ESG: how much is environment for people?

ESG practices are getting increasingly crucial for companies including those in the water transport segment which can actually gain from it.

The discussion of ‘carbon footprint’ and the ways to reduce it is followed by introduction of ESG practices globally. Compliance with ESG standards is more and more frequently considered as one of the key factors influencing the decisions of financial and governmental bodies on support of certain projects. Companies specializing in ESG audit appear and the market of related services is developing. No wonder that the transport industry is on the firing line of this agenda.

In terms of competition between various types of transport, water transport can gain from the trend as it is carbon intensity is one of the lowest. As Yevgeny Sinyakov, Vice President of Russian Chemists Union, said at the Black Sea Export Logistics Conference held recently in Sochi, ESG agenda will put an increasingly high pressure on the supply chains. Carbon intensity of transport is measured in ton-km. The most carbon intensive means of transport are air and road transport with railway and water transport featuring lower carbon intensity. The EU countries have been already working towards redirecting cargo flows to water transport in order to decrease carbon dioxide emissions. According to the expert, Russia is set to insist on inclusion of nuclear energy into the list of carbon-neutral ones. That is of special significance in view of the Arctic shipping development plans.

It should be noted that INFRAGREEN, a bank of data on natural disasters, technological accidents and national ESG-indicators was established in Russia two years ago. It is intended for accumulation of information on responsible investing measures – ESG indicators and rating, sustainable development marks granted to Russian territories and companies, that will let analyze risks and the implementation potential.

There are cases of ESG concerned financing in Russia. Among them is refunding provided by Sberbank to Port Vanino. That will let Port Vanino continue implementation of projects aimed at reduction of environmental footprint: by 2024, it will design and install wind protection screens ensuring control of dust emission when handling dry bulk cargo.

"While implementing the Strategy 2023, Sber places the priority focus on ESG-factors of new projects including those related to environment protection measures", - commented Sberbank Senior Vice President Vladimir Sitnov.

As Dmitry Ivanter, General Director of VTB Leasing Group, said at the Russian Leasing conference organized by Worldwide Expert Conferences in partnership with United Leasing Association, Russian leasing companies operating in the transport segment are also focused on ESG. “In the future, ESG agenda will directly influence the industry of leasing. Obviously, with the appearance of the industry regulator the business will face new requirements. Therefore, it is already important to start integrating ESG practices into the company’s business models and apply a comprehensive approach to all the three factors”.

In its turn, State Transport Leasing Company has recently announced introduction of ESG evaluation of leasing projects when making investment decisions. As of today, the share of ‘green’ and ‘social’ projects in the company’s leasing portfolio makes almost 15%. 

"Russia calls on a well balanced approach to sustainable development without any energy imbalances"

ESG evaluation system lets determine environmentally sustainable projects which can be financed involving ‘green’ financing instruments.

“Our task is to build a systemic work on dealing with ESG issues to remain a reliable partner for the state and for the business community on the way towards sustainable development goals”, said Yevgeny Ditrikh, General Director of STLC.

By today, STLC has contracted 10 green ships running on LNG for a total of RUB 55 billion. Among them are five tankers, two liners and three passenger ships.

STLC is Russia’s first leasing company to be rated by Expert RA agency as ESG-III company under the national rating. That means a high level of compliance with sustainable development standards.

It also should be noted that Russia's major shipping company Sovcomflot focused on using environmentally friendly fuel by its vessels was included into the rating of Weber Research.

In general, Russia calls on a well balanced approach to sustainable development without any energy imbalances. As Russian President Vladimir Putin said when speaking at the plenary session of the Russian Energy Week forum “we are currently highly emotional about the environment and we are to establish a hierarchy of various priorities. For example, biodiversity is of utmost importance and the climate change is among the main factors determining our future. We must focus on it but we do not want to exclude anything or to reduce energy production. The world needs more energy. Therefore, such companies as ExxonMobil, BP and all our energy companies should produce this energy in a sustainable way with respect of all standards. I think this is the practice of Russia as well. Obtaining some financing from western credit agencies we see that all those financial institutions expect us comply with ESG standards”.

Application of alternative fuels will be discussed at the 5th LNG Fleet, LNG Bunkering and Alternatives conference organized by IAA PortNews. The event will be held in partnership with Sovcomflot on 27 October 2021 in Moscow.

Read more about the Conference >>>>.

By Vitaly Chernov

news@portnews.ru

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