A QUIET REVOLUTION IN RUSSIAN CSR

Key findings of The Economist Intelligence Unit research commissioned by UC RUSAL and supported by PricewaterhouseCoopers and the representative office of UNDP in the Russian Federation


Moscow, 26 November 2008 – The first global study into Russian Corporate Social Responsibility (CSR) has shown that as Russian business goes global, sustainability has been established as a key priority of their strategic development. The international research project, From Russia with Love: A national chapter on the global CSR agenda, conducted by the Economist Intelligence Unit (EIU), has indicated that 90% of Russian majors have either a CSR or sustainability programme already in place or in development.š According to Russian companies, CSR provides them with a number of benefits including improved productivity and business performance as well as an enhanced ability to raise capital from investors.


From Russia With Love. A national chapter of the global CSR agenda, an original research undertaken between June and September 2008, is based on a survey of 258 senior executives from international companies with a turnover over USD 1bn, along with more than 20 in-depth interviews with business leaders and CSR experts. This is the first research to provide a comprehensive analysis of CSR practices by Russian majors as well as comparing them with those of the peers worldwide and in the most dynamic economies.


According to the research, CSR and sustainable development concepts have turned from being an abstract theory into day-to-day routine for Russian majors. 70% of Russian companies, more than anywhere else in the world (60%), have said that good CSR and sustainability programmes are helping to attract business from other emerging markets while over 60% said that improving their company’s brand and reputation was a leading motivation for implementing policies. The ability to compete internationally was cited by 31% of respondents as a reason for adopting sustainability policies, with 21% citing demands from governments and regulators.


Central to the development of CSR programmes in Russia has been the increasingly globalised perspective and international expansion of Russian majors. By 2010 Russia is predicted to have a total of USD 240bn invested in markets across the globe, far ahead of other emerging markets such as India and Brazil. Over 50 companies headquartered in Russia and the CIS states are already listed on the LSE alone. As a result, CSR and sustainability programmes have become an integral part of Russian business practices as companies adapt western business practices as well as invent their own unique solutions that seek to provide greater clarity in their operations as demanded by their international peers, investors, customers and regulators.


Over the past three years, Russian companies have placed a strong emphasis on improved workplace and human resource practices, including the development of heath and safety regulations and better working conditions, with 75% saying they have worked on this compared to 70% internationally. Indeed, 83% of Russian companies polled said they have a documented environmental policy, which is well ahead of the 70% from their emerging market peers. This reflects the growing importance of sustainable and environmentally friendly business practices among Russian companies.


With the current global economic slowdown, cost is the number one barrier to further progress on CSR and sustainability efforts all over the world. However, there is recognition among Russian business executives that more needs to be done to upgrade the infrastructure legacy of the Soviet era and to reduce the carbon footprint created by business activities. Greater leadership and more comprehensive measurement mechanisms along with closer cooperation between businesses and the state are also required to ensure that Russian companies continue to progress with CSR and sustainability programmes.


It’s clearly going to be a challenge to sustain CSR and sustainability programmes while there is turbulence in the world economy, but with a focus on improving waste management, corporate governance and energy efficiency, Russian companies have a business case for investing in CSR practices. While the report shows there is room for improvement, CSR in Russia is stepping up to the challenges of globalisation and the need to prioritise environmental measures in businesses processes.


Key findings of the research are:

Russian CSR practices are comparable to international standards in many areas. These include aligning CSR activities with corporate strategy and management understanding of sustainable development. More than 6o% of major Russian companies have a formal CSR policy or strategy in place.

Looking ahead, Russian companies expect to have a high priority on cleaning up waste and pollutants, improving corporate governance and energy efficiency, roughly in that order. Russian executives say that these three issues will be the top priorities between now and 2011.

Russian companies report on CSR and sustainability broadly as regularly as international firms. Approximately two-thirds of all surveyed companies, in Russia, emerging markets and globally, issue some form of report on their CSR and sustainability efforts. From 2006 the number of CSR reports issued has increased from 50 to over 120 in 2008.

Concern about costs is the number one barrier to further CSR/sustainability efforts—in Russia, and elsewhere. One third of Russian executives noted worries about costs as their key concern—higher than any other issue—to making further progress on sustainability. This reflects views elsewhere in the world, as it was top of the agenda for businesses in all regions.

Ethics policies do, however, have room for improvement. Ethical policy development is lagging well behind corporate governance development which is ahead of emerging market counterparts. 48% of Russian companies polled have documented a policy compared with 70% of emerging market firms.


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