Lack of ESG strategies reduces the investment attractiveness of Arctic companies

01.10.2021 Posts %s

Lack of ESG strategies reduces the investment attractiveness of Arctic companies

The investment attractiveness of companies operating in the Arctic decreases if they do not have ESG strategies, experts said at the round table of the Arctic Development Project Office "The Russian Arctic - the Territory of ESG Transformations". The event took place on September 28, 2021 as part of the Northern Sustainable Development Forum in Yakutsk.

“The implementation of the ESG agenda is necessary for the development of the largest infrastructure projects in the Arctic. Whether we like it or not, all the world's largest investors adhere to ESG standards, and Russian companies simply have no other choice but to comply with these standards. But it is important to understand where to start transformations, ”says the coordinator of the PORA Expert Council, Alexander Vorotnikov, who moderated the event.

“The growing number of PRI (Principles of Responsible Investment) signatories is the clearest illustration of the growth in ESG accounting in portfolio investments. It is a UN-backed group of investors committed to investing in accordance with ESG principles. The volume of assets under the management of the members of the association from 2015 to 2020 increased from $ 59 trillion to $ 103 trillion, ”said Yana Krukhmaleva, member of the Global International Community of Risk Managers, an expert on ESG transformation. According to her, this has the most direct impact on the Arctic, in particular, the largest logistics companies refuse to consider transportation along the Northern Sea Route, including due to inconsistency with ESG principles.

Companies' ESG strategies are inextricably linked to risk management, and experts agree that the greatest dangers await us from the environment. This is especially true in the Arctic, where ecosystems are fragile and the nature of the extractive industries business is disruptive. “Over the past 10 years, economic risks have given way to environmental risks among the most significant risks,” said Igor Korotetskiy, Head of the Operational Risks and Sustainability Group at the KPMG consulting company. He recalled that banks already include ESG principles in credit risk assessments, and international companies - in supply chain audits.

If you do not develop ESG strategies, the business will lag behind competitors at a rapid pace. The company will not be able to confirm its leadership, which is especially important for those who enter the international market, Ksenia Temnikova, Ph.D. Department of Information Security, Faculty of Information Technology, Moscow Polytechnic University.

Most of the experts who took part in the meeting also agree that when taking into account the compliance of business with the principles of ESG, it is necessary to “digitize” all production processes, use big data and automation systems. This will facilitate the decision-making process for the management of companies and will allow monitoring performance in real time.