ESG initiatives in Russia and the West share a common foundation. However, they differ fundamentally in three ways.
First, the level of maturity of the ESG framework: in Russia, national guidelines are still in their infancy, while Europe and the US have more advanced and developed ESG frameworks.
Second, Russia’s economy is heavily dependent on carbon-intensive industries such as oil, gas, and coal. This creates challenges for the implementation of ESG practices, as the transition to a low-carbon economy requires significant investment and massive transformation. It also increases ESG risks for Russian companies, particularly in light of potential additional taxes and sanctions.
Third, the roles of business and government are different in Russia and the West, and are largely determined by historical, political, and economic contexts. In the West, business plays a key role in shaping the ESG agenda, while government provides a regulatory framework and standards for the implementation of ESG practices; government assumes the role of a “referee” overseeing compliance with ESG regulations and standards, rather than a “player” directly involved in the game. In Russia, however, the role of the state in shaping the ESG agenda is more significant. Many large companies are state-owned, and their ESG strategies are often a function of public policy.
In general, we can say that the ESG agenda in the West is the result of cooperation between the state, business, and society, while in Russia it is more driven by public policy and the strategies of large corporations.
It should be noted, however, that the development of ESG in Russia is driven not only by external factors, but also by companies’ understanding of the need to embrace sustainable development in order to maintain their competitiveness and attract investment. The ESG agenda is expected to become one of the central elements of Russian companies’ strategies in the coming years. Ergo, Russia is not abandoning ESG in the Western sense of the word, or to put it more accurately: Russia is rethinking ESG in the context of its national realities and interests.