Finding a letter from the Church of England in his e-mail inbox was surprising enough for Vladimir Zaluzhsky, who’s in charge of investor relations at Russia’s second most valuable steelmaker. Even stranger was the demand to know what risks Severstal PJSC’s operations pose to the environment.
The church’s pension board wanted details on how Severstal disposes of waste at its plants in Russia, one of the few countries that hasn’t ratified the Paris climate deal and where commodity production prevails over protecting the environment.
Writing on behalf of 96 mostly European investors managing $10.3 trillion, the church described concerns over the January collapse of a Vale SA mining dam in Brazil that killed about 300 people and released a torrent of waste into nearby communities. Money managers wanted proof that other miners they invest in aren’t at risk of a similar catastrophe.
Noticing that some of Severstal’s biggest foreign shareholders were on the list, Zaluzhsky immediately escalated the request to CEO Alexander Shevelev.
Within two weeks, his team put together a nine-page PowerPoint presentation, complete with photographs, to reassure the investors the company’s three tailing dams and a sludge pond weren’t vulnerable.
“We’ve realised we need to always be ready to respond to requests like this from investors because they are coming more and more frequently,” said Zaluzhsky, who’s headed the department since 2010.
“This year there have been substantially more than we’ve ever had before.”
So far, Severstal hasn’t had to do anything drastic to keep institutional investors satisfied that it’s not violating their so-called ESG (environmental, social and governance) goals. But the scenario highlights how increasing pressure from regular Europeans to ensure that their retirement savings are invested responsibly is being felt in corners of the world where sustainability hasn’t been a priority.
Environmental awareness is so low in Russia that “ecology and environment” ranked 15th among concerns of Russian voters in a May poll, behind issues including inflation, unemployment, road conditions and corruption.
And it’s no wonder when President Vladimir Putin mocks green initiatives like he did this month while speaking in Russia’s most-polluted region.
As a head of state of a fossil-fuel producer, he faces a conundrum: Russia makes almost all its money from oil and gas, so he can’t talk up renewable energy without undermining his own economic model.