For decades, the world has followed the trend for boosting social, environmental and economic responsibility of business. In order to pursue Environmental, Social, and Governance (ESG) standards, companies are embracing strategies and hiring top executives to entrench corresponding principles, and Russia is keeping up with the agenda.
Despite the fact that the country adopted the concept of transition to sustainable development back in 1996, these principles have yet to actually become widespread. The government and big business have shown active interest in the environmental agenda only in the past few years – and largely due to increasing protests and high-profile technological disasters that have received media coverage.
Responsibility is often viewed as a solely image-related aspect. A recent survey conducted by Hays together with the Russian School of Management has revealed that top executives often utilize environmental and social assistance practices to improve their companies’ representation in the media and increase their competitiveness (54% and 43%, respectively), rather than to directly help society and the environment (53%).
Depending on the type of business, economic effects of the commitment to sustainable development can either be beneficial, such as attracting investors and increasing employee loyalty, or result in failing to meet business goals and reducing profits, which forces the company’s management to postpone implementation measures of social and environmental responsibility (47% and 16% of the surveyed senior managers, correspondingly).
It should also be noted that amidst the current Russian realities, both company employers and employees often mention reported salary (70% and 63%, respectively), guarantee of safe work (56% and 45%), and an opportunity for additional training (49% and 37%) among sustainable development practices, while these measures should be only a matter of course.
According to the survey, only 12% of employees will choose working in a company with increased social and environmental responsibility even if they are offered a higher salary by another company that does not implement sustainable development practices, which is a negative trend.
On the other hand, three-quarters of senior managers and almost three-quarters of employees are aware of what sustainable business development is, and nearly two-thirds of those surveyed emphasized its importance.
The poll showed that 41% of the respondents mention projects aimed to support society – both one-time events and long-term sponsorship or volunteering projects – among the most common sustainable development practices. Moreover, many are engaged in such projects; this is a widespread practice in international companies, which take more frequent and faster efforts to comply with sustainable development principles as it is easier for them to adopt their western colleagues’ experience and utilize solutions that have already proven successful.
The issues regarding the implementation of environmental initiatives are largely due to the fact that the environmental agenda is basically less popular in Russia than in other developed countries. Also, speaking of Russia’s economy, we should note that a great number of large companies operate in the so-called “dirty industries” – that is, those related to coal, oil, gas and other extractable resources.
In this business, the implementation of eco-responsibility practices requires immense financial investments even if top executives share a global concern for environmental protection. The coronavirus pandemic along with the unstable political and economic situation are forcing managers to channel money for solving more pressing issues and achieving the main strategic business goals of the business – otherwise they may fail to stay afloat.
Yet, over 100 Russian companies are represented at the top of ESG ratings today, a large part being representatives of the aforementioned “dirty industries” which are making every effort to avoid falling into this category. We even can generally call petrochemical and metallurgical companies pioneers in implementing sustainable development practices in Russia.
An increasing number of companies are becoming aware of the importance of environmental and social responsibility. The relevance of sustainable development strategies as well as the benefits of their implementation become clear due to many factors, such as business awareness and responsibility, along with increasing stock prices and interest from foreign investors, greater attractiveness of such companies for young professionals, and reduced tax burden due to the governmental support.
Even the companies that are yet unable to introduce widespread sustainable development measures are making efforts to utilize them when launching new projects. Given that business undergoes constant renewal and transformation, we will see the responsible business strategy expanding within a few years.
By Nina Voronova, Managing Consultant in Production, Hays international recruitment company