Methodological approaches to developing ESG ratings for public sector entities in the Russian Federation

Vollständiger Abstract

Worum geht es in dieser Arbeit?

Sustainable development of the Russian economy, in line with national strategic priorities, requires a governance system that balances long-term economic efficiency, environmental responsibility, and social performance. Public sector entities are directly involved in implementing national projects, government programs, and the Sustainable Development Goals. Assessing their performance is essential to determining the public sector’s actual contribution to sustainable development, identifying challenges and opportunities for improvement, and providing feedback on the exercise of public mandates. ESG ratings can provide a basis for organizational change within public sector entities and, consequently, for broader economic, social, and environmental transformation. However, existing international and Russian ESG ratings primarily target large commercial companies, leaving public authorities, local self-government bodies, and government, budgetary, and autonomous institutions largely outside the scope of ESG assessment. Closing this gap is necessary to integrate the public sector into the national ESG transition. Accordingly, this article proposes methodological approaches to developing ESG ratings for public sector entities in the Russian Federation, taking into account their organizational and legal characteristics and the limited applicability of existing commercial-sector methodologies. The approaches employed by five leading international and four Russian rating agencies were examined. The analysis demonstrates that existing ESG rating methodologies are poorly suited to public sector entities. The resulting methodology comprises a classification of rating participants by area of activity; a system of indicators covering the environmental, social, and governance pillars; a mechanism for incorporating risk management into the assessment; and a scale for interpreting results from low to high. An additional adjustment factor rewards advanced ESG initiatives. The proposed methodology closes a gap in assessing the public sector’s contribution to the Sustainable Development Goals, improves transparency, and enables comparisons across regions, municipalities, and public institutions.