In September 2023, the UN published a summary report on the current status of the Paris Climate Agreement, which aims to limit the rise in global average temperature to 1.5 degrees Celsius by 2100. The authors note that since signing the UN Framework Convention on Climate Change (UNFCCC), the international community has made significant progress towards sustainable development of the global economy, but this is still not enough to achieve the goals of the climate agreements - more action is needed.

We have tried to analyse what challenges Russia and its most friendly countries were facing and how ESG policy was developing in the run-up to, during and at the end of the most anticipated ESG event of 2023 - the 28th session of the Conference of the Parties (COP28).

The study presents a digest of what the authors believe to be the key sustainability news from June 2023 to January 2024. It reflects the most significant ESG events in Russia, BRICS members and Kazakhstan.

1. How has ESG regulation changed in Russia?

Russia continues to develop a domestic regulatory framework for sustainable development: work to standardise ESG ratings has been launched, the first methodologies for climate projects have been defined, and a ‘social’ taxonomy and domestic certifications have been introduced. The state is strengthening carbon regulation. The Sakhalin experiment continues. The first voluntary reporting of greenhouse emissions was successful, but the mass introduction of mandatory non-financial reporting is not yet planned - the changes will affect only partially state-owned companies or those with revenues of RUB 10 bln or more. New ‘green’ finance instruments are emerging. The state is ready to co-finance the development of green technologies. Energy efficiency, climate change and circular economy are also in focus. A state programme for energy saving, a new version of the Climate Doctrine, and new measures to encourage closed-loop recycling have been approved.

2. What is new in the ESG agenda of Russian businesses and regions?

In the nascent carbon , businesses are closing their first deals. Carbon units from partners‘ climate projects are being sold to offset companies’ carbon footprints. Green and sustainability bonds are issued. Green certificates are purchased. ‘Green’ property attracts financing. Lending rates for ‘green’ property developers are reduced. Businesses are implementing both environmental initiatives and social initiatives to support staff and local communities. Experts note that an increase in organisations' position in ESG ratings leads to a x1.2 increase in a company's market value. Businesses and regions are synchronising their efforts to achieve ESG goals. Metrics have been developed to assess the contribution of business to the sustainable development of regions.

3. China ESG News

China is on course for an energy transition. The country is embracing new green technologies in a bid to become a leader in renewable energy production, actively developing hydrogen economy, nuclear and hydropower. China has reset the national green bond market. The first adaptation and blue bonds have been issued. China was the first BRICS country to approve a biodiversity strategy to develop initiatives to protect natural ecosystems.

4. India ESG News

India has ambitious goals to increase the share of renewable energy sources in its energy mix to 50% by the end of the decade, as well as to become a leader in the production of green hydrogen. To achieve this, the country is actively cooperating with international investment institutions such as the International Monetary Fund and the World Bank. In 2023, India launched an international trade in green finance instruments by issuing sovereign green bonds for ESG projects. The government is also focusing on biodiversity, supporting local communities and vulnerable ecosystems in the region, and water management.

5. Brazil ESG News

Brazil is one of the first countries outside the EU to implement mandatory reporting under the latest IFRS S1 and S2. In the eyes of ESG investors, Brazil is considered one of the most promising countries to invest in. International organisations see it as a reliable partner and are ready to invite it to their alliances as one of the most developed countries in the region. The country is attracting funds for clean energy transition projects, as well as energy efficiency improvements and water and sanitation services for 100% of the population. Similar to other countries, Brazil entered the international green finance market in 2023 by introducing issuance guidelines as well as national sustainability bonds.

6. South Africa ESG News

South Africa considers climate security to be a critical and urgent issue. The country is actively cooperating with the International Finance Corporation (IFC) to address climate risks. As one of the most economically developed countries on the continent, the country supports the global energy transition initiative and aims to become a leader in the production of ‘green’ hydrogen in the region. With the assistance of IFC, national banks are attracting investments in the construction of ‘green’ real estate and urban infrastructure.

7. Kazakhstan ESG News

Kazakhstan is actively developing its ESG agenda both domestically and internationally. It is actively increasing its RES generation capacity and reconstructing current infrastructure, attracting funding from the global community. At COP-28, the country took on a number of climate obligations and signed key agreements. Among them are The Global Methane Pledge, the Oil & Gas Decarbonization Charter (the National Oil Company KazMunayGas represented Kazakhstan), as well as agreements on international cooperation on energy transition, biodiversity conservation and climate change adaptation. Kazakhstan keeps up with the global agenda and develops the carbon market: the country has introduced a national voluntary carbon standard and ESG principles in the financial market.