Investing in well-being: experiences of implementing the ESG agenda by Russian oil and gas companies

. The article is devoted to the study of the role of ESG policy in ensuring environmental well-being of oil and gas regions of the Russian Federation. In the framework of scientific research the main problems of its implementation were identified: commercial interpretation of ESG policy, lack of a transparent system of evaluation criteria and management remuneration, lack of a developed market infrastructure allowing to use ESG policy as a tool of competitive advantages. Prospects for increasing the role of ESG policy in providing environmental well-being of oil and gas regions of the Russian Federation: 1) development and implementation by the sector regulator of ESG policy code for oil and gas companies; 2) popularization of ESG methodology among oil and gas companies by putting them on a separate quotation list of PJSC Moscow Exchange; 3) national technological audit of development strategies of oil and gas companies with attraction of experts from venture capital sphere, marketing agencies for development of road maps; 4) formation of a national library of the best practices in the field of green technologies and greening of activities; 5) financial support for innovation infrastructure facilities (technoparks, technopolises, business incubators), focused on the development of import substitution in the field of green technologies.


Introduction
The aggravation of global environmental problems of mankind has not only made them headline agendas of states and international organizations (UN, FAO, Greenpeace, UNESCO), but has also begun to influence the model of business behavior of a growing range of businesses, and above all, of the oil and gas sector.Undoubtedly, any business has an impact on the environment, but the oil and gas sector is one of the most active in terms of changing the natural ecosystem, and the mechanism of compensation for such a destructive impact is a strategic priority of business development, taking into account the interests of many stakeholders and minimizing the toxic footprint of its economic activities.In general, environmental policy in the 21st century is complex and even ambiguous due to the interest of political forces in its use as an instrument of non-tariff regulation and, if necessary, the establishment of barriers to access to markets for businesses from so-called "unfriendly countries".Proceeding from this thesis we should keep in mind that the modern "green business philosophy" has hidden political interests but within the framework of this scientific research we will focus only on environmental facts of responsible business practices implemented within ESG-methodology.
The relevance of the issue of formation and development of the concept of "green economy" on the scale of the country has a multidimensional genesis: on the one hand, for the Russian Federation, the oil and gas industry is a critical component of the national economy and a source of budget revenues (in 2022, their volume was 10.7 trillion rubles, or 45.5% of the total federal budget revenues), on the other hand, in an explosive growth of the impact of international sanctions (489 sanctions have been introduced against the oil and gas sector in 2022, including 276 of technological nature) The importance of reforming the energy sector to gradually reduce its role in ensuring the growth and development of the national economy and business awareness of the importance of environmental goals and the NDF (Non-Damage Force) principle is increasing, which leads state regulators to adopt a set of economic and regulatory measures to promote environmentally responsible behavior [1][2][3].
Based on the review of practices of organization and functioning of ESG-model in the domestic and foreign oil and gas sector, the next stage of scientific research is to study the practice of its organization and application in the object of research -PJSC Gazprom and competitor companies: PJSC LukOil and PJSC Rosneft (Table 1).As follows from the above comparative analysis, PJSC Gazprom has a fundamental approach to the implementation of the ESG model of corporate business conduct and sets as its main goal the formation of an integrated environmentally friendly anthropogenic ecosystem, which involves not just compensation for the technological impact of gas production on the environment, but an adaptive approach to all business processes of natural gas production, production, storage and transportation, i.e. the work model is not built according to a well-established production pattern.On the basis of this model the company's management forms scenarios and chooses the most balanced option, which respects both commercial and environmental (social) interests.
At present, competitor companies, such as LukOil PJSC, have as their priority the task of digitalization of stability monitoring of gas production and transportation business processes to prevent technogenic accidents, as well as application of IoT technology to create digital 3D field models to improve operational efficiency; Rosneft PJSC focuses on increasing productivity of existing fields by using well recycling processes (storage of natural gas in exhausted wells); Rosneft ESG-model is aimed at increasing productivity of existing wells by using the process of well recycling (storage of natural gas in exhausted wells) [4; 5].

Investing in prosperity: analysis of investment activity of the oil and gas business
According to JSC "Rating Agency AK&M" at the end of 2022 ESG policy is fixed in only 9 of 76 oil and gas companies engaged in production of energy assets on an industrial scale (more than 1 mln tons / year): PJSC Gazprom, PJSC Rosneft, PJSC LUKOIL, PJSC NOVATEK, Sakhalin Energy Investment Company Ltd, PJSC Surgutneftegaz, PJSC Tatneft, JSC RNG, PJSC Gazprom Neft.The dynamics and structure of the contribution of oil and gas companies as part of the ESG policy implementation in the Russian oil and gas sector in 2017 -2022 (estimated data) are shown in Diagram 1.As it follows from the graph, the total volume of green financing within the framework of ESG policy implementation by 2022 increased by 6,574 mln rubles, or 2.2 times compared to 2017, with investments in green technologies and compensatory environmental projects (average value -2,411.9mln rubles, or 36%) being almost equal in specific weight in its structure, or 36.7%) and expenses for projects to develop the intellectual capital of the oil and gas business (the average value is 2,392.1 million rubles, or 36.4%),i.e. the emphasis was placed on the E and S policy components.At the same time, such direction as interfirm cooperation of the oil and gas business with the institutes of innovative development amounted to a much more modest volume -on the average 1,041.2 million rubles, or 15.8%.Expenditures for social facilities financing were the least -728.7 mln rubles, or 11.1%, which doesn't mean, however, that the companies' management is exceptionally rational.At present, the criteria for evaluating non-financial investments on the scale of the national energy assets market are only being formed and such corporate altruism is often perceived as wastefulness.
As follows from the analysis of the root features of the Russian ESG policy, its genesis lies in the regulatory, rather than market plane.Thus, the state through the mechanism of expanding corporate responsibility of oil and gas business to reduce the burden on the budget in terms of implementation of social development programs of oil and gas regions, which are mostly remote and less developed in terms of infrastructure and communications, and the example of issuing licenses for field development shows this feature most clearly: each permit involves a "non-commercial burden" from the state regulator associated with environmental and social contribution of business [6].
Separately, the author analyzed the indicators and metrics of green technology development in the oil and gas sector and their impact on the environmental well-being of oil and gas regions (Table 2).As follows from the data presented in the table, in the analyzed period there is an increase in the share of oil and gas businesses implementing green technology projects from 12.8% in 2017 to 20.3% in 2021.Despite the seemingly small share, it should be understood that we are talking about 9 companies, whose total contribution in the oil and gas sector is more than 67%.
It is important to note that the specific weight of investments into green technologies in the oil and gas sector during the analysed period rose from 3.9% to 7.7%, which of course lags behind the world leaders: for example, oil and gas companies in Norway and Sweden have a similar index ranging from 25.0% to 37.0%.Moreover, at present the green forces in Norway lobby the concept of banning investments in dirty assets, for example, from the Sovereign Fund, and reducing investments in the securities of such companies.As for the index of inventive activity and research in the field of green technology, the situation is somewhat ambiguous: most oil and gas companies transfer this issue to oil service companies or partners who are not affiliates, which means that data on their participation is not reflected in the reports, so the true scale of investment in R&D projects is quite difficult to assess correctly.
Turning to the assessment of oil and gas companies' contribution to the environmental well-being of the regions where they operate, the leadership in the reduction of discharges of harmful substances into water and reduction of water consumption becomes noticeable: in 2021 such indicator was -20.4% (in 2017 -12.5%), which is due not only to the obtained before the introduction of numerous technological sanctions, but also to active import substitution of technological equipment.The second place is occupied by the rehabilitation of the land fund (recultivation): 10.7% against 5.5%, but one should understand that this direction requires more profound structuring and analysis as in some cases obligations are fulfilled formally, for example through compensatory planting, introduction of special absorbents to the oil spills, etc.
Reduction of emissions into the atmosphere is the final direction of the environmental triad, and here it should also be noted the multidirectional dynamics of the effect, which is due to both the volume of hydrocarbon production, and the peak values of the limits of equipment operation: for example, in the interval from 2018 to 2020. 2 out of 9 companies analyzed conducted large-scale repair of treatment facilities, and 4 -only routine repairs, but in 2021, 5 out of 9 companies have already put into operation new treatment schemes that meet international standards.
The most expensive, but promising area of greening the oil and gas business is the formation of alternative energy sources: thus, the increase in the share of alternative energy sources in the regions of business presence has grown from 2.5 to 4.8%, which is also quite low compared with the global leaders: for example, in China the energy independence of energy businesses reaches 25-29% in the U.S. -18 -24% [7][8].
The conducted analysis of ESG-principles application in Russian oil and gas corporations is not exhaustive as it requires much more data, including those closed for public presentation, but even on the available information the following problem aspects of ESGprinciples application were established: 1. 1. strongly pronounced commercial interest of corporate stakeholders in implementation of ESG-principles: oil and gas management of corporations openly enough declare commercial interest and economic benefits revival in the short term period.At the same time the real contribution into provision of sustainable development of the company and the regions of its presence is put aside for the "second plan".
2. Strong motivating factor of ESG-principles usage is a growing pressure of state regulators and western markets -management activation of some oil and gas companies is closely connected with Russian acceptance of international environmental agreements and toughening of requirements and standards of environmental safety in EU markets, that lead to costs increase on business-processes adjustment to corresponding parameters and rules.
3. In the part of corporate management there is a prevalence of majority-owned management of the group of affiliated persons -from the point of view of ESG-principles methodology a company must aspire to openness of management processes and involvement of personnel and shareholders into strategic management.At present the institute of minority shareholders in most oil and gas companies is practically excluded from management.
Summarizing the results of scientific research, the author identified the prospects for increasing the role of ESG policy in ensuring environmental well-being of oil and gas regions of the Russian Federation: 1. development and implementation by the industry regulator of the ESG policy code for oil and gas companies with a clear definition of preferences and obligations mandatory for all market participants -at present the practice of remuneration assessment for the use of ESG principles is quite pronounced territorial and subjective in nature, which creates prerequisites for corruption manifestations by both companies and municipal authorities, as well as the problem of utilitarian exploitation of ESG agenda in corporate int 2. Popularization of ESG methodology among oil and gas companies by adding them to a separate quotation list of PJSC Moscow Exchange, as well as supporting and providing tax incentives for placement of such securities on foreign stock exchanges.Such experience is already available in China, where there is not only a segment of sustainable development under the aegis of the State Agenda ESG, but also a separate national system of carbon trading based on the Shanghai Stock Exchange.
3. Conducting a national technological audit of development strategies of oil and gas companies, involving venture capital experts and marketing agencies to develop road maps to form green business segments of oil and gas holdings, followed by scaling the experience across the industry.
4. Formation of a national library of best practices in the field of green technologies and greening activities in oil and gas production on the basis of such leading companies as Gazprom, Rosneft, NovaTEK.
5. Financial support of innovation infrastructure objects (technoparks, technopolises, business incubators), focused on development of import-substitution in the sphere of green technologies and formation of special corporate funds to finance investment projects and their selection criteria, worked out taking into account ESG methodology, and also providing more favorable conditions for corporate crediting, at present the only financial institution of green financing is SC "VEB.RF" [9 ; 10].

Conclusion
In Russia, the peculiarities of ESG-methodology implementation in oil and gas business development strategy are, on the one hand, their orientation to economic benefits for business itself and only then -for society; on the other hand, in Russia ESG-principles of oil and gas sphere are practically all coordinated and unified with state programs of industry development and territories of the companies themselves at the expense of private investments, i.e. strictly speaking they are not the initiative of the companies themselves [11,12].
Based on the identified problems of application of ESG-principles in the design of oil and gas business development strategy on the results of the study the following proposals were developed: 1. Adoption of a single law or a code at the level of industry regulators, which will describe a package of preferences and systematic benefits for oil and gas companies that adhere to ESG-principles 2. Popularization of the ESG methodology among oil and gas companies by listing them on a separate quotation list of the Moscow Exchange and providing support and tax preferences for the placement of such securities on foreign stock exchanges 3. The formation of special corporate funds to finance investment projects and their selection criteria developed in accordance with ESG methodology, as well as the provision of more favorable conditions for corporate lending -currently the only financial institution of "green finance" is SC "VEB.RF".
4. Leveling the high uncertainty of scenarios for the development of foreign markets for oil and gas products by reorienting to the East Asian region -currently, the oil and gas sector of Russia is facing a constant strengthening of sanctions and creating barriers to the western direction of product exports.
5. Acceleration of development of the national segment of the financial market of ESGinvestments with minimal state regulatory procedures and high transparency of information -the interest in ESG-methodology of doing business is gradually increasing, but to achieve sustainable growth it is necessary to form the appropriate financial and regulatory infrastructure with the simplest and most clear rules and actual tools of implementation of ESG-investments themselves

Fig. 1 .
Fig.1.Dynamics and structure of the contribution of oil and gas companies as part of the ESG policy implementation in the Russian oil and gas sector in 2017 -2022 (estimate), million rubles Source: based on ESG reports of Gazprom, Rosneft, LUKOIL, NO-VATEK, Sakhalin Energy Investment Company Ltd, Surgutneftegaz, Tatneft, RNG, Gazprom Neft.

Table 1 .
Characteristics of organization and application of ESG-model in the largest oil and gas based on ESG reports of Gazprom, Rosneft, LUKOIL, NO-VATEK, Sakhalin Energy Investment Company Ltd, Surgutneftegaz, Tatneft, RNG, Gazprom Neft.

Table 2 .
Indicators and metrics of green technology development in the oil and gas sector and their impact on the environmental well-being of oil and gas regions in 2017 -2021 Source: based on the ESG reports of Gazprom, Rosneft, LUKOIL, NO-VATEK, Sakhalin Energy Investment Company Ltd, Surgutneftegaz, Tatneft, RNG, Gazprom Neft.