ACRA has assigned ESG-AA, level ESG-3 to the Nizhny Novgorod Region (hereinafter, the Region), which corresponds to a very high score in the field of the environment, social responsibility and governance.
According to the Methodology for Assigning ESG Ratings, a very high score in the field of the environment, social responsibility and governance means that increased attention is paid to these issues.
The rating is based on the Region’s moderately positive environmental indicators, favorable social responsibility indicators, and moderately high governance quality.
The Nizhny Novgorod Region is a region of the Russian Federation and is part of the Volga Federal District. Its administrative center is the city of Nizhny Novgorod. The Region is home to 3.1 mln people (about 2.1% of the population of Russia). The area of the Region is 76,624 km².
KEY ASSESSMENT FACTORS
In the environmental factors block, the Region received a very high (positive) assessment for the share of consolidated budget expenditure on environmental protection (EP). The averaged value of this indicator from 2020 to 2023 is more than twice the average value calculated by the Agency for the regions of the Russian Federation. The specific indicators of the volume of pollutant emissions into the atmosphere from stationary and mobile sources (road and rail transport) per capita in the Region, as well as the energy intensity of the gross regional product (GRP) correspond to moderately high assessments.
Indicators of water withdrawal from natural water bodies, discharge of polluted wastewater into surface water bodies and total expenditure on EP per capita received moderate scores. The Region received the most conservative scores for the share of captured and neutralized air pollutants in the total amount of pollutants emitted by stationary sources, since the national average for this indicator (73.9%) is 31.2 percentage points higher than the indicator in the Region.
The specific indicators of energy intensity of GRP and total aggregate expenditure on environmental protection have shown positive dynamics over the past three years, which supports the assessment for this block of factors. On the contrary, the specific indicator of the volume of pollutant emissions into the atmosphere from mobile sources shows negative dynamics (an increase in the average dynamics indicator over the past three years by 2%), which negatively affects the final assessment of this indicator. At the same time, ACRA notes that over the past 10 years, the volume of pollutant emissions into the atmosphere from mobile sources in the Region has decreased by more than twofold due to the development of tram and metro services, renewal of the bus fleet, development of electric charging infrastructure, and subsidies for the purchase of electric vehicles by taxi fleets.
In the environmental factors block, the Agency applied a positive modifier for the presence of environmental education programs for the population. In 2023, within the framework of the contracts concluded by the State Budgetary Institution of the Nizhny Novgorod Region “Ecology of the Region”, environmental education events were held, including the organization of the Ecoclub and environmental lessons in schools, a series of popular science lectures on the biodiversity of the Nizhny Novgorod Region, a natural science hackathon for schoolchildren, and others.
At the same time, the Agency applied a negative modifier for the violations recorded in 2024 at the Balakhna and Gorodetsky landfills (burial of prohibited waste, failure to comply with the conditions for accumulation of filtrate, storage of waste in unequipped areas), as well as for fires at landfills in the Bogorodsky and Gorodetsky districts.
In the block of social responsibility factors, the Region received moderately high scores for the poverty level (from 2020 to 2023, the average indicator was below the national average (9.75%) by two percentage points), provision of preschool education (908 places per 1,000 children, which is 1.2 times higher than the national average (733 places per 1,000 children) and infant mortality. The measures taken in the Region over the past 10 years have had a positive impact on reducing the infant mortality rate (from 7.7 per 1,000 live births in 2014 to 3.9 in 2023 amid an average national indicator of 4.2 in 2023). Measures being implemented aimed at developing medical and social support for pregnant women include the functioning of consultation centers in perinatal institutions, online consultations, mobile forms of work of medical workers, and equipping perinatal centers with modern equipment (expert-class ultrasound machines).
The Nizhny Novgorod Region received moderate scores for the indicators of the number of doctors, the proportion of the number of students in the second and third shifts, ratio of the average per capita monetary income of the population to the fixed set of goods and services, crime rate, life expectancy, migration growth of the population and the expenditures of the consolidated budget on social policy.
The most conservative scores were assigned for the indicators of the number of teachers, budget expenditures and territorial fund of compulsory medical insurance for healthcare, mortality of the working-age population by the main classes of causes of death, as well as the number of students studying in bachelor’s, specialist and master’s degree programs. At the same time, the Agency notes the positive dynamics of most indicators in the social block for the period under review.
In terms of management quality, the Region received very high scores for the share of budget funds in investments, share of subsidies, and the turnover of small enterprises (including micro-sized businesses). ACRA notes an increase in the share of budget funds in investments by 2.4 times in 2022 compared to 2021, driven by the ongoing efforts aimed at improving the investment climate (participation of the Region in major infrastructure projects, provision of state support measures via the 1704 mechanism1, development of public-private partnerships).
The Region has not been a recipient of budget equalization transfers since 2022, and therefore the highest score was assigned for this indicator. The turnover of small enterprises (including micro-sized businesses) is 1.3 times higher than the national average, which creates conditions for accelerated economic growth, contributing to the diversification and saturation of local markets, as well as reducing unemployment.
The indicators of the number of state civil (municipal) employees of state bodies and local government bodies, financial profile, share of investments in GRP, average monthly salary of civil (municipal) employees (executive authorities), as well as the share of shipments of small enterprises (including micro-sized businesses) in the total volume of shipped products received moderate scores. The indicators of the number of actually operating individual entrepreneurs per capita (the national average (0.019) is 1.2 times higher), as well as the share of consolidated budget expenditures on national purposes, had a constraining effect on the assessment of this block of factors.
Over the past three years, there has been a positive trend in such indicators as the share of budget funds in investments, the turnover of small enterprises (including micro-sized businesses) per capita and the share of shipments of small enterprises (including micro-sized businesses) in the total volume of shipped products. This supported the assessment for the block of factors under consideration. However, with regard to the indicator of the average monthly salary of civil (municipal) employees (executive authorities) in relation to the average monthly nominal accrued wages of employees in a full range of organizations, there is a negative trend (a 7% decrease in the average dynamics from 2020 to 2022), which negatively affected the final score for this indicator.
The Agency applied positive modifiers for the high level of investment attractiveness, the presence of special economic zones (Kulibin SEZ), as well as the availability of an advanced and informative official website where government activities are regularly reported.
At the same time, the Agency applied a negative modifier, taking into account a criminal case initiated against a representative of the regional administration over the past four years.
1 Resolution of the Government of the Russian Federation dated October 19, 2020 No. 1704 “On approval of the Rules for determining new investment projects, for the implementation of which budget funds of a Russian region released through the reduction of repayments of budget loans due from a Russian region to the Russian Federation are appropriated for the purposes of engineering survey, design, examination of project documentation and/or engineering survey reports, construction, reconstruction and commissioning of infrastructure facilities, as well as for connection of capital facilities to utility and support networks.”
KEY ASSUMPTIONS
-
Information indicated in the Region’s questionnaire is reliable.
-
Due to unavailability of relevant data for 2022 and 2023, the average value of the indicator Energy Intensity of GRP for the period from 2018 to 2021 was used.
-
Due to unavailability of relevant data for 2023, the average values of the indicators Total Expenses for Environmental Protection (General), Volume of Pollutant Emissions from Stationary Sources, Share of Trapped and Neutralized Pollutants in the Total Volume of Outgoing Pollutants from Stationary Sources, Contaminated Wastewater Discharge into Surface Water Bodies, Mortality of the Working-age Population by Main Classes of Causes of Death, Number of Doctors, Crime Rate, Share of Investments in GRP, Share of Budget Funds in Investments, Number of State Civil (Municipal) Employees of State Bodies and Local Governments, and the Average Monthly Salary of Civil (Municipal) Employees (Executive Bodies of Russian Regions) from 2019 to 2022 were used.
-
Due to unavailability of the values of the indicator Number of Actually Operating Individual Entrepreneurs in official government statistics for 2020 and 2023, the indicator’s dynamics were not considered and the average value was calculated for 2018, 2019, 2021, and 2022.
-
The values of the indicators Preschool Education Coverage and Number of Teachers were taken from the Region’s questionnaire.
rating components
Final ESG rating: ESG-АА2.
Final level: ESG-3.
ESG rating determination: very high assessment in the field of the environment, social responsibility and governance. Increased attention is paid to the environment, social responsibility, and governance issues.
E assessment: ESG-2.
S assessment: ESG-4.
G assessment: ESG-3.
ADDITIONAL INFORMATION
The ESG rating has been assigned in accordance with the Methodology for Assigning ESG Ratings and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
An ESG rating has been assigned to the Nizhny Novgorod Region for the first time. The ESG rating is expected to be revised within one year following the publication date of this press release.
The ESG rating was assigned based on data provided by the Nizhny Novgorod Region, information from publicly available sources, and ACRA’s databases.
The ESG rating is solicited and the Nizhny Novgorod Region participated in its assignment.
In assigning the ESG rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodology.
No conflicts of interest were discovered in the course of the assessment process.
The assigned ESG rating is not a credit rating.
2 On ACRA’s ESG rating scale: https://www.acra-ratings.ru/about-ratings/assessment_scales/#scale1, where ESG-1 is the highest assessment in the field of the environment, social responsibility and governance and ESG-17 is the lowest assessment in the field of the environment, social responsibility and governance.
