Dec 4, 2020
Russians play in the snow on November 21, 2020. MIKHAIL JAPARIDZE/TASS
“Green is good” has replaced that old 1980s Wall Street mantra: “Greed is good.”
Even the oil rich Russians have discovered it. They’re not alone.
City planners, start-up entrepreneurs and big business are all discovering that concern over climate change is leading to entire new industries. Or fresh demand for old ones – like solar panels that became a thing in the 1970s; new battery powered car companies like Lordstown Motors, and really old school stuff like bicycles and electric powered scooters that are part of the so-called Mobility-as-a-Service (MaaS) movement.
Moscow is home to some of Russia’s biggest ESG investors. Who knew?
Moscow-based National Association of Concessioners and Long-Term Investors and the Moscow Stock Exchange launched a rating for “green” issues by Russian companies. Guarant-Invest and Commercial Properties, two local listings, have the new “Green Segment” designation, the local seal of approval for the ESG-investor.
For new Russian companies that can get this right, and take their company public, too, being a climate steward makes them all the more attractive to European ESG fund managers who are investing in environmentally sustainable businesses.
Yandex has a better ESG risk rating than many U.S. tech companies. Yandex ranks 30, with a “moderate” ESG risk level, based on data from Sustainalytics for the month ending October 31.
Apple AAPL +1.2% is ranked higher at 24, but because of issues like battery and phone life/recycling, it is considered to have a “controversy” level of 3 while Yandex is at 2. Twitter is next at 25, and has the same controversy score from Sustainalytics as Apple. Facebook is ranked 31, worse than Yandex, and has a controversy level of four. Google GOOG +3.4% is a little better overall, at 24, but also has a controversy level of four on a scale of 0 to 5.
Moscow Looks North
The Nordic countries are taking the lead with their sovereign wealth funds and plans to go carbon neutral within a generation. They are putting their money to work in companies that they deem climate friendly. Overall, Russia is at the bottom of the list. But Russia needs Europe fund managers, because Europe is big source of foreign portfolio inflow into Russian companies.
Norway’s largest pension fund sold all the shares it held in Russian mining giant Nornickel way back in 2011 because the firm was polluting the Arctic; similar issues plague other Russian resource developers, and that is the most important sector in Russia’s economy. Russia is not going to sit back and let the green trend pass them by.
To show its serious, Moscow is taking a cue from the Nordics and rolling out their MaaS app for the city. The MaaS concept is about “the personalization of traveling around Moscow” with a minimum waste of time and effort. It takes into account all the means of transport, the notorious city traffic load at the time, and tells the locals the best way to get where they need to be at the lowest cost and lowest amount off fossil fuel use.
Maxim Liksutov, Moscow Deputy Mayor for Transport, said private taxi companies, car sharing companies, bicycle and scooter rental service firms will be added to the mix.
“Moscow is doing all it can to pursue the goal of digitalization of its transportation system. We want to take a leading position on this,” says Maxim Liksutov, Moscow Deputy Mayor for Transport.
Yandex.Drive, Citymobil, Delimobil, BelkaCar, electric scooters Urent, Whoosh and smaller venture-backed startup Samokat are part of Moscow’s MaaS application, going live in the fourth quarter of 2021.
The Moscow MaaS doesn’t have an official target number for registered users but industry insiders in the city think the MaaS audience will be equal to Maxima Telecom’s Wi-Fi service in the Moscow metro, which has 1.2 million riders using its Wi-Fi every day.
MaaS is not a hot new start up. This is part of the bigger picture of what’s going on in a global city most would not put on cue with the climate initiatives sweeping Europe.
The “smart mobility” system integrates inexpensive ride share options into the public transportation network and gives older users options for city taxis and shared minibuses, and for the younger crowd – they’ll know where they can pick up electric scooters and bikes in Moscow.
“As a professional startup-guy and a rabid scooter fan, I can tell you that I ride them even during Moscow winters,” says Igor Khmel, founder of Bankex. “I spend most of my time in Silicon Valley, but it’s nice to have the same continuity of travel options when I come to Moscow on business.”
Moscow is a city of 20 million and has massive congestion problems, and a lot of space to cover. Trains and cars are the only way most of the time.
Finland rolled out its MaaS application to help foster a smart mobility system in Helsinki, but it wasn’t easy. They’re still working out the kinks.
Japan’s rideshare system was unable to realize its intended goal at first, but have since solved it by integrating a Toshiba artificial intelligence program that determined the shortest routes at a faster pace than before.
The whole concept of sustainability is becoming big business for urban development and consumer brands worldwide, the FT reported on November 26.
Much of it is based on fear: if we’re not worried about the climate, we may be blindsided in destructive ways.
“Climate change could lead to ‘green swan’ events and be the cause of the next systemic financial crisis,” the Bank of International Settlements said in a report released earlier this year.
Techies all think they have the solution.
Some new start-ups are singularly focused on the environment, whether in traditional sectors like cars, or new ones like blockchain.
The Brazilians behind the MOSS Carbon Credit Token say they are “on a mission to combat climate change and preserve the planet.”
Their Moss.Earth platform and blockchain system give users a way to acquire carbon credits, and for consumers or companies to offset their carbon footprint. This year the company completed a $3.3mn seed round raising money from private companies and Brazil’s environmental authorities. They said they managed to secure carbon contracts for the next four years (20 million tons, or 20% of global supply).
The start-ups founders claim they have already sent $10 million to conservation projects in the last 8 months. They plan to expand that to more projects funded by their blockchain solution for carbon credits; they claim to protecting some 741 thousand acres of forest and woodlands.
Berlin-based Ecosia, a search engine “that plants trees”, donates most of its profits to nonprofit organizations working on reforestation and planting trees.
“By buying and selling one carbon credit, you can offset one ton of carbon emissions,” says Luis Felipe Adaime, founder and CEO of Moss.Earth. Adaime is trying to bring the innovation of blockchain to the carbon credit market, which he sees as being an inefficient market at the moment. “It massively increases funding for the conservation of the environment and for C02 reduction,” he says.
Back in Russia, last January its government published a plan to prepare its economy for the effects of climate change. The report said the country would do what it could to mitigate the damages of warming in the Arctic Circle, but also “use the advantages” of warmer temperatures in the south for agriculture.
The document outlined a plan of action and said that warmer temperatures were having a “prominent and increasing effect” on Russia’s development, people’s lives, health and the overall economy. This is especially true if its biggest customers – the Europeans – grow increasingly anti-fossil fuels.
Russia is the lead foreign supplier of natural gas to Europe.
Last December, some winter resorts in Russia were forced to make snow for skiing because it was their warmest December on record.
“It is heartening to hear about ideas being proposed in Moscow to reduce the carbon footprint,” said Chris Thorne, chairman of Broadline Capital, commenting on Moscow’s push into MaaS. “Transportation is a large contributor to most cities’ carbon footprint. One question is how to make it easier, more convenient, and more affordable for city dwellers to choose cleaner transportation choices. Each time a city dweller chooses to walk, bike, carpool or use public transportation — instead of driving — for their daily commute, that’s beneficial.”