ESG-Digest №3 by Mikhailov & Partners monthly issue

Some of the hyperlinks lead to the full version of the article only in Russian

July 2021 KEY EVENTS

#ESG_global_agenda

European Green Deal: Commission proposes transformation of EU economy and society to meet climate ambitions The European Commission adopted a package of proposals to make the EU's climate, energy, land use, transport and taxation policies ft for reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990 levels. A new Carbon Border Adjustment Mechanism will put a carbon price on imports of a targeted selection of products to ensure that ambitious climate action in Europe does not lead to "carbon leakage" More

Vladimir Putin and John Kerry had a telephone conversation on climate issues Vladimir Putin claimed that Russia attaches great importance to achieving the goals of the Paris Agreement and stands for a depoliticized and professional dialogue in this area. Putin and Kerry exchanged their views on the prospects of bilateral environmental cooperation in the Arctic. Putin came up with a number of initiatives, including a proposal to establish Russian- American cooperation on collecting climate data using satellites. More

Blockchain can help us beat climate change Smart contracts – fully traceable, transparent and irreversible self- executing contracts, running on blockchains – can contribute to the fght against climate change. They allow us to design globally accessible and fully automated incentive systems that can directly reward individuals, companies and governments for taking part in sustainable practices – such as regenerative agriculture, carbon ofsets, crop insurance and more. More

ESG-Digest, No. 3 2 KEY EVENTS

DWS Launches ESG Infrastructure Debt Fund DWS, one of the largest asset managers in Europe, announced today the launch of the ESG Infrastructure Debt Fund (EIDF), focused on European sustainability-themed infrastructure sectors that contribute towards making society and economies more sustainable. The new fund will target sectors including renewable energy, digital, energy efciency/utilities, clean mobility/transportation, and social infrastructure, and will avoid fossil fuel-related investments. More

Credit Suisse, JPMorgan Partnering on Sustainable Nutrition Investment Strategy Credit Suisse announced today a partnership with J.P. Morgan Asset & Wealth Management aimed at developing a sustainable nutrition-focused investment strategy. The strategy will be available to Credit Suisse’s wealth management clients globally. Food systems responsible for 20% of global Greenhouse gas emissions and accounting for more than 90% while nearly 700 million people are still undernourished. More

Four global banks to launch voluntary carbon ofset market platform Britain’s NatWest Group (NWG.L), Canada’s Canadian Imperial Bank of Commerce (CM.TO), Australia’s National Australia Bank and Brazil’s Itaú Unibanco (ITUB4.SA) will next month launch a pilot platform for buying and selling voluntary carbon credits, they said on Wednesday, the latest sign of growing interest from the fnancial community in the burgeoning carbon ofset market. More

ESG-Digest, No. 3 3 KEY EVENTS

Microsoft: empowering organizations on their path to net zero Microsoft Cloud for Sustainability is designed to help companies take control of their environmental initiatives, ofering a set of comprehensive, integrated and automated insights for organizations to accelerate each stage of their sustainability journey. It can discover and connect to real-time data sources, accelerate data integration and reporting, provide accurate carbon accounting, measure performance against goals and enable intelligent insights for organizations to take more efective action. More

FCA designed guiding of ESG and sustainable investment funds FCA have therefore developed a set of guiding principles, informed by broad stakeholder liaison and consumer research, to help frms apply our existing rules. The guiding principles are there to ensure that any ESG-related claims are clear and not misleading, both at the time of application and on an ongoing basis, so that consumers can make informed choices. More

U.S. frms may have to disclose emissions by partners, suppliers -SEC The top U.S. fnancial regulator said on Wednesday it may require publicly traded companies to report on greenhouse gas emissions by suppliers and partners, as part of an expected climate risk disclosure rule. More

ESG-Digest, No. 3 4 KEY EVENTS

#green_funding

The Russian Government has approved the goals and main directions of green fnancing Mikhail Mishustin signed an order defning the goals and main directions in green projects fnancing and initiatives in the feld of sustainable development in Russia. The fnancing will be carried out at the expense of green or adaptive fnancial instruments (special bonds or loans). Among the priorities are reducing emissions of pollutants and greenhouse gases, improving the efciency of resource use, and energy conservation. More

Commission puts forward new strategy to make the EU's fnancial system more sustainable and proposes new European Green Bond Standard The European Commission has adopted a number of measures to increase its level of ambition on sustainable fnance. First, the new Sustainable Finance Strategy sets out several initiatives to tackle climate change, and other environmental challenges, while increasing investment – and the inclusiveness of small and medium-sized enterprises (SMEs) – in the EU's transition towards a sustainable economy. More

RusHydro enters the market of "green" renewable energy certifcates I-REC RusHydro concluded an agreement with the Association of Energy Market Participants "Goal number Seven". The Association will certify RusHydro generating facilities, after which it will ensure the issuance of green I-REC certifcates confrming the origin of energy produced by RusHydro power plants from renewable sources. More

ESG-Digest, No. 3 5 KEY EVENTS

#green_funding

The Stock Exchange started trading in shares of the new "green" fund of Tinkof Bank The value of the share is tied to the shares of global companies in the feld of "green" economy. The emphasis was put on the environment: to form the fund, the bank focused on companies focused on the development of green technologies. The initial price of the share is 7 rubles, or about 10 cents. More

Since the beginning of 2021, Sber has issued ESG loans for 52 billion rubles The portfolio of ESG loans of Sberbank has exceeded 52 billion rubles since the beginning of 2021, according to the presentation of the bank’s policy in the feld of social and environmental responsibility, corporate governance and sustainable development. More

The global issue of socially oriented bonds has increased by 2 times in six months In the frst half of 2021, the issue of bonds for sustainable development (for social, environmental purposes, ESG bonds, etc.) amounted to $680 billion. This is 2 times more than in the same period last year. More

ESG-Digest, No. 3 6 KEY EVENTS

#ESG_research

Demand for sustainable thematic funds grows The growth of thematic investing has been remarkable, expanding threefold between 2017 and 2020. More than three-quarters (76%) of investors’ main reason for using thematic funds is for exposure to sustainable and ESG solutions, with the leading preference being an overall focus on the UN SDGs (41%), followed by climate change solutions (21%) and renewable energy (18%). More

Sustainable investments account for more than a third of global assets Sustainable investments total $35.3 trillion, or more than a third of all assets in fve of the world's biggest markets, a report from the Global Sustainable Investment Alliance on Monday showed. Investors are increasingly driven by environmental, social and governance-related (ESG) factors that traditionally have not been captured in a company's balance sheet, but that can infuence future returns. More

Demand for ESG Investments Soars Emerging From COVID-19 Pandemic In a survey of Investopedia and Treehugger readers, a majority or 58% of respondents reported that their interest in ESG grew in 2020, and nearly a ffth or 19%, began incorporating ESG standards into their portfolios during that period. More than half or 62% of ESG investors surveyed took up investing in ESG-related products within the last fve years. More than over two- thirds or 67% of respondents claim they plan to invest more in companies with strong ESG initiatives over the next fve years. More

ESG-Digest, No. 3 7 KEY EVENTS

#ESG_regulatory_practice

Putin signs the law on curbing greenhouse gas emissions Russian President Vladimir Putin signed the country’s frst law on introduction of carbon reporting for companies and limitation of greenhouse gas emissions. The law encompasses the introduction of a model for regulating such emissions. It includes the introduction of obligatory carbon reporting. More

Bank of Russia recommends that public joint-stock companies disclose information about ESG factors Public companies are encouraged to disclose information about how they take into account factors related to the impact on the environment, the social sphere and corporate governance (the ESG factors), as well as how they implement these factors into their business model and development strategy. The recommendations have been developed based on the international standards TCFD and GRI. More

Companies-owners of Russian hydroelectric power plants ask to review the draft "green" taxonomy The Association "Hydropower of Russia" and the companies En+ and RusHydro sent letters to the Deputy Prime Minister of the Russian Federation Alexander Novak with a request to review the project on "green" taxonomy. According to the current version, only hydroelectric power plants without dams will be recognized as "green" without additional criteria and will be able to receive benefts and state support. More

ESG-Digest, No. 3 8 KEY EVENTS

#ESG_appointments

Guerlain turns to experts for sustainability drive Luxury perfume and cosmetics label Guerlain, owned by the LVMH group, has recently created a ‘sustainability board’, a committee of 13 recognised experts in various felds, whose mission will be to help Guerlain defne and deploy a series of strategic initiatives promoting sustainable development. More

RUSAL Announces Appointment of Director for Sustainable Development In her new position, Irina Bakhtina will focus on the further implementation of ’s sustainable development strategy across all divisions of the Company, as well as the Group’s wider climate strategy aimed at achieving carbon neutrality by 2050. Earlier, Irina Bakhtina served as Deputy Prime Minister of the Komi Republic and coordinated issues of socio-economic development. More

Ekaterina Egorova named new CEO of IKEA South East Europe IKEA South East Europe (Croatia, Romania, Serbia, Slovenia, and Ukraine) announces that Ekaterina Egorova has been appointed the company’s new CEO and CSO (Chief Sustainability Ofcer) for the region, efective September 1. More

ESG-Digest, No. 3 9 KEY EVENTS

#ESG_Russia

Rosseti Group became the frst Russian company to receive a non-fnancial rating from the Analytical Credit Rating Agency (ACRA) The group’s assessment was carried out in the area of environmental and social responsibility, corporate governance (ESG). The fnal score was ESG-3, which indicates a very high level of compliance with best practices. For ACRA, this is the frst non-fnancial rating conducted according to its own methodology. More

RUSAL publishes its Sustainability Report for 2020, detailing the company’s commitment towards greener aluminium One of the most signifcant projects of RUSAL in 2020 was the large- scale construction of medical centers to combat COVID-19 with a total cost of about 4 billion rubles in seven cities of Russia (in Siberia and the Urals) and abroad in Guinea. More

Russian business increased their environmental spending by almost 100 billion rubles in 2020 Russian businessmen increased their investments in the environment by 97.2 billion rubles in the pandemic year 2020 compared to the previous period. Businessmen have spent more than 640 billion rubles to protect air, water and soil from pollution, as well as 196 billion rubles invested in environmental investments. Moscow enterprises spent the most on the environment in 2020. More

ESG-Digest, No. 3 10 KEY EVENTS

Сarbon tax for Russian exporters: fears are unfounded? Under certain conditions, Russian companies may even beneft from the measures proposed by the EU to reduce greenhouse gas emissions — they still have three years to adapt to the new rules. Russia must have its own decarbonization plan, which is not yet visible. More

Exporters' losses from the EU emissions tax will exceed $2 billion a year The losses of Russian exporters from the introduction of the EU carbon tax, taking into account direct and indirect emissions, can amount to $2.3 billion a year, the Institute for Natural Monopoly Problems (IPEM) has calculated. This is equivalent to an import duty of 24%. Due to a possible decrease in the production of export products in Russia, a drop in demand for electricity and heat is also expected. More Financing sustainable development: new subsection on Bank of Russia website The subsection presents up-to-date materials on sustainable development, Bank of Russia documents on responsible fnancing and on investment by institutional investors, public and other companies. Moving forward, updates will be available on the progress in the working group’s operations. More

The Russian-German chamber of commerce (AHK Russland) published an update of RAEX- Europe's ESG Ranking of Russian companies Five new companies from the coal mining and retail sector appeared. RAEX-Europe continues to update the ranking on a monthly basis. The companies already represented will be re-evaluated in the annual reports. Companies that have not yet received an ESG rating will continue to be included in the ranking. More

ESG-Digest, No. 3 11 KEY EVENTS

RAEX-Europe has assigned PJSC an ESG rating at the level of A[esg] RAEX-Europe has assigned an ESG Score of 71 (equivalent to a rating of AESG) to PJSC Polyus (Company), which means that the management of ESG related risks and opportunities is of high level. More Three buildings at Sber’s Moscow-City HQ receive BREEAM certifcate Three buildings at Sber’s 32 Kutuzovsky Prospekt complex (Moscow- City) have received BREEAM certifcates. BREEAM, developed by BRE Global, is one of two leading global voluntary sustainability assessment rankings for buildings. Over 500,000 sites worldwide currently have BREEAM certifcates, with only 177 located in Russia. More Sber publishes its frst ESG and Sustainable Development Policy Sber has published its Environmental, Social, Governance and Sustainability Policy. The document enshrines the key framework elements for Sber’s sustainable development, including its main goal, areas, principles, action lines, and targets where Sber’s business has most signifcant impact, and makes basis for management of ESG activities and engagement with stakeholders. More

VEB.rf announced the beginning of the ESG transformation Transformation of the Web.rf will last until the end of 2023 and will contain a number of changes. The state corporation intends to create and implement special ESG tools — including "green" loans and bonds. In addition, the WEB.rf will help create a methodology for the application of social fnancial instruments, climate policy, a system for assessing the quality and sustainability of infrastructure projects. More

ESG-Digest, No. 3 12 KEY EVENTS

Moscow Exchange established guidelines on the best ESG practices created guidelines for companies seeking to follow the principles of sustainable development and be transparent to their customers, counterparties and investors. Specialists of the Moscow Stock Exchange, Deloitte, Environmental Resources Management, Ernst & Young, KPMG, PwC, and the PRI Association participated in the preparation of the manual. More

ESG-Digest, No. 3 13 Contacts: Alexander Briskin Director of Corporate Communications and ESG Projects +7 (495) 956-39-72 [email protected]

Mikhailov & Partners is the leading communications company in Russia. We advise leaders of Russian and international business. Our team helps to build reputations, develop relationships and implement projects in all areas of communication, including ESG