This section has not been updated since the first edition of the Primer published in June 2021.
Russian laws expressly regulate only following the issues connected with climate change, including:
- prohibitions and restrictions on the activity causing harm to the environment: in particular, by means of rate-setting and regulation;
- liability measures for violations of such prohibitions and restrictions: in particular, measures of public liability of directors for violations committed by their companies, i.e. fines, disqualification, etc.; measures of private liability, i.e. compensation of damages, subsidiary liability for the company's obligations in case of bankruptcy, disciplinary liability for the improper performance of their duties as directors, per their legal and contractual obligations.
The Russian Civil Code provides for the obligation of directors to act reasonably and in good faith for the benefit of the company.1 However, the Code does not make explicit reference to directors’ fiduciary duty in respect of climate change. To the extent that directors are held to such duties, they arise from the company itself voluntarily committing to good practice, placing responsibility for climate governance with the board and disclosing these commitments via publicly available statements and documents.
Examples of such internal documents determining corporate governance standards are as follows:
- corporate ethics (culture) codes;
- corporate governance codes;
- ESG and disclosure policies etc.
In 2014, the Bank of Russia approved the Corporate Governance Code, the implementation of which is recommended to public companies.2 The Corporate Governance Code is not mandatory. However, public companies are encouraged to adhere to it, and may adopt model language contained in the Code as their own, and include it in their public documents.
The Corporate Governance Code sets out the following duties of company directors:
- to assess and take into account non-financial environmental risks;
- to disclose additional information in the areas of social and environmental responsibility, in particular, the company's policies and management systems related to the environment); and
- to include in annual reports information on the company's policy in the field of environmental protection and environmental policy.
In addition, most public companies have adopted their own definitions of director duties, which they incorporate into their by-laws or other documentation that are made public. These definitions often include the following duties:
- to be guided by the principle of preventing rather than remediating environmental damage;
- to improve competencies and raise awareness amongst employees in the field of environmental best practice; and
- to take measures to reduce greenhouse gas emissions.
Russian legislation continues to develop. At present, there are several draft laws under consideration that address the regulation of companies’ carbon footprints. If they are adopted, they may also affect directors' duties in the sphere of climate change.
Information regarding climate change is normally disclosed within annual reports, sustainable development reports and environmental reports.
Public disclosure generally includes:
- data on certification (inter alia voluntary) of products, equipment and buildings;
- corporate environmental goals and performance against them;
- environmental management systems;
- Information concerning the issuance of Green Finance instruments, such as bonds, project finance and bank loans used to finance renewable energy projects;
- resource efficiency processes and policies; and
- efforts to improve energy efficiency etc.
Given that issues connected with climate change are on the agenda of Russian public companies and their boards, it is highly recommended to adopt climate resilience measures in business practices, which may include:
- adopting internal documents determining corporate governance standards (ESG policies, etc.);
- delegating climate risk identification and evaluation to a clearly-identified management team which reports directly to the CEO and board;
- initiating the development of a climate transition roadmap to 2050 with transparent carbon neutrality or reduction targets, with clear interim targets for 2040 and 2030, a current rolling multi-year strategic plan, and periodical reports back to the board;
- delegating to the appropriate committee(s) of the board, such as risk, audit, legal and governance, scenarios/strategy, nominations/remuneration, or sustainability/corporate responsibility, the task of implementing the long-term strategy into a clear decision-making process for each aspect relevant to each committee; and
- discussing with the disclosure counsel, in order to develop an external engagement and communications plan.
- Nikita Shabalin, DLA Piper Russia