Western Balkans citizens legally resident in EU equal to 14% of region’s population
International Ice Hockey Federation (IIHF) has stripped Belarus of the right to hold the World Championship this year
Alexei Navalny arrested on arrival as he returns home
LONG READ: The oligarch problem
MOSCOW BLOG: Has Navalny started a revolution?
Russia's biggest demonstrations since 2011 in protest against Navalny jailing
Opposition activist Navalny's call for mass protests a success as thousands take to the streets across Russia
Russia's National Welfare Fund accounts for almost 12% of GDP
NBU keeps key policy rate at 6%, worsens CPI outlook
Western Balkans and Ukraine urged to scrutinise coal subsidies
Oligarchs trying to derail Ukraine’s privatisation programme, warns the head of Ukraine’s State Property Fund
VISEGRAD BLOG: Central Europe's populists need a new strategy for Biden
OUTLOOK 2021 Lithuania
EBRD says loan to Estonia’s controversial Porto Franco project was never disbursed
Czech MPs pass protectionist food law in violation of EU rules
M&A in Central and Eastern Europe fell 16% in value in 2020, says CMS report
Hungarian vehicle makers hit by supply chain shortage
COVID-19 and Trump’s indifference helped human rights abusers in 2020
OUTLOOK 2021 Poland
OUTLOOK 2021 Slovakia
BRICKS & MORTAR: Rosier future beckons for CEE retailers after year of change and disruption
FDI inflows to CEE down 58% in 1H20 but rebound expected
Albania needs reforms for e-commerce to thrive, says World Bank
BALKAN BLOG: US approach to switch from quick-fix dealmaking to experience and cooperation
Corona-induced slump in global clothing sector dragged down Albania’s 2020 exports
Bosnia's exports in 2020 amounted to BAM10.5bn, trade deficit to BAM6.3bn
Retailers and restaurant owners threaten protests in Bulgaria if reopening is delayed
Bulgaria's Biodit first company to IPO on new BEAM market
Bulgaria’s government considers gradual easing of COVID-related restrictions
Spring lockdown caused spike in online transactions in Croatia
ING: Growth in the Balkans: from zero to hero again?
Labour demand down 28% y/y in Croatia in 2020
EBRD investments reach record €11bn in pandemic-struck 2020
OUTLOOK 2021 Moldova
Storming parliaments: New Europe's greatest hits
World Bank revises projection for Moldova’s 2020 GDP decline to 7.2%
Montenegrins say state administration is most corrupt institution
North Macedonia plans to cut personal income tax in IT sector to zero in 2023
Romania government to pursue “ambitious” timetable for justice reforms
Private finance mobilised by development banks up 9% to $175bn in 2019
OUTLOOK 2021 Romania
OUTLOOK 2021 Slovenia
Slovenia’s opposition files no-confidence motion against Jansa cabinet
Slovenia’s government to release funds to news agency STA after EU pressure
UK Moneyhub picks Slovenia for post-Brexit European base
D’S Damat franchise deals ‘show Turkey’s hard-pressed mall operators becoming their own tenants’
Turkey’s benchmark rate held as concerns over faltering recovery come to fore
Turkish lira breaches HSBC’s stop-loss, Turkey ETF signalling outflows
CAUCASUS BLOG : What can Biden offer the Caucasus and Stans, all but forgotten about by Trump?
Armenia ‘to extend life of its 1970s Metsamor nuclear power plant after 2026’
OUTLOOK 2021 Armenia
COMMENT: Record high debt levels will slow post-coronavirus recovery, threaten some countries' financial stability, says IIF
OUTLOOK 2021 Georgia
Iran’s Khamenei menaces private citizen Trump with image of aircraft shadowing blond golfer
Iran’s technology minister indicted for failing to properly implement internet censorship
No US move to rejoin Iran nuclear deal imminent, say Biden national security nominees
TEHRAN BLOG: Will Biden bet on a quick return to the Iran nuclear deal?
Central Asia vaccination plans underwhelm, but governments look unruffled
Fears of authoritarianism as Kyrgyz populist wins landslide and backing for ‘Khanstitution’
Mongolia's PM quits amid protests over treatment of mother with coronavirus and newborn baby
Mongolia's winter dzud set to be one of most extreme on record says Red Cross
Mongolian coal exports to China paralysed as Beijing demands virus testing of truck drivers
Mongolia fears economic damage as country faces up to its first local transmissions of coronavirus
OUTLOOK 2021 Tajikistan
OUTLOOK 2021 Turkmenistan
Turkmenistan: How the Grinch stole New Year
COMMENT: Uzbekistan is being transformed, but where are the democratic reforms?
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The coronavirus pandemic has dramatically changed the global economy. And investors are “risk on” again. In addition to the pandemic currently sweeping the world the climate crisis remains in the background and investors are increasingly worried about environmental risks. Russian companies, in particular, are worried about being penalised for environment related issues and will have follow the Green Economy trend that is being demanded by retail investors, first and foremost.
The coronavirus pandemic has distracted from the furore created by Swedish climate crisis campaigner Greta Thunberg and her “Friday’s for the Future” youth movement. Nobody seems to care anymore about climate change since the globalization has stalled. People fear losing their jobs more than what the future holds -- even on Fridays.
But appearances are deceptive. While governments around the world are busy curbing the pandemic and managing economic loses, a sophisticated green financing infrastructure is being built in the background. Companies, especially in Europe, which has embraced Thunberg’s call to action, taking their ESG (Environment – Social – Governance) responsibilities seriously and including it in their long-term strategies. This trend will not stop, and can be expected to grow in importance.
The pandemic has sharpened the senses to risks among companies’ decision-makers. Coronavirus has clearly demonstrated the fatal consequences of underestimating the risks for supply chains and the disruptive power Mother Nature still commands.
Banks, investors, and regulators re-evaluate risks that go beyond the pandemic. A World Economic Forum (WEF) report on global risks has linked nine out of ten risks directly to ESG factors, the most important of which are the protection of the climate and the environment. Financial players have started to closely monitor companies’ ESG policies.
While the world is fighting the coronavirus, Europe continues its efforts to build up a large-scale financial infrastructure for ESG investors. In 2016, the Luxembourg Exchange launched the Green Stock Exchange (LGX) – a trading platform for securities and Eurobonds of projects that meet 17 UN sustainable development goals (SDGs). Today it is the global leader in the “green bond” market, whose volume doubled to €216bn in 2019. Today less than one per cent of all traded bonds are green, but this market has enormous growth potential.
Large investors have already given an impulse to “greenify” the market, and the rest of the investing community is expected to follow. Last summer, the world’s largest investment company Blackrock banned all investments into the traditional energy sector. In October, the Norwegian pension fund Global sold its stake in Russia’s metallurgical titan Norilsk Nickel for environmental reasons: according to the Norwegian Ministry of Finance, the environment is suffering because of the company’s activities, and this violates the fund’s code of ethics (although Global itself made €900bn from oil sales the same year). And Brussels has already banned the European Investment Bank (EIB) and the European Investment Fund (EIF) from investing in oil, gas, and coal industries.
A this trend progresses more and more investors are expected to redistribute funds from fossil fuel producers to green-tech companies. Raising capital in equity markets for green and eco-friendly companies will become easier. Financial institutions will monitor ESG-compliance and make access to credit lines and bank accounts easier. In the case of non-compliance with these standards, credit and capital will become hard to get.
Classical energy companies will be subjected to the neoclassical risks. Why invest in bonds, even a super-profitable oil company, if it is exposed to non-ESG compliance risks or public scandal that could ruin an investment overnight? Neither investors, nor banks, nor regulators are willing to bear responsibility for serious environmental consequences.
Russia has no choice but to follow the trend
“The trend if your friend,” runs the old market adage, but in this case it is a trend with a twist. Falling oil prices have already created problems for the low-liquid waste market, which is still at very early stage of development.
The upshot of the low prices is petroleum raw materials to make plastics is now cheaper than recycled plastic waste. But the large petrochemical producers such as Russia’s Sibur and Nizhnekamskneftekhim remain committed to using recycled plastic in production, thanks to pressure from their strategic partners, customers, investors, and banks as well as their own ESG-compliance rules.
Many Russian companies are actively introducing ESG compliance strategies and officers. For an example, Russia’s major privately owned Lukoil oil producer covers 6% of its electricity needed using renewable sources - primarily solar energy. Shell plans to spend €2bn a year on development of alternative energy sources, and the Norwegian oil major Equinor will invest one fifth of its investment budget in renewables.
Russian petroleum companies are still far from these numbers, though they are already active in environmental protection initiatives. Environmental performance of oil and gas companies is monitored by Transparency Rating of Environmental Responsibility, which has been jointly conducted by Creon Group and WWF Russia (World Wild Fund for Nature Conservation) for seven years already.
The time for large investments into the green economy has come. Now is the time to develop clean renewable energy, reduce burning of associated gas to zero, and increase the share of recycling in the polymer industry. In the new economic order only businesses with a consistent strategy for sustainable development in the social and environmental arena can be profitable. This need has already recognized by many, not just Greta Thunberg.
Florian Willershausen, director of Creon Capital, managing Luxembourg-based fund’s company Creon Energy Fund, which invests in projects of green technologies, renewable energy and logistics projects. The fund is the core part of Creon Group, a strategic consultant in the transition to sustainable development and integration of ESG factors.
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