In February 2026, the Council of the European Union adopted the Omnibus package and at once reduced the coverage of mandatory sustainability reporting and regulatory burden. Formally, it looks like a retreat, as if regulators were disappointed in the idea itself. In fact, the opposite happened. In fact, simplifying the rules does not abolish the practice, but enshrines it: ESG (environmental, social and management practices) has turned from a moral agenda into a financial mechanism, which has forced investors to treat climate as a risk, and Russian companies will now have to comply with several standards systems at once.
A century before the abbreviation
The idea that business is responsible not only to shareholders is almost a century older than the term ESG. In 1889, Andrew Carnegie published a Wealth essay in the North American Review with the rigid formula: “A man who dies rich dies disgraced.” Bearing in mind that wealth should be returned to society through charitable investments. His words did not part with the case. In 1911, he established the Carnegie Corporation of New York with a capital of $125 million, and in total gave about 350 million to charity, about 90% of the fortune. Next came the Rockefeller Foundation (1913) and the Ford Foundation (1936).
Systematically, the principle was formulated by economist Howard Bowen. In the book Social Responsibilities of the Businessman (1953), he called corporate social responsibility (CSR) the responsibility of an entrepreneur to make decisions that are desirable from the point of view of society’s values. It was from this work that the term was fixed in the business language, and Bowen is now called the father of CSR.
One book made environmental consciousness massive. On September 27, 1962, Rachel Carson’s Silent Spring came out about the dangers of pesticides, and then the agenda only intensified. The first Earth Day on April 22, 1970 attracted about twenty million participants. In the same year, the United States created the Environmental Protection Agency (EPA) and adopted the Clean Air Act, for which the House of Representatives voted 374 to one. In 1972, the Clean Water Act was held.
In parallel, the numbers were counted. The Roman Club, gathered in 1968 around Aurelio Peccei and Alexander King, in 1972 released the report The Limits to Growth with a circulation of about thirty million copies in thirty languages. For the first time, a simple thing was shown mathematically: the exponential growth of consumption in the final system sooner or later rests against the resource ceiling. Then, in June 1972, the UN Stockholm Conference gathered 114 states and gave rise to UNEP – the UN Environment Program.
ESG: How three letters grew out of sustainability
A conceptual framework was given by the report “Our Common Future” (1987). The definition of sustainable development is still cited from there: development that meets the needs of the present without undermining the capabilities of future generations. The direct predecessor of the agenda was the Earth Summit in Rio de Janeiro (1992), where delegations of 179 countries came. Five documents were adopted there, including the UN Framework Convention on Climate Change and the Statement of Principles for Forest Management. Starting from Rio, a systemic conversation begins that business is obliged to consider the environmental and social consequences of its decisions. Then the climate architecture lined up: the Kyoto Protocol (1997), the Paris Agreement (2015, 194 parties by 2026) and the UN Sustainable Development Goals.
The abbreviation itself was born in the financial environment. In January 2004, UN Secretary General Kofi Annan wrote to the heads of 55 major financial companies, proposing to integrate the environment, social issues and management into the analysis of securities. The answer was the Who Cares Wins report (2004), which was signed by twenty institutions from nine countries with assets over six trillion dollars, including Goldman Sachs, Deutsche Bank, HSBC, UBS and the World Bank. In this text, the term ESG first came into wide circulation. A year later, the legal Freshfields Report removed the main barrier, concluding that taking into account ESG factors does not contradict the fiduciary duty of the manager, but rather it is required. In April 2006, the Principles of Responsible Investment (PRI) were launched on the New York Stock Exchange: investors with assets over two trillion dollars started, and by 2024 there were about 128 trillion under the management of the signatories.
The decoding of the three letters is simple only in appearance. E – climate, emissions, water, waste, biodiversity. S – human rights, occupational safety, relations with local communities, product safety. G – Board of Directors, top management remuneration, anti-corruption procedures, tax transparency. The main shift was the appearance of the letter G. Practice has shown that companies with opaque solutions and toxic management systematically generate environmental and social risks. Management turned out to be a condition without which the other two factors cannot be controlled at all.
The moment climate became an investment risk
2018 was a turning point and indicative. The head of BlackRock’s largest investment fund, Larry Fink, who then managed $6.3 trillion in assets, wrote in an annual letter that companies should serve a social purpose. Two years later, he formulated a thought that has become canonical: climate risk is investment risk. From that moment on, the topic went from the niche of ethical funds to the mainstream.
The real watershed was the shift from voluntary reporting to mandatory disclosure. The European Union introduced a taxonomy of “green” activities (2020), disclosure rules for financiers SFDR (2021) and the CSRD directive (2022), which expanded the circle of those obliged to report from 11,700 to about 50,000 companies. Twelve ESRS standards were added to them with the principle: you need to disclose what is important either for the company’s finances or for its environmental impact. Global leadership in ESG standardization passed to ISSB (International Council on Sustainability Standards): its IFRS S1 (general requirements) and S2 (climate) standards began to operate on January 1, 2024, and by the beginning of 2026 21 jurisdictions had already adopted them.
What does this give the company in monetary terms
According to MSCI, top ESG-rated companies raise capital at an average of 6.8% against the usual 7.9%. This difference means noticeably cheaper money for the entire duration of the project. The green bond market, which began with the issue of the European Investment Bank for 600 million euros in 2007, by the end of 2025 had accumulated a volume of about $8.1 trillion.
There is also a hard side of admission. Apple, Unilever, Ikea, automakers have built ESG criteria into supplier requirements, and a company without non-financial reporting often simply fails counterparty verification. Data collection has a separate effect: a company counting its carbon footprint for the first time across all three covers usually finds along the way that it did not know half its own costs. Yes, sometimes reporting changes management before climate and its changes.
International examples can be divided into two groups. Danish Ørsted, back in the mid-2000s 85% dependent on fossil fuels, sold the oil and gas business and by 2019 brought the share of renewable generation to 86%, meeting the goal more than a decade ahead of schedule. Unilever’s sustainability brands grew 69% faster than the rest. Patagonia in 2022 transferred the entire company worth about three billion dollars to structures that direct profits to climate conservation, which is hundreds of millions a year.
The second group is the flip side, and it costs a lot more. Volkswagen’s high-profile diesel scandal (2015) cost about $33 billion and cost the CEO a chair, BP’s accident in the Gulf of Mexico (2010) brought about 65 billion direct losses. The Rio Tinto explosion in the Jukan Gorge in Australia, that destroyed a monument with a history of about 46 thousand years, was legally settled, but the company lost its “social license” along with three top managers. This is the price of the letter G.
Russian contour: reporting began before the word
In Russia, non-financial reporting appeared before ESG became fashionable. Gazprom adopted an environmental policy in 1995, Norilsk Nickel released a social report in 2003, and Lukoil has been reporting since 2005. The infrastructure was gathered around itself by the Russian Union of Industrialists and Entrepreneurs: the National Register of Non-Financial Reports has been conducted since 2006 and by 2025 has 252 companies. Since 2019, the Moscow Exchange has been publishing daily quotes on the RSPP indices, at the same time Expert RA and ACRA ESG ratings appeared.
The Bank of Russia entered the ESG topic systematically in 2021, issuing a series of information letters – on climate risks, disclosure of non-financial information by public companies and accounting for ESG factors by boards of directors, and by 2023-2025 added recommendations on the climate transition strategy and the Code of Responsible Investment. In 2024, the regulator also prepared its own ESG rating methodology with a single scale.
The industry picture pleases: it is dense and motley. Metallurgists invested in decarbonization: Severstal brought the program budget to 298 billion rubles, MMK spent 106 billion on environmental protection measures in eight years and reduced gross emissions in Magnitogorsk by a third. Norilsk Nickel runs the Sulfur Program 2.0 with a budget of up to $4.3 billion and a goal to reduce emissions in Norilsk by 95%, and it also remains a defendant in Russia’s record fine: 146.2 billion rubles for spilling about 21 thousand tons of diesel fuel in 2020. The reason was called pile settlement due to thawing of permafrost, that is, an underestimated physical climatic risk in the literal sense. Oil & gas industry keeps its goals for 2030-2050, retail counts emissions per square meter, and banks have increased their portfolios: green and ESG loans of Sberbank have grown from 300 billion rubles in 2021 to 3.7 trillion in 2024. The first Russian issue of green bonds took place in December 2018.
Where criticism is fair
It is unfair to ignore claims against ESG, some of them are quite fair. Greenwashing as one of the main accusations is already expensive for the companies themselves: the management company DWS from the Deutsche Bank group was punished by regulators for $52 million for embellished statements about sustainability. The situation is worse with ratings. The Aggregate Confusion (MIT Sloan) study found that the average correlation of ESG scores of the six largest providers is about 0.54, while the credit ratings of S&P and Moody’s are close to 0.99. More than half of the discrepancies are explained by the fact that providers measure the same indicators differently. The investor receives a weak signal and the ability to choose a rating for himself.
In the United States, this topic has become the subject of inter-party struggle. After Tesla was excluded from the S&P ESG index, Elon Musk called ESG a fraud, Republican states passed dozens of anti-laws, and Texas and Florida withdrew billions from funds suspected of “boycotting” oil and gas. There is also an entry price: according to the European Commission, reporting on CSRD costs a large company about 740 thousand euros per year, and for medium-sized businesses this is a tangible burden. Most likely, this became the political trigger for simplifying the rules.
What is important for Russian business
By 2026, the ideological stage of the development of the ESG agenda has definitely been completed. According to WTW, 77% of S&P 500 companies have tied at least one ESG metric to CEO bonuses against 52% in 2020-2021. The Omnibus package reduced European reporting coverage by 90% and the number of ESRS indicators by more than seventy, but the obligation for companies with more than a thousand employees remained. The word may go out of fashion, but the practice will remain inside the standard corporate machine: disclosure on IFRS S1 and S2, risk management, tax transparency, working with supply chains.
This dictates a specific task for Russian companies. Anyone who focuses on Asian markets is forced to simultaneously pull the Russian taxonomy, ISSB standards in China, Japan and Hong Kong, and when working with European partners – de facto ESRS too. It is worth starting not with a rating or a report, but with an honest calculation of your own carbon footprint in all three areas – then the data itself will show where the company is losing money.
By Andrey Khoroshilov, General Director and founder of the Save the Forest environmental service, member of the Skolkovo Foundation