for ESG Transformation of the public organization Delovaya Rossiya. The document contains a methodology and a list of mandatory disclosure information required for the ESG assessment.
The head of the Russian environmental department consistently advocates a joint dialogue with business in the formation of national standards, including with the participation of representatives of the so-called big four audit and consulting companies: Deloitte, PricewaterhouseCoopers, Ernst & Young and KPMG. In particular, he proposes to take into account the position of the state. In December 2021, the head of Rosprirodnadzor once again invited business representatives to get acquainted with the acts, regulations, requirements, standards, and methods for calculating damages. In her opinion, it is necessary to take into account the state experience when evaluating an enterprise as environmentally friendly and caring for the environment. At the same time, Svetlana Radionova states that “so far, neither audit companies nor rating agencies are in a hurry to consult Rosprirodnadzor.”
Radionova Svetlana Gennadievna Curriculum vitae
Radionova Svetlana Gennadievna Born in Alma-Ata. In 1999 she graduated from the Saratov State Academy of Law. She worked in the prosecutor’s office, as well as in the Investigative Committee under the Prosecutor’s Office of Russia.
From 2009 to 2018, she held senior positions in Rostekhnadzor, for eight years she was the Deputy Head of the Federal Service for Environmental, Technological and Nuclear Supervision.
In December 2018, she headed the Federal Service for Supervision of Natural Resources.