Narrow focus in wide-angle format

This year’s “RUSSIA CALLING!” investment forum will be quite narrowly focused: VTB Capital, the organizer, builds the agenda basically around just one issue, which is unusual for the major Russian investment forum. Though, the question of what does Russian sustainable development agenda look like is essentially very broad. Top Russian government officials and businessmen will discuss almost any and all issues that have been in the limelight of the business community over the latest years – from ESG to technology development, from infrastructure to rapid investment market depth increase, from climate change to combatting poverty. "Sustainable Development" is a term that should get an accurate definition: “RUSSIA CALLING!” will make an important step in this direction.

The 13-th Annual VTB Capital Investment Forum “RUSSIA CALLING!” to be held on November 30 – December 1 in online format, has announced its annual program. The forum will follow the familiar routine: five plenary sessions in two days, including the anticipated panel discussion with participation of RF President Vladimir Putin. However, the announced theme of the 2021 forum, on the one hand looks vague at first sight – the forum is headed "Rethinking Priorities, Embracing Sustainability", and on the other hand, leaves no agenda diversity for the five sessions. The organizers are facing a quite complex task of essentially focusing the agenda on just one topic. The pivot to "sustainable development" of at least government agencies (and actually of most major non-state actors) in Russia starting from 2020-2021 is a key event in the business environment of the country over the latest years. Just recently "sustainable development" used to be a term that was highly specific for Russia – it was mostly used by environmental experts, few activists and diplomats, primarily interacting with humanitarian and economic divisions of the United Nations (UN). The November forum of VTB Capital will likely be the first Russian general economic forum to take stock of the changes of the latest months: the sustainable development agenda is acquiring official status. This brings about at least the need to determine what is "sustainable development" as such and as understood by Russia. In other words, the term requires a Russian definition, and it is expected to come through.

The reasons, why the RF expediently used a scenario, different from the majority of other countries, to include "sustainable development" into the officially recognized top level development priorities, will also likely be discussed at the forum’s sessions – it is an interesting process of itself. Especially if it is considered that no new concepts will be adopted – the sustainable development agenda and its components was almost completely declared as a state policy priority since 2002-2003, - and probably, some terms, priorities will be “crystallized”, the existing development trends will be conceptualized. This process has been largely catalyzed by the COVID-19 pandemic since 2020. Over the latest year and a half, the information environment, hosting states, societies and business environment, have been “toned down” – combatting the pandemic was and still remains the top priority for all and the key information background. But right after the "first wave" of COVID-19 there were first assumptions, including Russia, that the world that will see itself after the pandemic will be largely different from the “pre-COVID” one. This feeling had grown stronger by the fall of 2020: at the December session of the last year’s “RUSSIA CALLING!” it was the primary outcome – but at the time the new reality outlines seemed rather vague. Has reality changed enough to start earnest discussions of where we are now – this is yet unknown. But it is known for an absolute fact what is to be looked at: having received the extreme experience of systemic interaction at a level that was higher than the previous one, the state, public and business intend to at least try to resolve “post-COVID” world issues in a more systemic fashion.

Russia, in this respect, is not an exclusion but a rule: "sustainable development" in the known sense was viewed under "economic and political stability" motto with sustained and increased economic growth rates based on the state policy. Has the "COVID pause", which could hardly be named a "pause" – more likely, it was the time for other information priorities, when suspension or slowed down "external" events were largely followed by acceleration of multiple significant social and economic trends starting from 2020, added anything to the current situation? This is what will largely be featured in the “RUSSIA CALLING!” program in 2021. But some things may be stated right now, based on the announced program.

On November 30 the forum will open with a traditional macroeconomic session, headed "New Economic Policy: Green and Technological Transformation" - probably, for the first time for the RF this topic will be discussed under the macroeconomic aspect. Speakers at the session suggest maximum responsibility for highlighting the subject: these are Finance Minister Anton Siluanov, Governor of the Bank of Russia Elvira Nabiullina, Economic Development Minister Maxim Reshetnikov, Aide to the President of the Russian Federation Maxim Oreshkin, Wildberries CEO Tatyana Bakalchuk and Founder of RUSAL, GAZ Group and Volnoe Delo Foundation Oleg Deripaska. The macroeconomy session will be moderated by Yuri Soloviev, VTB's First Deputy President and Chairman. Let us note, that previously the term "sustainable development", as applied to the macroeconomy of Russia, was almost never included into the range of subjects, related to the world of macroeconomic decisions as such. It is all the more important that inflation targeting by the Bank of Russia, which is being tested by the current inflation outburst, and budget consolidation, performed by the Ministry of Finance in 2020-2023, and state governance digitalization and project approach in state governance, which are among other subjects in the focus of the Ministry of Economy, and breakthrough initiatives of private companies – these are distinctly interrelated stories of the latest years: under the upcoming reality one cannot be apart from the other and largely makes no sense.

The issue here is not only climate, highlighted in the header of the session, and it de-facto will be one of the topics of the second session on December 30, where VTB head Andrei Kostin will moderate a Q&A session with the President of the RF. Let us remind you that the forum by VTB Capital will take place soon after the UN Climate Conference COP26 in Glasgow, where the subject of economic development impact on the climate situation was the primary one. At any rate the European Union and the USA (just like all OECD countries and China) intend to "exit the coronavirus pandemic" at least with one subject – prevention of climate change via emission reduction commitments. Russia has accepted the same agenda as the other countries almost unconditionally, but just like anywhere else, the climate issue is just a part of sustainable development problems. Actually, it is safe to assume now that the key questions of investors to Vladimir Putin will be about what is "sustainable development" as it is understood by Russia. What will it look like in Russia?

And questions now may come from any area – one of the actual outcomes of 2020-2021 COVID experiences was rapid convergence of social, business and state agendas. Does sustainable development involve QR codes? This sounds like a strange question, but there’s sense in it: a consolidated information society with a new level of "transparency" for business and state, and for each person, - this is reality to a significant degree. But where are the limits for this convergence, which is not only greeted by many, but also feared by many? This world has vaccines and gadgetization, which have been known to us before. But there is also something that has emerged over the latest months, though it has intrinsically existed previously. And if previously they discussed "corporate capitalizm", where growth of influence of multinational companies was considered the main trend, then what will be the center of power in the world of digital ecosystems? And what do they think in Russia about what will owners of extra-large fortunes be doing in this new world (and what they should be doing in the opinion of those around them) – let’s only say that not long ago Elon Musk managed his major stake in Tesla, a most valuable global company, via voting on Twitter.

But still, there is also the question of what is sustainable development in modern times. Climate is only a part of the agenda, and then there’s the issue of power, even as applied to climate. Who should be driving the new energy order: governments at international meetings, producing companies, seeing four-digit gas prices at European spot markets, environmental activists, charging at offshore drilling platforms in rubber boats, protesters with skateboards on the streets? Or should the primary driving force consist of billions of social media network users – since the world around us is rapidly shrinking to a mobile screed with a news feed, and the "workplace" notion for many has also compressed to a virtual office over the latest months – and thus was expanded by multiples. It is clear that most of these questions will not be applicable to the RF President, but nevertheless, these will obviously be implied; and all of this, whether we want it or not, - also calls for a Russian translation of "sustainable development", since it has been adopted as a state policy pillar. Neither "investment reload", nor any investments in any jurisdiction, which underwent such conceptual changes, are possible anymore. Moreover, “Russia Calling!” in many respects is required for a reverse process – to find out what do investors understand as sustainable development: this is a two-way road.

The second day will be opened with "Infrastructure Projects - Drivers of Economic Growth" session by VTB Infrastructure Holding. In this case one of the key questions is related to a term that is new both for Russia and the world, which has gone viral over the latest few months – one of the objectives of the session will be to determine key performance indicators and ESG criteria for infrastructure (along with red tape reduction in construction). The session, moderated by Oleg Pankratov, CEO, VTB Infrastructure Holding, will feature regional representatives, Ministry for the Development of the Russian Far East and Arctic, VINCI Concessions, Mubadala, VEB.RF, DOM.RF, Rosavtodor, JSC "Mostostroy-11", Fraport AG. The second session of day two will discuss another late phenomenon, directly related to a broad understanding of "sustainable development": the session will be headed " Drop in the ocean or a tidal wave: effect of individual investors on stock markets?". The session will be moderated by Vladimir Potapov, CEO, VTB Capital Investments, and will feature top managers of Allianz Global Investors, the Bank of Russia, Amundi, 22V Research, Moscow Exchange and JSC "SPB Exchange", CICC Asset Management, TS Lombard. The subject of the RF economy transition to "self-financing", to internal investment market development, reduction of dependence on external financing sources and retail savings, is directly connected to " sustainable development " agenda as such – now it is being expanded with financial literacy.

And ultimately, the forum will finish with the sustainable development business session, featuring top managers of the Ministry of Energy, Fortum, SUEK, Polyus, representatives from the Lomonosov MSU and Empieza por Educar Foundation, the session will be moderated by Dmitry Snesar, Sr. Vice President at VTB. The session will discuss ESG issues. "Accelerated measures (climate - "Kommersant") cannot but reflect on the society. It should be considered that many developing countries are unable to make a transition to green energy today. It should be considered, that while resolving environmental issues, social issues should be kept in mind, poverty levels should be reduced and education levels improved. Which of the three letters is the most important - E-S-G? Should their order be changed? How would ESG agenda affect Russia?" These are some of the issues to be discussed at the session, according to Dmitry Snesar.

Meanwhile, even the question of what should come first in ESG – environmental issues (E, which are mostly discussed in relation to sustainable development topics over the latest years), sustainability issues (S – and here the issue in question is social sustainability) or the governance topic (G – and this issue, among other, considers corporate priorities, shareholder value, "stakeholder capitalism" and ten more questions of the same caliber) – is important: the view that ESG is the future of business is quite common now. But what will ESG mean in Russia? In July 2021 Prime Minister Mikhail Mishustin signed a government resolution on the Russia’s view of sustainable development goals with specific indicators for various industries. The Central Bank of Russia promises to present a verification system for sustainable development financing instruments. But interaction of governments of all countries, business and societies is precisely the issue of "sustainability of sustainable development": inadequate definitions of rules of the game could destroy many things. The final session of “Russia Calling!” forum will give business an opportunity to get to know government requirements for ESG regulation, and the government will be able to assess business requirements and opportunities to comply with the regulations.

However, even if all these questions are answered, scores more will remain unanswered: sustainable development in the broadest sense is by definition is more of a process than a predetermined result. But Russia could hardly opt out of this process: it could only determine traffic rules and speed of processes.