Let's take a closer look at what the ESG concept is and why it is important for companies to think about environmental issues, social issues, and ethical management.
Content
How do ESG principles affect business?
Why Industrial Corporations Need Sustainable Development
MMK case
Case of the petrochemical company SIBUR
Case of PJSC MMC Norilsk Nickel
Case of the oil company JSC INK-Capital
BIM and sustainability programs in industry
How Russia Supports Sustainable Development
Conclusion
What is ESG and why does business need it?
ESG (environment, social, governance) can be deciphered as "ecology, social policy and corporate management". In a broad sense, it is the sustainable development of commercial activities, which is based on three principles:
E - responsible attitude to the environment
S — high social responsibility
G - high quality of corporate governance
In recent years, the ESG concept has become an important standard for assessing the sustainability and responsibility of businesses. Companies that implement the principles of this strategy strive to minimize negative impacts on the environment, promote social well-being, and follow high standards of corporate governance.
There is an ESG rating. It evaluates companies based on their actions in each of these areas, helping investors, partners and clients understand how well the company meets modern standards of sustainable development.
A high ESG rating is an indicator of the reliability and sustainability of a company, which has a positive impact on its reputation and attracting investment.
ESG ratings are formed by independent research agencies. In Russia, this is done by Expert RA, the National Rating Agency (NRA), the Analytical Credit Rating Agency (ACRA), National Credit Ratings (NCR) and others. They evaluate the development of companies according to three criteria (E, S and G) and assign points.
An example of criteria by which ESG ratings can be compiled
There is no single approach to rating formation yet, so different agencies may have different ones. However, work is underway to bring everything to a “common denominator”. For example, last year the Bank of Russia prepared recommendations for developing a methodology and assigning sustainable development ratings.
How ESG principles affect business
ESG principles are important for all market participants: from investors and consumers to employees and society as a whole.
Investors are less likely to support companies with a low ESG rating, and banks are more likely to refuse to issue them loans. In turn, corporations that follow ESG principles attract more attention and trust from investors, which contributes to their financial stability. For example, when the aluminum producer RUSAL received $1 billion, the decision was made based on the company's sustainable development indicators. Consumers also prefer to support companies that demonstrate responsibility and care for the social and environmental environment. According to a survey by the ECA Movement and the Ecological Union "How We Choose Eco-Products", Russians are willing to pay more for eco-friendly products and trust eco-labels.