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UN Global Compact Russia


Russian Business in the Context of Sustainable Development


On 13 December 2018 in the ‘Argymenty i Fakty’ press center there was hold a final press conference devoted to 70 years of the UN in Russia and 10 years of the UN Global Compact Network in Russia.

UN family in Russia, including today almost 20 bodies, celebrated its 70th anniversary of work in Russia which started with opening of the UN Information Center in 1948. Being challenged with numerous conflicts and demands from member countries on greater efficiency, reporting and responsibility the UN has determined a key direction of work – to facilitate development of human potential, ensure decent and safe life for all. Private sector has become one of the main partners of the Organization that is united by the UN Global Compact at its platform.
 Main result of cooperation of responsible business and the UN in Russia is a significant progress of leading companies in the area of sustainable development, which assumes managing all kinds of own impact in environmental, social and economic spheres, effective programmes of corporate responsibility and volunteering, social projecting and investment, systemic charity and sustainable territorial development, introduction of low carbon technologies, and many other aspects of transforming business strategies towards sustainable development and the SDGs. During the press conference, its participants and guests discussed the level of involvement of Russian business in this international business agenda on sustainable development and particular features of synchronizing this agenda with the national context, as well as certain forms of introducing into business practice of Russian business sustainability values, main thematic, practical, governance and other aspects of transforming business models of Russian business for sustainable development. 

Vladimir Pavinsky, Deputy Director of the UN Information Center, marked the width of the context: ‘A complex and not always clear concept of sustainable development to a large extent reflects complexity of society itself, dynamics of development of which is more and more difficult to digitalize. SDGs are often criticized for their unclearly formulated ambitious targets. Millennium Development Goals provoked not less criticism, and yet, in large they were achieved. SDGs might be called more ambitious in comparison to their predecessors, but opportunities to achieve them are also broader. Today entrepreneurs share the opinion that healthy society and healthy markets need each other. That is what corporate sustainability concept is based on. With the emergence of the Global Compact, our mind has accepted the understanding that global challenges are too large to handle them only vie states; business community is also a crucial element. Today corporate sustainability is based on meeting the norms of law and integration of social responsibility principles to the very logic of corporate governance.’

‘Increased partnerships of the UN with private sector is the influence of time, since irreversible process of the economy globalization has made business on of key player not only of the world economy and politics, - Oleg Kobiakov, Head of Division for ECOSOC and Regional Economic Commissions of the UN, expressed the position of the Ministry of Foreign Affairs of the Russian Federation. 2030 Agenda, the SDGs is an ambitious and practice-oriented system of navigation both for an international community as it is, and for separate countries and regions in their activities. Russia also adheres to this system. However, the achievement of goals and guidelines in this area depends on the initiative of the business and its innovative approaches. Business reputation plays not less role than stock quotes. We are convinced that domestic business should play its role in drafting a report on the SDGs, with which we intend to speak in 2020 at the High-Level Political Forum on Sustainable Development. The Ministry of Foreign Affairs will provide the necessary assistance in strengthening cooperation between the business community and the UN’. 

Among the various aspects and areas of global cooperation of socially responsible business, corporate volunteering was highlighted, since 2018 in Russia was a year of volunteer, a year full of various events, research and partnerships dedicated to volunteering and volunteering. The main results, as well as the role and place of business in shaping the new conditions of interaction between society and the corporate world in the context of volunteering, the reasons why corporate volunteering is becoming increasingly popular, and companies try to deal with them not one-time, but systematically, developing and considering as one of directions of theor sustainability work, were presented by Vadim Kovalev, First Deputy Executive Director of the Managers Association, Executive Secretary of the National Council for Corporate Volunteering, and Irina Zhukova, Deputy Chair of the National Council for Corporate Volunteering, ‘Despite ‘corporate volunteering’ as a term is still poorly recognized by the population, said Vadim Kovalev, we can see that the level of volunteering support in society is colossal. If we have a look at the international context, I can say with confidence that we are in the vanguard of the world in terms of people's involvement, the level of ideas and their scale. Although, of course, we still lack participation of companies, medium and small businesses. This agenda should move along the entire chain of suppliers and contractors. We hope that by joint efforts we will be able to further develop this area in 2019’.

One of the vectors of developing the corporate volunteering agenda in Russia is volunteering for the SDGs that has become a subject of an Agreement on Cooperation between National Council on Corporate Volunteering and the UN Global Compact Network Russia.  Alexander Plakida, the Chair of the Board of the Association ‘National Network of the Global Compact’, Deputy Chair of the Board of ACIG GC, mentioned this agreement as an important achievement of 2018, together with the survey result among leading Russian companies ‘Sustainable Development. Role of Russia’ and priorities of Local Network Russia activities in 2019. 

‘Local Network had two main objectives of high importance’, said Alexander Plakida. ‘First of all, it is work aimed at raising awareness on SDGs, Global Compact, their use for people and companies, role of state and joining efforts. We provide an extensive information base, we aim to collect, translate and adapt all the amount of materials published by the UNGC Office, we publish an informational digest and a number of other materials, Second, our objective is to involve, to synchronize. LN in 2018 held an unprecedented amount of event, during which flagmen share their experience, partners learn and prepare for integrating new principles into their practice. In 2018, LN Russia received an observer status to the UN Assembly on Environment, we are getting ready for hosting our session in 2019 during the Assembly in Nairobi. We need to think of future generations today, and we try to speak with youth their language, such as through the Sustainable Development Day and RANEPA Summer Campus, Hackathons, our youth contest and other projects. We have launched an analytical direction. In particular, to launch the regular monitoring of all the processes we discuss today and aspects of Russian business involvement into the global agenda, UNGC Local Network initiated in 2018 its first report-review ‘Russian Business in the Context of Sustainable Development’. 

Structure and objectives of the report-review were presented by one of its authors - Yuriy Blagov, Director of the PwC Center for Corporate Social Responsibility, St.Petersburg University: ‘SDGs are not just fashion or updated Millenium Goals – they are the global confirmation of the fact that sustainable development is not just an idea, that we need to think about future generations, that it is a question of civilizational survival. CSR can not considered as a microeconomic part of sustainable development: even if all companies become sustainable, it will not provide for overall sustainability. While substantial part of sustainable ed is changing, coporate sustainability idea is changing as well. Initially corporate sustainability meant that business takes ecological risks into consideration and, when possible, compensates the damage. Then this idea transformed into a ‘triple-bottom-line’ concept, in which companies focus on three groups of indicators. Today this idea includes not only opportunity, but also necessity of a situation, in which a company is obliged to sacrifice something to allow business to achieve the SDGs in its aggregate impact. As a result, we speak about corporate sustainability not at the level of an overall proclamation, but as a complementarity of business, NGOs and a state’. 

Relevance of a report-review ‘Russian Business in the Context of Sustainable Development’, which in its full Russian-English version will be presented in 2019, is evident since leading Russian companies demonstrate an active integration of sustainability values into commercial strategies, and their motivation to involve more into sustainability is a duality of objectives: one the one hand, there is an idea of caring for future and a planet, on the other hand, there exist a clear understanding that these factors are of growth and development of business itself (including demand from investors, communities, consumers). 

Natalia Poppel, Head of Sustainability and Brand of Severstal confirms: ‘Socially responsible business perceives its development in a direct correlation with the development of presence regions and the country. During the last 4 years, we observe that in the area of social investment related to volunteering, human rights, communities and employees, we, Russian business, are at the leading position. Nevertheless, there is still a lot of work to be done. For example, joining the UNGC allowed our company to make a step forward in forming policies and standards and changing our strategy. New challenges make all the companies transform their strategies and introduce sustainability approaches’.

Elena Feoktistova, Deputy Chair of the Board of the Association ‘National Network of the Global Compact’, Managing Director of RSPP on corporate responsibility, sustainable development and social entrepreneurship, also highlighted other aspects of motivation of increased attention of business to practical work in the context of sustainable development. ‘Movement towards sustainability is a practical necessity and can’t help influencing competitiveness and business assessment, because objectives and business activities have changed’, confirmed Elena Feoktistova. ‘Companies all over the world start from assessment of their activities according to the SDGs to understand the growth points and groundwork for future changes. In first research projects in 2016-2017, when companies were asked if they were revising their strategies, companies were sure that targets were already set and strategy built. Now we can observe appearance of understanding that revision of tasks and strategies is yet to come’. 

Several days prior to the press conference, RSPP announced results of its Sustainability Index 2018, created by RSPP for 5 years. It is based on public reporting of the largest companies that provides for transparency and accessibility of information. During the last 2-3 years there could be observed a clear growth of quality of the information provided, thus ratings leaders were forced to raise the bar for the assessment of companies in the ‘leaders’ group. Nevertheless, it doesn’t prevent from growth the number of companies, entering the ‘leaders’ category. Today they are 33. ‘All this means that companies understand how important it is to demonstrate what they do and to use in a right way such tool as reporting. It allows to make smoother operations inside the company and has the function of communications for interaction with partners and financial institutions’, said Elena Feoktistova. 

One of the most persuasive confirmations of sustainability progress can be development of market mechanisms, such as fund (stock) indices, build upon an aggregate consideration of economic, environmental, social indicators, which jointly characterize effectiveness of companies activities, their sustainability, responsibility and openness. Moscow Exchange has also started elaborated stock indices on sustainability based on RSPP indices ‘Responsibility and Openness’ and ‘Sustainable Development Vector’. ‘This in a very important step, demonstrating that financial institutions have started perceiving the sustainability topic in a different way’, noticed Elena Feoktistova. We witness that the exchange has built based on our selection a stock exchange index of sustainable development and confirmed that in relation to a middle industry indicator both leaders of first responsibility and openness index, and second sustainable development vector demonstrate high profitability. It is crucial that the index works as other stock indices’.

Developing the topic of finance and investment tools of facilitating sustainable development, Svetlana Bik, Svetlana Bik, Executive director CoLTI – Head of project of «additional information disclosure of concession projects Investinfra», Chair of the Working Group on Green Finance and Responsible Investment of the Expert Council on Long-Term Investment at the Bank of Russia, agreed that enforcement of a holistic approach of SDGs development is impossible without a financial market that is still lagging: ‘Until such indices become a part of investment strategy for large companies, they will perform a role of an image mechanism only. A share in portfolio of an investment company or a bank should correspond to this index. Currently we observe a dictatorship of ESG factors in investment strategies and portfolios of largest global investors. Nevertheless, in Russia we also see certain shifts. The main directions of developing a financial market, the draft of which has already been sent to the President of the Russian Federation, include the ‘green’ topic, which is only in its infancy in Russia. That is what we focus our joint efforts on’.

Anna Lvova, the Director of the International Relations and Information department of the International Investment Bank, commented on a position of development institutions, for which sustainability issues has become relevant much in advance than for business, since such objectives make part of the mandates of such institutions:’ When business applies for finance, development banks set additional requirements. In fact, this way banks perform their educational and awareness-raising function, since not long time ago companies had no understanding why they need that. We try to build logical chains, demonstrating the real profit for business – excluding the moral-ethical and environmental components’.

FBK company has also been dealing with real profit, risks and strategies of companies for more than 30 years at a Russian market. Not long time ago, FBK formed a department assisting companies in developing business strategies in the area of sustainable development. FBK has become the Global Compact member and the Member of the Board of the Global Compact Local Network Russia. Considering that, Sergey Shapiguzov, Managing Partner, President of the FBK Grant Tornton, concluded the press conference, presenting the motivation of an auditor and a consultant, who knows requests and competences of business in a generalized way, assists it to find new opportunities, closely connected today with the topic of sustainable development, and also with its reflection – non-financial reporting.

‘Work of each company is related, first of all, with the regions’, said Sergey Shapiguzov. ‘However business almost doesn’t inform the population on what exactly it does and on what territories, which is important for people. SDGs should be bind with the goals of strategic development of a company. Only 30% of non-financial reports are verified by professional auditors, and that is not enough. FBK is the only company in Russia certified by GRI, it prepares sustainability specialists. Reporting development is multilateral, and should be balanced: creation of a system of reporting on the SDGs, integrated and combined annual non-financial reports and their assurance, special information systems assisting in forming reporting’.

During the press conference and after it, participants discussed different partnerships, importance of support and cooperation in the context of sustainable development. That is for what – for partnership, support and cooperation – on behalf of the UN Global Compact Local Network – there were awarded the Acknowledgements to: 

The Director of the UN Information Center in Moscow VLADIMIR KUZNETSOV for the support of development priorities and a system of projects of the Global Compact Local Network Russia, effective cooperation on involving Russian business into a global agenda and achieving the SDGs and to celebrate 70 years of the UN presence in Russia. 

LARISA OVCHINNIKOVA for the years of involvement and personal contribution to activities, institutionalization and development of the UNGC Local Network Russia, effective professional participation in forming the standards of responsible business practice and sustainable development in Russia.

ELENA FEOKTISTOVA, Deputy Chair of the Board of the Association ‘National Network of the Global Compact’, Managing Director of RSPP on corporate responsibility, sustainable development and social entrepreneurship, for the years of involvement and personal contribution to activities, institutionalization and development of the UNGC Local Network Russia, active professional position on involving Russian business into a global agenda and achieving the SDGs.

IRINA ZHUKOVA for an active and professionally recognized participation in the activities of the UN Global Compact Network Russia and involvement into enforcement of its priorities in the context of forming a signle agenda of Russian business for sustainable development. 

SERGEY SLIPCHENKO for attention to priorities and support of programmatic activities of the UNGC Local Network Russia, professional and personal participation in forming favourable conditions of its development for sustainable development and involving Russian business into a global UN agenda.

NATALIA POPPEL, Head of Sustainability and Brand of Severstal, for an active professional participation in enforcing priorities of the UN Global Compact Local Network Russia, understanding and support to its programmes and projects, personal contribution to forming a responsible business practice in Russia and development of effective partnerships for sustainable development. 

                                                                                                      Happy New Year and see you!

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