The interviewee would go on to note that Gazprom experienced an inflection point in 2000 with its IPO, suggesting that the need for greater openness and accountability inherent to the courtship of public investment would stimulate fundamental change. The interviewee would indicate that Gazprom would be among the leaders in Russia in producing thorough environmental reporting on its own practices.
This corresponds with what our research finds to be one of F&C's core priorities. So reports REO Research (2009), which indicates that in the area of sustainability, "F&C's focus has been to press companies to build a stable long-term business model based on tackling workplace health, climate change and community relations." (p. 5) This is a primary imperative upon which it bases its interaction with a host of Russian firms, based on their expressed commitment to truly effect environmental policy and sustainability change. Litvack supports claims concerning this priority, indicating that, in fact, Russia is experiencing some degree of success in instigating change. Litvack argues that Russia is in fact well ahead of nations such as India and China in both policy and enforcement of environmental provisions. Litvack identifies several steps with which F&C has begun to see changes in corporate behavior amongst the most prominent and therefore most visible firms. For instance, the interviewee would note that carbon trading has been particularly effective at instigating improvements in corporate compliance, with Lukoil demonstrating a simultaneous increase in revenues and decrease in carbon emissions. Litvack would report similar outcomes in Rosneft, which has demonstrated marked improvement in compliance with emissions standards even in the face of the kind of resistance that is commonplace in Russian corporate culture.
The positive outcomes to which Litvack would speak in interview correspond with the strategy reported to in F&C's report on sustainability. Here, the SRI reports on the recommendations and counsel which it has provided to Russian firms at every engagement level, demonstrating the importance of connecting the idea of sustainability with promises of economic good-fortune. Indeed, Litvack emphasizes this point, suggesting that Russian firms and Russian corporate culture in general seem to not yet have fully integrated the notion that ethical practice and corporate social responsibility may prefigure better economic efficiency. The connection that Litvack implies has already come to prominent light in American and European markets has yet evaded Russian firms, standing in the way of sustainability enthusiasm or technological innovation. This cultural gap seems essential to the approach reported in the F&C sustainability report, which with respect to the Emergent Social Responsibility Fund firm, recommends "that Novatek form a sustainability committee to help identify how significant risks and opportunities can drive corporate strategy. We also suggested that Evraz, Lukoil, Norilsk Nickel, Novatek and Rosneft embed sustainability into their corporate culture by linking health and safety with executive remuneration." (REO Research, p. 5)
This reflects the interest of creating a more explicit connection between environmental sustainability and opportunities for greater corporate efficiency. As we find to be overwhelmingly the case throughout primary and secondary research. Russia lags dramatically behind Europe in terms of corporate emissions standards. And even with the increase in regulatory legislation, many of the stated goals for Russia's oil, gas and mining firms seem unrealistic at best, vulnerability...
The interview with Anonymous Investment Bank VP would reiterate this point, contending that Russia is roughly five to ten years behind Europe in drafting and enforcing protective regulatory standards. The interviewee would indicate that "in Russia alone 20-30 billion m3 of associated gas are burnt annually. In Europe this figure is around zero. European companies understand that burning associated gas not only harms the environment, it also represents lost revenue. However, Russian oil and gas companies are supposed to be forced to utilize 95% of associated gas by 2012."
However, the interviewee would express scepticism that any such change could truly be made given the current state of Russia's corporate culture. The degree to which bribery, secrecy, executive abuses and state level malfeasance remain dominant in such big money businesses makes the role of firms such as F&C simultaneously extremely important and extremely difficult. Moreover, the interviewee would in a number of ways recurrently state the response to survey questions noting that no observable or significant change in the behaviour or corporate social responsibility of firms has occurred over the last three years. This is a primary interest of the research, which has intended to determine whether or not SRIs have been able to levy any detectable impact on the CSR levels met by key firms. The interviewee would suggest that the transition for many firms from being totally state-owned to achieving IPOs during the late 1990s and early 2000s would have a far more catalyzing impact than would any force of the last three years. To the point, the incursion of a global financial crisis and a credit crunch have only intensified economic hardship in Russia, prompting many firms to dispense with such interests as corporate governance, sustainability and transparency in favour of mere survival. In the Russian business climate, this survival has often meant engaging in many of the normative practices that are problematically omnipresent in current Russian business culture.
Conclusions and Recommendations:
This points us toward a resolution to the research which is that at this juncture, Socially Responsible Investment Funds can be said to have had very little impact on the broad scope of Russian corporate culture. As both primary data culled from interviews and secondary data culled from literature resources denotes, Russia's most powerful firms have historically engaged in practices that are consistent with Soviet patterns of cronyism and unfettered industrial growth. It has proven quite a dramatic undertaking both economically and culturally to bring about change in these areas. It is the conclusion of this research that this remains so because so many firms remain connected to the totalitarian practices of their immediate past in a way that is notably incompatible with global free market capitalism. So observes REO Review, which contends that "much will depend on the country's ability to overcome its Soviet legacy, not least a weak rule of law, endemic corruption, deteriorating public health and the government's tendency to help itself to private assets. The Russian state keeps a tight grip on the energy sector8and frequently sits on company boards, while companies are often dominated by a single controlling shareholder, either the state or one of handful of well-connected 'oligarchs'." (p. 5)
This is a condition which stands largely in the way of the ability of SRIs to levy a meaningful impact on the behavior of corporate actors in Russia. Moreover, it is a condition that has limited the interest of Socially Responsible Investment funds to the extent that our own research has been highly limited to the decidedly non-scientific methods here executed. This helps to produce some basic recommendations that might improve the prospects of future research projects.
First and foremost, it seems there is a need for an expanded sample of case studies. The focus here on a single SRI would be conducted out of convenience and availability. It is recommended that a future research endeavor instead select an array of Russian-bound companies such as those assessed in our research by way of an F&C-based interview subject. Contact should be made with these firms and investigations mounted to be conducted across five years. This duration of time and the method of engaging a set of Russian firms should help to bring greater conclusiveness to the question of the impact of such SRIs and F&C on company practices.
Another recommendation holds that with a greater duration, a greater number of interview subjects would be consulted. With a greater number of respondents, the interview method should be streamlined using a scholastically tested and approved data-gathering instrument. This can help to eliminate some of the bias that is likely to have contributed to responses during face-to-face interviews.
F&C Investments. (2009). Responsible Investments. F&C Management, Ltd.
REO Research. (2009). BRIC: Sustainability Holds the Key to Long-Term Growth. F&C Management, Ltd.
REO Research1. (2009). Sustainable Mining: Oxymoron or New Reality? F&C Management, Ltd.
Standard & Poor's. (S&P). (2009). Transparency and Disclosure by Russian Companies 2009: The Gap Between the Highest Scoring Companies and the Lowest Scoring Companies Widens. Centre for Economic and Financial Research at the New Economic School.
By using these as a channel through which to encourage and reward ethical business behavior, it may be possible to demonstrate the economic imperatives that underscore the demand for ethical codification in Russia. The discussion below seeks to support this claim by demonstrating the role already assumed by those SRI funds in operation. Particularly, it is incumbent upon us to attempt to measure the impact of existing SRI firms,
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