Business and Ecology

A Series of Round Tables: “Business and the Environment in Russia”

Background: 

As Russia’s economy grows and integrates with the global economy, the impact of companies in Russia on the environment is becoming increasingly important. Internationally, there is growing concern about global warming, and international companies investing in Russia are under pressure to comply to increasingly strict legislation and the demands of public opinion. Inside Russia, the Ministry of Natural Resources has become more active in prosecuting companies for infringements and there is growing public awareness of environmental issues. President Medvedev and Prime Minister Putin have both recently emphasized the importance of good environmental management for the future competitiveness of Russia. There are good business reasons why companies need to pay attention to the environment, and particularly to resource management. Domestic electricity prices and natural resources are increasing. There is also a capacity shortage in electricity which has resulted in cuts during peak hours, especially during extremes of temperatures. There are a number of opportunities for investment in environmental processes, technologies and management - including international financing, cost reduction and diversification of exports. Higher energy prices, spot shortages, increased vigilance by the regulator and the beginnings of a public opinion which want to protect its environment – these issues are in their infancy but are likely to grow in importance

Aims and Goals: 

The aim of the series of round tables was to bring together senior executives of leading Russian and multinational companies to exchange experience and best practices on how companies could manage their environmental policies and position themselves to meet the social, legal and economic challenges of the next few years. The round-tables were the main vehicle for exchange of information on management, strategies and policies. The results of the discussions will be further disseminated by a publication of case studies which will be distributed widely throughout the business and government communities. Overall, the aim is to create a network of business leaders and senior executives interested to contribute to, and learn from, such exchanges about the environment. Our goal is to increase business decision-makers’ awareness of the risks and opportunities of environmental management and to spread this awareness throughout the business community. Finally, all IBLF programmes have led to further projects and collaboration between companies. 

Structure and format:

The series comprised 7 round-tables organized by IBLF throughout 2008. Each round-table examined in depth a particular aspect of environmental impact and management fr om the point of view of business. The target audience were Directors of Environment of leading Russian and multinational companies.
The participants were from industries that have the biggest impact on the environment: natural resources, power generation, metallurgy, chemicals and paper and pulp. The format was based on discussion and exchange rather than presentations.

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Round Tables 

Round Table 1: The Global Context

10 April 2008 at RAO UES

A panel of top-level industrialists, scientists and observers lead a discussion on the global context for environmental management by companies. What are the global regulatory demands, what are the growing pressures due to the climate change debate and the new Kyoto-2 discussion in Bali, what are the pressure points on companies? What are the risks and opportunities to business of the changing demands of the public and governments? How do these change impact Russian companies and society and how can companies deal with it? How do you manage future risks, and what are the environmental threats of the future?

Round Table 2: Efficient Use of Resources

21 April 2008 at Severstal

Although investment in environmental activities is often portrayed in terms of increased costs to business, in fact thee efficient use of scarce resources can provide a dramatic way of reducing costs. Companies shared best practices in how they implement the three “R”s: Reduce - Reuse - Recycle. The discussion  focused on energy saving as one of the key ways in which companies can reduce costs, increase energy security, and protect the environment. The impact of the new law on energy-saving was also examined. Another major focus of the discussion was managing water resources, a key challenge for Russian companies. Finally there was a discussion on reducing emissions as a means to reduce costs and creating new business opportunities.

Round Table 3: Developments of minimizing ecological risks

21 May 2008 at Rusal

Waste management remains one of the biggest problems for Russian companies. As acquisitions become more widespread, companies will be less likely to be willing to take on obligations of earth, water and air pollution caused by previous owners. The discussion focused on cleaning up the environmental mistakes of the past, how to dispose of waste without causing damage to the environment and local communities, and new opportunities for land reclamation and recultivation.

Round Table 4: Financial instruments

4 June 2008 at ABN AMRO

As companies seek to attract project financing and investment, especially from abroad, they will need to prove to lenders and investors that they will have to meet increasingly stringent requirements on managing environmental risk. At the same time new business opportunities arise in areas such as carbon emission reductions. Our discussion will focus on the following questions: What is the role of banks and investors in incentivising good environmental behaviour? According to what criteria and processes do they decide whether to back a deal? What are the requirements of international capital markets on environmental due diligence? What financial instruments are emerging to address the environmental risk? What are the risks and opportunities of new environmental regulation from governments and international agreements such as the Kyoto Protocol? What is the impact of the standards adopted by international banks called Equator Principles on project finance?

Round Table 5: Combatting risk through stakeholder engagement

24 June 2008 at TNK-BP

Reputation, risk management, and communications are all critical parts of environmental management, and with pressure from government and NGOs, this has never been more important. How do companies managing relations with local communities, how do they consult with local stakeholders, and work with NGOs and the press rather than in conflict with them? What support mechanisms exist for Russian companies in managing community relations? Finally, how can construct an integrated environmental policy and convincing public image?

Round Table 6: Culture Change against Climate Change

20 October 2008 at Dupont

In the series of round-tables, we have seen that the role of Director of Environment in multinational corporations is far broader than has traditionally been the case, and people attending have asked us to focus on precisely what if the that role in an international company. Rather than fulfilling a purely technical role, ticking the boxes to make sure that regulations have been observed, the Director of Environment has increasingly become a leader - responsible in part for creating a culture change within the organization so that that the company can meet its obligations to shareholders and the market without damaging the environment and society.

In this session we will look at how Directors of Environment in companies, working with other functions, can achieve this through clear communication, training and education of the staff and the top management, and how they can put the beginnings of infrastructure in place to engineer this change.

Round Table 7: The regulatory framework

16 December 2008 at Ernst & Young

There has been much confusion amongst Russian and international companies about the role of the regulator and how legislation is applied. Companies also face the challenge of acting in accordance with two sets of standards: international norms and local regulations. What kind of dialogue are companies having with the government, and what kind of dialogue should it be? Wh ere are environmental legislation and regulation regulator heading in Russia? This session will mark the start of a new positive era of open debate and mutual understanding between business and govenment.