Influence of financial tools, ESG principles and carbon regulation on the metallurgical industry

Abstract

The article deals with the potential financial risks for Russia, devoted to the crossborder carbon regulation in the EU and its impact on the metallurgical industry. Due to the imposed economic sanctions and the refusal of a number of Western countries to cooperate with Russia the companies involved in the metallurgical sector are forced to transfer their export flows from the European markets to the Asian countries with China predominating. The authors conclude that in the short-term perspective the main tasks challenges for business will involve import substitution, search for the new sources of supply and restructuring of logistics chains. However, it is important to continue developing ESG principles, managing ecological risks and reducing carbon dioxide emissions in particular. Implementation of decarbonization strategy will let the business preserve the volumes of export and remain competitive in the international market where various incentives and mechanisms of decarbonization are formed. The authors analyses the relevance of climatic agenda in Russia: emergence of new financial tools, formation of ecological direction in the legislation as well as appropriate government support of the measures for improving environmental protection in terms of industrial enterprises’ activities. The authors point out that decarbonization of metallurgical sector requires developed partnership between business, state and ESG investors to provide the companies with access to external financing, modern domestic technology with the reduction of carbon payments in the future. In general, the article contains evaluation of the impact of financial tools, existing ESG principles and cross-border carbon regulation in terms of current development of the metallurgical industry.