ESG Ranking of Russian regions 2021

Regions ESG Rank E Rank S Rank G Rank

Leningrad oblast

1

13

9

3

Saint Petersburg

2

54

4

2

Moscow

3

37

5

5

Tatarstan Republic

4

61

16

1

Khanty-Mansy autonomous okrug

5

48

8

4

Lipetsk oblast

6

7

14

24

Kursk oblast

7

11

21

13

Tyumen oblast

8

24

17

7

Sverdlovsk oblast

9

15

25

11

Moscow oblast

10

36

6

34

Kaluga oblast

11

17

31

8

Sakha (Yakut) Republic

12

16

11

35

Tver oblast

13

2

42

50

Saratov oblast

14

4

39

46

Adygeya Republic

15

34

36

10

Voronezh oblast

16

18

23

32

Ryazan oblast

17

38

20

16

Ulyanovsk oblast

18

27

26

29

Tula oblast

19

68

15

9

Sakhalin oblast

20

78

3

15

Belgorod oblast

21

47

10

39

Yamal-Nenetsky autonomous okrug

22

81

2

18

Penza oblast

23

40

27

27

Samara oblast

24

42

29

20

Nenetsky autonomous okrug

25

83

1

19

Vologda oblast

26

26

45

28

Rostov oblast

27

9

59

44

Chuvash Republic

28

19

35

45

Republic of Crimea*

29

28

30

40

Novgorod oblast

30

29

49

33

Nizhny Novgorod oblast

31

71

37

6

Oryol oblast

32

8

52

58

Mariy El Republic

33

39

61

23

Khabarovsk krai

34

31

32

54

Chelyabinsk oblast

35

10

65

55

Vladimir oblast

36

63

55

12

Krasnodar krai

37

65

34

21

Yaroslavl oblast

38

59

33

36

Udmurt Republic

39

44

60

31

Sevastopol*

40

50

12

59

Mordovian Republic

41

22

24

62

Murmansk oblast

42

76

13

26

Smolensk oblast

43

3

72

70

Novosibirsk oblast

44

66

50

14

Dagestan Republic

45

6

75

67

Kirov oblast

46

32

67

38

Krasnoyarsk krai

47

41

54

51

Bashkortostan Republic

48

53

41

52

Irkutsk oblast

49

56

77

22

Orenburg oblast

50

21

53

60

Perm krai

51

45

69

43

Primorsky krai

52

49

73

37

Altai krai

53

23

79

53

Ivanovo oblast

54

74

51

17

Jewish autonomous oblast

55

1

84

63

Stavropol krai

56

67

70

30

Bryansk oblast

57

35

40

66

Kostroma oblast

58

12

63

74

Omsk oblast

59

30

68

65

Arkhangelsk oblast (excluding Nenetsky autonomous okrug)

60

72

48

49

Amur oblast

61

46

78

56

Astrakhan oblast

62

75

56

41

Volgograd oblast

63

57

44

68

Buryat Republic

64

58

80

42

Kaliningrad oblast

65

73

28

57

Tomsk oblast

66

70

64

47

Komi Republic

67

80

46

25

Northern Ossetia - Alaniya Republic

68

52

47

69

Chukot autonomous okrug

69

60

7

82

Ingush Republic

70

5

58

83

Tambov oblast

71

64

19

73

Karachay-Cherkess Republic

72

14

76

80

Kabardin-Balkar Republic

73

55

62

76

Pskov oblast

74

43

74

77

Khakass Republic

75

69

57

72

Kamchatka krai

76

82

22

61

Chechen Republic

77

62

66

78

Kareliya Republic

78

84

38

48

Kurgan oblast

79

33

82

79

Zabaikal krai

80

25

81

81

Altai Republic

81

51

83

75

Kemerovo oblast

82

79

71

64

Magadan oblast

83

85

18

71

Kalmykiya Republic

84

77

43

85

Tyva Republic

85

20

85

84

*Despite the disputed status of the Crimean Peninsula, the Republic of Crimea and the federal city of Sevastopol were considered as de facto federal subjects of the Russian Federation, since all operational activities with respect to the ESG factors are conducted under de facto Russian control.

 

 

See ESG Ranking of Russian regions 2020

ESG Ranking of Russian regions 2020

Region / Position

E

S

G

ESG

Republic of Tatarstan

19

12

1

1

Moscow City

42

5

3

2

Lipetsk region

1

17

31

3

Khanty-Mansiysk Autonomous Okrug-Ugra

47

8

2

4

Kursk region

3

20

16

5

Tyumen region

27

13

4

6

Sverdlovsk region

9

30

7

7

Leningrad region

18

9

17

8

Saratov region

5

44

26

9

Kaluga region

7

29

28

10

Novgorod region

8

45

19

11

Voronezh region

28

24

10

12

Chuvash Republic

11

33

32

13

Tver region

16

37

21

14

Sakhalin Oblast

72

3

6

15

Ryazan Oblast

48

25

11

16

Ulyanovsk region

62

32

5

17

Yaroslavskaya oblast

25

27

25

18

Yamal-Nenets Autonomous Okrug

76

2

12

19

Moscow region

51

7

33

20

Nenets Autonomous Okrug

81

1

13

21

Tula region

65

16

9

22

St. Petersburg

70

6

18

23

Kostroma region

2

59

56

24

Republic of Adygea

43

34

22

25

Samara Region

46

26

24

26

Chelyabinsk region

30

66

14

27

Krasnoyarsk region

17

43

34

28

Vologda Region

13

48

41

29

Novosibirsk region

52

52

8

30

The Republic of Dagestan

6

75

44

31

Irkutsk region

33

77

15

32

Khabarovsk region

39

28

39

33

Rostov region

40

56

27

34

The Republic of Sakha (Yakutia)

10

15

74

35

The Republic of Mordovia

21

23

57

36

Mari El Republic

24

61

37

37

Smolensk region

4

64

67

38

Altai region

14

76

36

39

Bryansk region

12

47

59

40

Chukotka Autonomous Okrug

58

4

65

41

Belgorod region

50

10

58

42

Omsk region

23

63

49

43

Penza region

56

21

43

44

Krasnodar region

69

31

23

45

Republic of Bashkortostan

44

36

53

46

Republic of North Ossetia - Alania

31

38

60

47

Stavropol region

22

67

54

48

Nizhny Novgorod Region

68

35

30

49

Vladimir region

61

51

35

50

Tomsk region

49

54

50

51

Kirov region

34

69

55

52

Murmansk region

78

14

20

53

Kaliningrad region

67

22

47

54

Orenburg region

37

60

62

55

Amur region

60

71

38

56

Primorsky Krai

55

72

46

57

Udmurtia

53

58

52

58

Volgograd region

35

39

73

59

Perm region

38

65

64

60

Tambov Region

63

18

70

61

The Republic of Buryatia

36

79

51

62

Oryol Region

45

53

71

63

Altai Republic

32

78

68

64

Zabaykalsky Krai

26

81

69

65

Ivanovo region

77

49

29

66

Karachay-Cherkess Republic

20

73

78

67

Kemerovo region

75

68

40

68

Astrakhan region

71

55

61

69

The Republic of Khakassia

64

46

76

70

Arhangelsk region

73

41

66

71

The Republic of Ingushetia

29

50

81

72

Kurgan region

54

80

72

73

Kamchatka Krai

83

19

45

74

Chechen Republic

59

74

77

75

Republic of Karelia

80

40

42

76

Jewish Autonomous Region

57

82

63

77

Komi Republic

82

42

48

78

Magadan Region

79

11

75

79

Pskov region

66

70

79

80

Kabardino-Balkarian Republic

41

62

83

81

Tyva Republic

15

83

80

82

Republic of Kalmykia

74

57

82

83

 

See ESG Ranking of Russian regions 2019

ESG Ranking of Russian regions 2019

Region / Position

E

S

G

ESG

Republic of Tatarstan

7

12

1

1

Moscow

32

4

3

2

Sverdlovsk region

6

34

10

3

Kursk region

5

18

28

4

Tver region

3

40

32

5

Lipetsk region

4

21

36

6

Khanty-Mansiysk Autonomous Okrug-Ugra

52

8

7

7

Chuvash Republic

8

30

26

8

Ryazan region

43

23

6

9

Irkutsk region

20

73

5

10

Novosibirsk region

33

60

4

11

Tyumen region (without autonomous regions)

75

11

2

12

Yaroslavl region

11

28

35

13

Voronezh region

31

20

15

14

St. Petersburg

69

3

13

15

Leningrad region

57

9

17

16

Saratov region

9

48

34

17

Samara Region

39

24

14

18

Novgorod region

16

35

38

19

Ulyanovsk region

54

29

8

20

Khabarovsk region

23

26

33

21

Nenets Autonomous Okrug

83

1

9

22

Tula region

63

17

12

23

Moscow region

64

6

31

24

Chelyabinsk region

27

69

11

25

Smolensk region

1

64

75

26

Krasnodar region

42

31

20

27

Republic of Adygea

19

38

44

28

Vologda region

12

59

41

29

Kaluga region

34

36

27

30

Sakhalin region

77

5

16

31

Yamalo-Nenets Autonomous District

80

2

18

32

Rostov region

25

56

37

33

The Republic of Buryatia

24

78

19

34

Omsk region

18

61

47

35

Krasnoyarsk region

28

45

40

36

Altai Republic

2

80

65

37

Mari El Republic

44

50

30

38

Udmurt Republic

30

44

46

39

Murmansk region

76

14

22

40

The Republic of Mordovia

35

25

56

41

Penza region

72

19

29

42

Nizhny Novgorod Region

68

27

25

43

Ivanovo region

59

46

23

44

Belgorod region

55

10

61

45

Altai region

36

70

39

46

The Republic of Sakha (Yakutia)

13

13

79

47

Kaliningrad region

60

22

48

48

Chukotka Autonomous Region

38

7

77

49

Primorsky Krai

58

77

21

50

The Republic of Dagestan

22

66

58

51

Republic of Bashkortostan

40

41

57

52

Orenburg region

29

49

62

53

Vladimir region

51

52

45

54

Kirov region

47

65

42

55

Kurgan region

10

79

72

56

Tambov Region

62

15

63

57

Bryansk region

17

58

74

58

Oryol Region

26

54

71

59

Amur region

50

71

43

60

Stavropol region

45

62

55

61

Perm region

56

63

51

62

Transbaikal region

14

81

67

63

Komi Republic

70

32

52

64

Kostroma region

46

53

60

65

Republic of North Ossetia - Alania

49

42

66

66

Tomsk region

67

57

49

67

Volgograd region

48

39

70

68

The Republic of Khakassia

53

47

64

69

Chechen Republic

37

76

68

70

Astrakhan region

73

55

50

71

Arkhangelsk region (without autonomous region)

74

43

54

72

Karachay-Cherkess Republic

21

74

76

73

Kemerovo region

81

72

24

74

Jewish Autonomous Region

65

82

53

75

Republic of Karelia

78

37

69

76

The Republic of Ingushetia

41

75

80

77

Kamchatka Krai

79

33

59

78

Magadan Region

82

16

73

79

Pskov region

71

67

81

80

Tyva Republic

15

83

78

81

Kabardino-Balkar Republic

66

51

82

82

Republic of Kalmykia

61

68

83

83

 

ESG Ranking of Russian regions

For the second year, the European rating agency RAEX-Europe has prepared the unique ESG ranking of Russian regions, which allows a direct comparison of the environmental and social risks, as well as the quality of public administration among regions in Russia. This year, the agency also assessed how regions are prepared to face the economic crisis caused by the COVID-19 pandemic and the drop in oil prices.

Crisis comparison and 2020 forecast for regions

The current economic crisis has no analogues neither in Russian nor in world history, as for the first time it was not caused by economic or political factors but by the epidemiological elements. Nevertheless, we would like to compare its course in the regions with the previous crises of 2008-2009 and 2015-2016.

With our best case scenario showing a contraction of only 3% and the worst case scenario a recession of up to 6%  in the Russian economy, it is certain that the number of regions with negative growth will exceed the figures of 2015 (45), and will be closer to the values of 2009 (67). Gross regional product is a lagging indicator, so we looked at more up-to-date data on industrial production, construction, investments, agricultural output, household incomes and retail trade. Most of the indicators showed a slowdown by the end of 2019 after overcoming the 2015-2016 recession. Industrial production in 2019 grew only by 2,3% against 3,5% a year earlier, with a decline in 17 regions (13 in 2018); construction showed an increase of 0,6% (after 6,3% in 2018), with a decline in 45 regions; investments grew only by 1,7% with a decline in 31 regions (5,4% growth in 2018 with a decline in 34 regions). The exception is the agricultural sector, which grew by 4% after a 0,6% decline in 2018, but this sector usually moves out of the general trend due to the weather factors and global market dynamics.

The main difference between the current crisis and the recession of 2008-2009 is that its preceded by an almost six-year stagnation of the real income of the population, which still has not reached the level of 2013 in real terms (by the end of 2019 it amounted to 93% of this level). The share of the population with incomes below the subsistence minimum, after reaching the local minimum of 11% in 2012, has actually been at the plateau of 12-13% for five years, and the gap between the “worst” and “best” regions fluctuates around 28 and30 percentage points. Against this background, given the high debt load of the population, we can expect a sharp increase of social risks at the exit from the acute phase of the crisis in both depressed and relatively developed regions.

Due to the expected negative dynamics of average personal income in 2020 and the extension of quarantine measures in regions, retail trade will be the most affected industry, which is on of the most important sectors for the regions. As in other sectors, the dynamics of retail trade turnover slowed down already in 2019, showing growth of only 1,9% (after 2,8% in 2018), and by the end of the year we can expect a decline of significantly more than 10%, as it was in 2015. The number of regions with negative dynamics will exceed the previous peak at 76.

Similar to the case of the last two crises, as soon as we exit the current one, the largest cities and agricultural regions will be the fastest to recover. Regions with a narrow industrial specialization and the presence of “single-industry” towns will demonstrate a stronger and longer-lasting decline, and the way out of the crisis will follow the dynamics of world commodity markets. The performance of “oil and gas regions” will almost entirely depend on when and to what extent the oil market will recover and what will happen to the RUB exchange rate; after all, oil and gas companies bear costs in national currency while their revenues are in USD. Underdeveloped regions in Central Russia, especially those specializing in machinery engineering, are likely to continue in stagnation even after the acute phase of the crisis. The southern republics of Russia will emerge from the crises non-uniformly, since the dynamics of their economy will strongly depend on the decisions of the federal government for financial support and the implementation of large infrastructural projects.

Social risks and preparedness of the healthcare system

The expected increase in social risks will be largely levelled in the regions that have the leading positions in our social sub-ranking. These include relatively sparsely populated “oil and gas” regions, such as Nenets Autonomous Okrug- 1st place; Yamalo-Nenets Autonomous Okrug - 2nd place; Sakhalin region - 3rd place, as well as the capital cities and their surroundings including Moscow City- 5th place and; St. Petersburg - 6th place. In both cases oil and gas rent is transformed into good indicators of the healthcare system, safety, welfare and basic education.

Certain indicators in the social section of the ranking show quite interesting results, especially due to the large burden on the healthcare system. It is worth mentioning that before the crisis there was a change of the main source of financing medicine from the regional budgets themselves to the territorial funds of compulsory health insurance. While in 2013, 97 kopecks (cents) spent from the fund accounted for 1 RUB of budget expenditures. Then, by 2018, more than 2 RUB from the compulsory medical insurance system accounted for ruble of budget money. Accordingly, the share of health care spending in regional budgets decreased from an average of 14-16% in 2012-2014 to 7-8% in 2017-2018.

A sufficiently high gap remains between the regions in terms of provision of basic medical infrastructure and staff, although this gap was gradually narrowing against the background of the health care system reform. While in 2013, there were on average 0,41 hospital facilities per 10,000 people in Russia, by 2018 this figure declined to 0,36, and the gap between regions with maximum and minimum provision decreased from 12 to 11 times.

Environmental protection and waste management reform

Despite a clear decreasing trend in total amount of pollution from the industrial enterprises, the indicators of environmental risks generally show stagnation. At the same time, the pollution volume of road transport emissions in the atmosphere (15,108 thousand tons) is already almost equal to the one from industrial enterprises (17,100 thousand tons), while the key environmental indicators of the Russian automotive transport (volumes of emissions per one car) have remained unchanged over the last six years. There are some positive trends in terms of the preservation of water resources - in 2018 the total reuse and recycling of water for the first time exceeded the total volume of contaminated wastewater discharge.

We also have analysed the waste-management industry through our ranking. It is a fact that the available data are only the figures published by Rosstat, which are defined based on the waybills or documents completed by usage of special equipment. All the “shadow” market of municipal solid waste, naturally, remains outside the scope of our research.

On a positive note, there is a clear trend towards a decrease in the number of regions where, according to official statistics, solid municipal waste (SMW) is practically not taken out for recycling: in 2010 the number of regions where officially registered SMW was not taken out for recycling was 56, by the end of 2019 only 21 Russian region has zero percent of the recycled or well treated SMW. In our view, the large-scale non-payment crisis and the critical financial stance of many market participants were observed before the start of a new crisis, so it is highly likely that the transition to an economically viable and civilized waste management industry in Russia will drag on for several years.

Quality of public administration

In terms of public administration quality, the leading regions are those where the high level of investment attractiveness is combined with good transparency of local authorities and budget discipline. Moscow City and Tatarstan have been among the top three leaders for the last two years; however, the second position in 2020 has been taken by the Khanty-Mansi Autonomous Okrug, while last year this spot belonged to the Tyumen region.

By the end of 2019, the regional budgets had an increase in the deficit due to a delay of gain on corporate income tax and personal income tax, although the debt had remained low with an improved structure. Apparently, in 2020 the vast majority of regional budgets will be executed with a deficit. More financially stable regions having such opportunities will increase banks’ loans and bonds issues, while the regions having restrictions from the Russian Ministry of Finance will increase demand for transfers from the federal budget and probably will face a sequester of some low-priority budget items.

 

See Analytics 2019

This first ESG ranking of Russian regions describes the key environmental, social and governance risks of the regions, together with the level of risk mitigation. We analyzed indicators of environmental pollution and waste management; indicators of poverty, lack of school facilities, infant mortality and crime; as well as conducted a comprehensive survey of the quality of public administration.

The comprehensive ranking ultimately allowed us to evaluate the Russian regions in terms of so-called “responsible investments” potential, which became a popular trend in the international financial markets, and over time should become a mainstream for the largest investors.

The most balanced results (high scores for all three components of the ESG) belong to the Republic of Tatarstan. The Republic shows high indicators of solving environmental problems, low social risks and high quality of public administration, due to the transparency of the government and the high investment attractiveness of the region. As a result, the Republic of Tatarstan is ranked number one in our ranking.

Air Pollution: Metallurgy and Oil Industry

The results of the environmental risk assessment show that for the regions where high levels of pollution per capita were caused by the large metallurgical plants, the final score was supported by various risk mitigation indicators. For example, despite the poor ecological image of Lipetsk and Sverdlovsk regions, they were included in the top 10 best regions in terms of the environmental component. On the contrary, the regions where the oil and gas sector is the main source of pollution are in the tail of the ranking, because the level of mitigation against the mentioned risks turned out to be much lower. The main gas producers - Nenets and Yamalo-Nenets autonomous districts took the 83rd and 80th places respectively. The “oil” regions - Sakhalin, Tyumen regions and the Khanty-Mansiysk district are located at 77th, 75th and 52nd places. The low population level in the oil and gas regions only partially explains their positions. Such indicators as “The proportion of captured and neutralized air polluting substances” or “The proportion of used and neutralized waste in the total amount of waste generated” do not depend on the population size. According to official data, in the Lipetsk region the share of captured and neutralized pollutants is more than 80%, while in the Khanty-Mansi Autonomous Okrug and Yamal-Nenets Autonomous area this figure does not exceed 1%.

From our point of view, this demonstrates the different behavior of private businesses and state-owned companies towards environmental problems. The metallurgical sector is mainly in private hands, while oil and gas industries are almost entirely controlled by the state. Practically all the largest metallurgical enterprises in Russia over the past 15 years have undergone a full-scale modernization including implementation of modern environmental protection technologies. On the contrary, the key problem of the Russian oil industry - the burning of associated petroleum gas (APG), which affects the level of emissions to the atmosphere, is being solved at a slower pace.

The Republic of Tatarstan is a special case, where large oil producing and petrochemical enterprises went through a deep modernization a long time ago. As a result, the Republic ranked 7th in the environmental component of the ranking.

Garbage collection: Statistics glance

Our Ranking also made it possible to analyze the currently critical garbage problem using officially published statistical sources.

The most frequently discussed Moscow region, is one of the leaders in the removal of municipal solid waste (MSW) per capita. Here, this figure is almost 3 cubic meters per person per year, which is 1,5 times higher than the average value in Russia. At the same time, only 6,8% of MSW is going to waste recycling and sorting plants, with an average value of 10% for the country. In the neighboring Kaluga and Smolensk regions, this figure is 30% and 16%, and in the Lipetsk region - almost 60%. As a result, the Moscow region took only the 64th place in the environmental component of the ranking.

In general, garbage disposal at waste recycling plants is not a common practice for all regions. At the end of 2017 (the most recent data), according to Rosstat, in 36 regions, garbage was not removed at all for recycling, and in 12 regions less than 1% of municipal solid waste was removed. It is important to mention, that over the past 8 years the number of such regions has significantly decreased and the process of building waste recycling plants has been launched in many regions.

Social well-being and governance

Naturally, the leaders of our social indicators are “oil and gas” regions, as well as Moscow and St. Petersburg. Essentially, the workers’ high income in the basic industry, combined with a good budget performance and a relatively small population, makes it possible to maintain high social standards. Similarly, in the “capital” regions, the high incomes of large corporations through salaries and dividends are transformed into a high level of social well-being according to the Russian standards. On the contrary, the agrarian republics of the North Caucasus and Southern Siberia, as well as regions of the Far East with a population decline trend and low personal income, stood at the bottom of the ranking.

Governance risk assessment contributes to a primary audit of key anti-corruption practices in the regions. At the end of 2018, anti-corruption commissions were created in all regions, and the income and property of the heads of administrations and departments were disclosed. However, the degree of transparency and the structure of this information differ significantly. In many cases, there is no information about the decisions of the commissions or it remains unknown whether the commission meets more than once a year.

In addition, the ranking recorded a rapid deterioration in the quality of regional finance management: in recent years, the number of violations of the budget code by Russian regions has more than doubled, and the number of violating regions increased by 1,5 times. The changes in the budget code itself could partially explain this tendency; however, the trend of the regional finance stability reduction has been also noticed under this indicator.

The leader of the ranking on the quality of government is The Republic of Tatarstan. For many years now, the Republic has been one of the leaders of the investment attractiveness of Russian regions, which is complemented by the presence of a special economic zone and several industrial parks. In addition, The Republic of Tatarstan was noted by the federal government as a region with high level of budget management, as well as elevated quality of information disclosure as the best among all regions.

On the contrary, the agrarian republics of the North Caucasus and southern Siberia, as well as regions where a long outflow of human capital reduces the level of demand for quality management, in particular, the Pskov, Bryansk and Smolensk regions, are in the tail of the ranking in terms of governance.

Ranking process principles

The core of the majority of ESG ratings/rankings is the principle of combining the level of the risk exposure with the effectiveness of its mitigation.

Example: Assuming a company belongs to the chemical industry, where air and water pollution in general is very high as compared to other industries. However the company has shown through official policies and established programs that it takes the necessary precautions and is working on a new technology that will make it possible to decrease or to stop using hazardous substances in the future and therefore reduce the water and air pollution per production unit as compared to its industry peers, then, the total score for these parameters may be relatively high

Available statistical information from various institutions in Russia allows us to build a system of indicators to assess the exposure of regions to potential risks and the degree of their mitigation. For each factor, in order to assess risk exposure and risk mitigation at the same time two indicators were selected. For example, in the Environmental section, we use the indicator “Emission of pollutants from stationary sources per capita into the atmosphere”. It is supplemented by the “Share of captured and neutralized air pollutants in the total amount of waste from stationary sources”. In the best case scenario, if the first indicator is very high, the second indicator should be as high. However, if the second indicator is lower, this indicates the presence of imbalances, which suggests that risks are not given appropriate attention

An exception is the section G (governance), where the assessment is based on verifying the existence of key tools to improve the quality of public administration and transparency in the regions: the presence of anti-corruption commissions, disclosure of information about the income of government employees, etc. In addition, the assessment is supplemented with integral indices, such as the RAEX rating of investment attractiveness of Russian regions1 and Monitoring of the financial position and quality of financial management of the Ministry of Finance of the Russian Federation.

 

List of ESG Rating indicators of Russian Regions

 Environmental risks

 №

 Risk indicator

 №

 Risk mitigation indicator

 1.1 

Amount of pollutants emitted from stationary sources into the atmosphere, per capita

 1.2 

The share of captured and neutralized air pollutants in the total amount of waste from stationary sources

 2.1 

Emissions of harmful substances (pollutants) in the atmosphere from motor vehicles, per capita

 2.2

The share of cars, trucks and buses in the regions of the Russian Federation, with the possibility of using natural gas as a motor fuel

 3.1

Discharge of polluted wastewater into surface water bodies, per capita

 3.2

The volume of recycled and used consistently water, per capita

 4.1

The amount of wastes accumulated from production and consumption, per capita

 4.2

The share of used and neutralized waste in the total amount of waste in production and consumption process

 5.1

Amount of municipal waste removed in a year, per capita

 5.2

The share of the solid municipal waste  moved to facilities used for waste treatment to the total municipal waste removed, %

 Social risks

 №

 Risk indicator

 №

 Risk mitigation indicator

 1.1 

The share of population with incomes below the subsistence level

 1.2 

Amount of expenditures from the consolidated budget of the region on the "Social policy", adjusted for the cost of living, per capita

 2.1 

The share of school students enrolled in the second shift

 2.2

Amount of expenditures from the consolidated budget of the region on the "Education", adjusted for the cost of living, per capita

 3.1

Infant mortality rate (Number of registered death in the first year of life per 1,000 births

 3.2

Amount of expenditures from the consolidated budget of the region on the "Health care", adjusted for the cost of living, per capita

 4.1

The number of grave and especially grave crimes recorded in the reporting period, per 100 thousand people

 4.2

Amount of expenditures from the consolidated budget of the region on the "Security", adjusted for the cost of living, per capita

 5.1

Population dynamics over 10 years (the ratio of the average population in the reporting year to the number 10 years ago), %

 5.2

The total number of jobs created by groups of organizations in which the average number of employees has increased and by newly created organizations, per 1000 residents

 The quality of governance

1

Position in the rating of investment attractiveness of Russian regions “Expert RA” (RAEX)

2

The presence of certified industrial park / parks

3

The presence of special economic zones

4

Assessment of the level of centralization / decentralization of the regional administration site

5

The number of interface languages for the regional administration site

6

The presence of vacancies in the administration of the region, available on the site

7

The presence of anti-corruption commissions at the regional administration and the transparency of its activities

8

Availability of information about the income and property of employees on the main site of the regional administration

9

Quality assessment of the regulatory impact assessment in the regions

10

Monitoring the financial position and the quality of financial management of the Russian Federation and municipal entities

11

Monitoring of compliance with the requirements of the Budget Code of the Russian Federation by subjects of the Russian Federation

12

Expenditures of the consolidated budget of the region under the heading "National issues" in relation to the GRP

 

What is an ESG assessment and why is it important

An ESG (environmental, social and governance) assessment is based on an analysis of three key factors affecting the sustainability and ethicality of investments: environmental, social risks and the quality of corporate governance

The idea of responsible investments and assessment of ESG factors appeared in the early 2000s, when a number of companies and non-profit organizations in developed countries for the first time took initiatives to integrate social and environmental standards and rules in the financial sector. In 2006, the UN organization established the principles of responsible investments (PRI) for financial market participants and launched their implementation on the New York Stock Exchange. As a result, investors who want to understand precisely whether the project in which they are investing carries risks for the environment and societ, receive a tool to capture such exposures for investment decision. Shortly afterwards, major financial markets joined these principles. At the end of 2018, the number of companies, which had already signed the principles, exceeded 2000, and the total amount of assets under their management was USD 80 tn

Until recently, there was no systematic approach to develop this idea in Russia. However, in mid-2017, theadvisory council on the market for long-term investment under the Central Bank of the Russian Federation emerged, which was the trigger for the introduction of sustainable practices in the country. In 2018, a working group on responsible financing, including the so-called “green financing,” was created at the council and, from 2019 onwards, it is expected that a new sector exclusively specialized on green bonds will be created in the Moscow Stock Exchange, launching the circulation of the environmentally oriented securities

For Russian regions, the topic of responsible investments is important from the perspective of attracting foreign funds. Large western companies are gradually requiring ESG standards audited by specialized providers prior to establishing a partnership or choosing a supplier. For the most part, this relates to the corporate sector. In Russia, however, regional administrations play a key roleindeciding theproductionfacilities’ localization. Therefore, the assessment of exposures to environmental, social, and governance risks may be relevant during the decision-making process. In addition, while investing in Russian projects, the financial partner of a foreign company (a bank or a fund) may take into account the macro environment, which, among other things, includes the assessment of ESG parameters

1www.raexpert.eu