Because of the growing interest of companies and investors in the sustainable development agenda, ESG principles that cover the environmental, social and managerial components of companies' activities are gaining popularity.

In the third part of the research you can get acquainted with the history of the development of responsible investment principles, a description of ESG factors and the degree of their influence on companies in Russia and globally.

Historical background and evolution of ESG principles

Main stages of development:

• 1960s: Refusal to support companies associated with the Vietnam War.
• 1970s: Refusal to support companies associated with apartheid in South Africa.
• 1980s: Creation of the US Sustainable Investment Forum and the social DSI 400 Index..
• 1990s: Signing of the UN Framework Convention on Climate Change and the emergence of GRI standards.
• 2000s: Publication of the UN Sustainable Development Goals and start of the EU's Green Energy Transition.
• 2010s: Launch of environmental reforms in Russia and publication of the UN Millennium Development Goals.

Main components of ESG

Environmental:

• Environmental Management System
• Energy efficiency and climate change
• Water use and air pollution
• Land use, waste and packaging
• Biodiversity

Social:

• Working conditions and safety at work
• Human resources policy and social support
• Human rights and discrimination
• Community engagement

Governance:

• Governance structure and strategy
• Board independence
• Ethics and anti-corruption policy
• Disclosure Score
• Governance for Sustainable Development

Examples of information to be disclosed

Environmental indicators:

• Specific water consumption, GHG emissions
• Land reclamation and energy efficiency programmes

Social indicators::

• Occupational injuries, employee turnover rate
• Salary range, share of women in managerial positions
• Social investments in the regions of operation

Governance:

• Share of independent members on the board of directors
• Financial incentives for ESG compliance
• Availability and accessibility of ESG reporting

Benefits of implementing ESG principles

Impact on companies:

• Revenue growth and improved credit ratings.
• Enhanced business reputation and strategic market positioning
• Reduced environmental costs and increased shareholder returns
• Reliable financial forecasting
• Improved sustainability and returns on investments

Examples of countries and companies:

• Japan, Mexico: The share of companies publishing ESG reporting reaches 100%.
• Sweden, the USA, Malaysia, France, India, Spain: The share of companies publishing ESG reporting is 98-99%.

ESG financial instruments

Key instruments:

• Green bonds: Issued for environmentally friendly purposes, with a lower coupon yield than conventional bonds.
• Green loans: The rate varies depending on the extent to which environmental goals are met.
• Sustainability-linked loans: Rate depends on ESG indicators, rating agencies' assessment.

Examples of Russian banks:

• Sberbank: ESG-transformation, development of ESG-strategy and establishment of ESG-committee
• Sovcombank: Sustainable development policies, ESG lending
• Russian Agricultural Bank: First ESG ETF on the Moscow Exchange, support for sustainable development of the agro-industrial complex

State support and recommendations

Key areas:

• Reduction of pollutant and GHG emissions
• Improving resource use efficiency and energy saving

Recommendations of the Central Bank of the Russian Federation:

• Analysis and consideration of sustainability factors in investing.
• Disclosure of information on sustainable investing strategies
• Preference to companies with responsible environmental and human capital development policies

Key sectors:

• Waste management, energy, construction, industry
• Transport, water and wastewater discharge, agriculture
• Sustainable infrastructure, natural landscapes and biodiversity

Conclusion

The study emphasises the importance of implementing ESG principles to improve the investment attractiveness and sustainable development of companies. The main areas include the development of green finance, improved corporate governance and social responsibility. Effective environmental risk management and compliance with international standards will help companies to achieve long-term sustainability goals and improve their international competitiveness.