Transparency Rating of Environmental Responsibility

The mission of the Ministry is to develop the fuel and power complex in order to ensure a high level of competitiveness, national and power security, to meet the growing demand in energy carriers, to support scientific and technical researches, aimed at effective use of such carriers, and to provide a base for preservation, restoration and improvement of the quality of ecological environment, ensuring the transition of the Republic of Kazakhstan to low-carbon and a "green" economy to meet the necessities the present and future generations.

The main goals of the Ministry are to increase the efficiency of the consumption of fuel and power resources and operation of Russia’s fuel and power complex to ensure efficient and reliable fuel and power resources supply and provision of appropriate public utilities to all consumer groups, both at the federal and regional levels; development of competitiveness of the fuel and power complex of Russia on the domestic and foreign power markets as a part of open economy; strengthening of Russia's position in the world power markets.

UNDER THE AUSPICIES OF

Over the past few years, the efforts of the CREON group have been aimed at promoting Russian initiatives on the international level. The country is in dire need of foreign investments for new petrochemical projects. The world financial community pays special attention to the principles of the "green" economy, which, in turn, motivated us together with our partner WWF Russia to establish Environmental Responsibility Rating of Oil & Gas Companies, that we carry out jointly since 2014. In mid-2016 we established direct investment fund CREON Energy, with an estimated investment amount over 100 million euro, focused on investments in the chemical sector projects of the Russian Federation, in the environmental projects of the green economy and alternative energy projects.

The Rational Approach project is a global campaign to support the "green" economy. This is the annual

rating with results available to general public. It showcases details, nuances, problems and their solutions. This is our joint, honest work today for the benefit of future generations. For more than 15 years, CREON Group of Companies has been active in the same information field as oilers; it basically breathes the same air with petrochemical industry. Obviously, the economic activities of oil and gas holdings, in absence of proper attention to the issue, carry a serious threat to the environment. At the same time, the industry is a key segment of the national economy. Rational approach dictates the necessity achieving balance. As experts, we trace the positive trends of recent years and progression of the domestic companies towards a "green" economy. Each company follows their own way at its own pace, but the overall progress is obvious ... this cannot be ignored, this should not be ignored. The Rational Approach project, which we initiated and have been implementing for several years, is our contribution to popularizing and promoting the idea of ​​a green economy in Russia and abroad. The flagship of the project is the Environmental Responsibility Rating of Oil & Gas Companies in Russia that we carry on jointly with our partner, the World Wildlife Fund. Thus, for the first time in Russia, a comprehensive system is established to assess the environmental performance of oil and gas companies.

In 2017, Creon Capital and WWF Russia in partnership with UNEP and on the basis of similar experience in Russia, implemented the rating calculation project in Kazakhstan, and the results of this pilot project have proved to be successful. The project in Kazakhstan was supported by UNEP-CA ant the Ministry of Energy of the Republic of Kazakhstan. Further annual calculation of the Rating has been approved.

Capitalizing on the experience gained in Russia and Kazakhstan, the new Global Rating was announced in 2018. The Global Rating’s objective is to evaluate the present transparency level of environmental indicators in the world’s largest oil and gas companies based on the information available in the public domain. The corresponding declaration between WWF-Russia and the independent fund management company CREON Capital was signed at the International Economic Forum in Saint Petersburg in May. The new initiative will raise the environmental awareness of various parties interacting with the oil and gas industry including consumers, financial and insurance companies, and will help influence corporate policies. Thus the Global Rating will highlight the activities of oil and gas companies in hydrocarbon-producing countries, and will also support them in diversification of energy sources in the developing markets on the way to switching to non-fossil feedstock.

Fares Kilzie, Head of CREON Group of Companies

Alexey  Knizhnikov

Business Environmental Responsibility Program Manager WWF Russia

Active involvement of the final consumer - the middle class, opened the door for the main achievements of the World Wildlife Fund (WWF) in promoting green economy, such as the development of voluntary certification in the forest management and exploitation of marine and other biological resources. Middle class feelings about the issue are extremely important for almost any manufacturer. According to the famous 20/80 marketing rule (20% of consumers provide 80% of profit), the consumer preferences of the "environmentally sensitive" middle class are in many ways responsible for the "market presence license". Even though the Russian oil and gas sector industry is quite specific as the companies have been mainly operating not in the environmentally sensitive end-user market, but in the "scarce goods seller" conditions, consumer preferences of the end user are still very important for the vertically integrated oil and gas companies. Competition remains in place for both the end consumer between the vertically integrated companies, and for longer and cheaper financial resources for implementation of new projects.

That is why the World Wildlife Fund (WWF) Russia began to consider the necessity to create an integrated Environmental Responsibility Rating of Oil and Gas Companies operating in the Russian Federation more than 10 years ago.The purpose of such a rating is to allow the end user and financial

institutions evaluate company products and to assess various corporate risks (including reputation risks) based on an objective comparison and assessment of the environmental and social responsibility of companies and their management. Such an uneasy task, in our opinion, must necessarily include environmental performance indicators for the upstream production and downstream processing, as well as the relevant company's corporate culture and management indicators. Specifically, environmental performance indicators of upstream production include associated gas use ratio, the number and frequency of leaks in oil field pipelines and oil spills, etc. When it comes to downstream processing, the most important indicator is the ecological rating of the final product (Euro-IV, Euro-V, etc). Indicators of the company's corporate culture and management include compliance of corporate policies with the requirements of environmental NGOs, public transparency of a company and availability of its non-financial reports (it is no secret that in some cases non-financial reports of large state companies resemble reports on social expenditures for shareholders rather than corporate response to general public), policies and practices to ensure implementation of respective corporate regulations among subsidiaries, contractors and subcontractors, certifications by the major international environmental agencies, corporate policies and established practices for their implementation with involvement of broad range of stakeholders, environmental impact assessments and strategic environmental assessments, etc.

I hope that implementation of this project will allow consumers and financial institutions to directly influence the strengthening of the environmental responsibility of oil and gas companies. The rating is important as a tool for comparative assessment of oil and gas industry ecological activities, which should become an efficient tool of enhancing the environmental responsibility of companies and their investment appeal.

ORGANIZERS

CREON GROUP OF COMPANIES

Leading Russian advisory and investment group working in oil & gas, petrochemical and related industries in Russia and the CIS.

 

CREON Group mission is to promote the dynamic development of Russian and the CIS countries petrochemical industry and to assist oil & gas and petrochemical companies in improving the business performance.

WORLD WILDLIFE FUND (WWF) RUSSIA

One of the largest national nature conservation organizations, WWF Russia is a part of international WWF network that unites around 5 million supporters and operates in over than 100 countries of the world.

 

WWF mission is to prevent the growing degradation of the natural planet environment and to achieve harmony between man and nature. The main goals of the organization are to conserve biodiversity and decrease ecological footprint.

PARTNERS

CREON Capital S.a.r.l.

The managing company and unlimited partner of Direct Investment Fund (total volume over 100 million euro) CREON Energy Fund SICAV-SIF, established in 2016 and focused on investments
in projects of chemical sector at the primary stage, growing and developed companies in Russia and CIS countries, as well as in ecological projects of green economy and alternative energy.

 

NATIONAL RATING AGENCY (NRA)

One of the leading rating agencies in Russia. NRA is involved in socially important projects and provides research analysis in the wide range of economic segments: macroeconomics, banks, insurance, oil & gas, investment potential of Russian regions etc. NRA has a client base of over 400, with over 1000 companies participating in various information projects of the Agency.

AIG

One of the world leaders in the insurance market. Over 90 million clients entrust AIG with protection of their businesses. The Company has been working in the Russian market for 23 years now and offers its clients a wide range of services for property insurance, liability and financial risks insurance. For details, please visit www.aig.ru

The United Nations Environment Programme

(UN Environment)

Un Environment is the leading global environmental authority that sets the global environmental agenda, promotes the coherent implementation of the environmental dimension of sustainable development within the United Nations system, and serves as an authoritative advocate for the global environment.

Our mission is to provide leadership and encourage partnership in caring for the environment by inspiring, informing, and enabling nations and peoples to improve their quality of life without compromising that of future generations.

Rating Objective

Rating objective is to facilitate rational use of hydrocarbon resources, protect environment and run socially responsible business in Russia.

RATING TARGETS

  1. To identify key indicators of environmental activities for oil & gas companies in Kazakhstan. The Rating makes it possible to create an immersive quantified database to be used for calculation of industry average indicators related to discharges, emissions, and wastes.

  2. To compare main stakeholders in the oil & gas sector by the following criteria: — the company’s level of environmental impact per production unit — the extent of transparency and availability of ecologically significant information — the quality of environmental management in the company (compliance of activities with corporate and national environmental policies, best standards and practices) — the frequency of violating environmental legislation in project execution areas by the company — the efficiency of mineral resources consumption.

  3. To make record of the year-over-year changes in the above-listed criteria.

FUNDAMENTAL PRINCIPLES OF THE RATING

  • The rating is performed on the basis of the criteria specified, first and foremost, in the Joint Environmental Requirements of the Public Interest Environmental Groups to the Oil and Gas Companies (https://new.wwf.ru/upload/iblock/4ac/oil_demands.pdf).

  • The rating methodology shall be discussed with all the interested parties. Face-to-face and distance consultations dedicated to improving rating methodology are held annually with the rating participants. 

  • The rating is calculated considering all the segments: production, processing and transportation.  The rating is based on the data related to the companies’ operations in the Republic of Kazakhstan, available in public domain. Availability in public domain is understood as being accessible to public in the form of annual business or socio-ecological reports, including reports on environmental protection measures (including regional ones). Also, for the purpose of this rating, any information is deemed to be publicly available if it is displayed on the official Internet sites of the relevant companies (including subsidiaries) with the necessary inclusion of references to the relevant pages in the site menu, or if it is provided through interviews of the companies’ official representatives for republican or regional media.

  • The rating calculation shall be performed by the professional rating agency, which is chosen on the basis of tender.

  • List of the companies for the rating is defined by the volume of production, refinery and transportation of oil, gas condensate and oil products. The lower borderline is represented by the volume of oil and gas condensate production equivalent to 1.5 mln tons per year, and the transportation volume of 30 mln tons per year, the refinery volume of oil, gas condensate and oil products of 8 mln tons per year. X The rating is performed on the annual basis. This allows for estimation of the oil & gas companies environmental indicators dynamics.

 
 

© Здравый Смысл. Россия, Москва, 119296, Университетский проспект 9. +7 (495) 276-77-88

© Rational Approach. Russia, 119296, Moscow, Universitetsky Prospekt, 9 Tel.: (495) 276-77-88