How Russian Companies Respond to Mounting ESG Pressure
Russian corporations seek to increase their ESG performance in major international ESG ratings. Novatek, for example, was upgraded to rank ‘A’ in the MSCI ESG rating end of last year – the highest rating every held by a Russian oil and gas company and the gold mining corporation Polyus is far ahead of its peers in the 2020 SAM Corporate Sustainability Assessment (Fedorinova, 2020). These improvements show that Russian corporations take ESG seriously and dedicate resources to ESG issues.
Richard Germain from the University of Louisville and I conducted a large-scale empirical study on more than 700 Russian manufacturers to better understand their strategic and operational approach to ESG. Key findings are summarized below:
Russian manufacturers are more open to ESG when they are deeply embedded in international networks and have economic ties to other countries, the European Union most notably. This is not surprising as pressure for high ESG performance is substantially high in Europe and European buying companies transmit this pressure to their suppliers.
Despite the role of the international client base for ESG, Russian manufacturers do little to actively include clients in ESG innovation processes but prefer to formulate ESG strategies independently.
Openness to ESG decreases among Russian companies with increasing geographic distance from the intellectual and economic center of Moscow. From a supply chain perspective, remoteness from an economic hub in a transitioning economy implies not just longer supply lines but also a lack of access to know-how and innovations.
Russian managers show signs of a low future orientation, implying a focus on short-term business development.
In sum, Russian managers might forgo opportunities for long-term investments in ESG innovations, but international trade relations may assist them in becoming more open and receptive to ESG.
Please cite as
Hartmann, J., Germain, R. and Grobecker, A. (2015). 'Antecedents of environmentally conscious operations in transitioning economies'. International Journal of Operations & Production Management, Vol. 35 No. (6), pp. 843-65.
Hartmann, J. and Germain, R. (2015). 'Understanding the relationships of integration capabilities, ecological product design, and manufacturing performance'. Journal of Cleaner Production, Vol. 92 No., pp. 196-205.
Fedorinova, Y. (2020). 'Russian Sustainability Scores Rise, But Climate Goal Still Lags'. Bloomberg.com [accessed 28 Feb 2021].