Annotation of the results obtained in 2023
Sustainability is becoming an increasingly important issue in the global business landscape as companies realize the need to adopt sustainable practices to remain competitive in the long term. The Nordic countries have become leaders in sustainable business practices, and their innovative approaches to sustainability have set an example for other regions. In this essay, we will examine the climate challenges faced by the Nordic countries and the importance of HCC for long-term competitiveness. We will also analyze the current state of business in Northwest Russia and identify opportunities for Russian companies to participate in sustainable HCCs. Finally, we will review successful sustainable HCCs in the Nordic countries and assess their potential application in Northwest Russia. Nordic countries are facing serious climate challenges, including melting ice caps and rising sea levels, which are having a profound impact on their economies and the global business landscape. These challenges have led to a growing awareness of the need for sustainable business practices and the adoption of circular economy principles. Sustainable GCCs are crucial for long-term competitiveness as they enable companies to reduce their environmental impact and increase their social responsibility. The Nordic countries are at the forefront of sustainable business practices: companies in the region are adopting innovative approaches to sustainability, such as the use of renewable energy and the adoption of circular economy principles. Northwest Russia has significant potential to participate in sustainable GVCs, given its proximity to the Nordic countries and its vast natural resources. However, the current state of business in the region is characterized by outdated infrastructure, inadequate regulatory frameworks and a lack of awareness of sustainable business practices. Russian companies have the opportunity to participate in sustainable GVCs by adopting sustainable practices, investing in renewable energy and collaborating with Nordic companies to improve their competitiveness. The research results showed that the majority of respondents consider climate change to be a serious issue, but have little knowledge of their companies' role in addressing the problem. It was also found that Russian companies operating predominantly in the northern region often lose out in competition due to a lack of resources and insufficient access to production technologies. In addition, the research highlighted factors that can affect the participation and competitiveness of Russian companies in the global market, such as the level of innovation, resources, access to production technologies, and government support for climate issues. GVCs in times of global crises and economic regionalization: the case of the Russian oil and gas industry Participation in the GCC brings both advantages and disadvantages for companies such as Gazprom, LUKOIL and Rosneft. On the one hand, GVCs allow companies to access a wider range of resources, reduce costs and increase efficiency through specialization in certain stages of production. On the other hand, GVCs may increase a company's vulnerability to external shocks, such as changes in exchange rates or trade policies, and may result in a loss of control over the production process. Therefore, companies carefully weigh the potential benefits and risks of participating in GVCs. In our study, we analyzed five years from 2018 to 2023 to find out whether the GVC strategies of Russian oil and gas companies were affected by external shocks. First, we found that all three companies exhibit a similar GCC strategy, characterized by centralization with elements of globalization. This is not surprising given Russia's vast oil reserves, which provide these companies with a competitive advantage. In addition, all three companies have exploration and production operations overseas that complement their domestic activities. This strategy has remained unchanged since countries with significant oil reserves, such as Russia, are mostly developing or least developed countries that are not involved in the political turbulence affecting Russia. Second, we identified some differences in mid-level GCC strategies. While Lukoil and Rosneft predominantly rely on a centralized approach with elements of transition, that is, they exercise greater control over their transport and trading operations, Gazprom, due to the unique nature of gas transportation and storage, uses a globalization strategy. As a result, we can observe relatively stable strategies of Lukoil and Rosneft, while Gazprom has undergone significant changes in its activities in the mid-market sector. Gazprom's strong dependence on the European market and its strong partnerships led to a strategic shift involving the sale of mid-market assets and the consolidation of existing resources. Downstream GVC strategies showed variation among the three cases studied, encompassing a mixture of centralization, transition, and globalization approaches. In particular, Gazprom and Rosneft used a similar GCC scheme in the refining sector. They primarily pursued a combination of transition and globalization strategies, allowing their foreign subsidiaries to operate with some degree of autonomy. However, in 2022, their strategies began to change. To reduce the risk of sanctions, they separated processing activities from the main business. On the other hand, Lukoil maintained its original transition-based refining and marketing strategy without significant changes. This approach allowed Lukoil to maintain significant control over its activities while delegating certain tasks to its subsidiaries. The different dynamics of subsequent GVC strategies can be explained by the ownership structure. Unlike Gazprom and Rosneft, Lukoil is not a state-owned enterprise. Although Lukoil remains subject to sanctions, pressure from stakeholders abroad may be comparatively less. In conclusion, it is worth noting that none of the multinational enterprises (MNEs) studied followed a pure GVC strategy as proposed in the literature. Instead, there is always a combination of strategies with one approach dominating. Over five years, despite the economic turmoil, there were no significant changes in the upstream strategy, while more changes occurred in the mid- and downstream GCCs. Companies vary in how they adjust their strategy; however, a certain pattern can be observed. There is a transition from a transition to globalization in the lower reaches of the GCC to evade sanctions and from a transition to centralization in the middle part of the GCC. Lukoil has undergone less transformation in its GVC compared to Gazprom and Rosneft, which can partly be explained by its initially different internationalization strategy and private ownership.

 

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Annotation of the results obtained in 2022
In the first year of the project, a systematic review of the literature was carried out to identify directions in research on climate challenges and the formation of sustainable global value chains. Global value chains (GVCs) are an important part of the modern international business system, but the discussion about their sustainability and environmental friendliness is relatively new. Based on the analysis of scientific works of domestic and foreign authors, the main features of the formation and development of sustainable global value chains are identified and analyzed. GVCs, traditionally run by multinational companies, have a significant impact on the environment in both developed and emerging markets. GVCs are seen as an integral part of international trade, with UNCTAD estimating that approximately 80% of world trade is carried out through GVC management systems linking companies in various constellations. The International Labor Organization report highlights that the GVC's focus on greater environmental sustainability is a priority. Growing concerns and external pressures are forcing GVC members to assess the environmental impact of their product manufacturing activities. It is necessary to take into account the important role of GVC interconnectedness and the changing nature of the involvement of various actors in the global economy. Despite the importance of GVC governance structures in facilitating the dissemination of environmental sustainability practices among companies from emerging economies, the role of national institutional contexts should not be underestimated. Regional integration provides an opportunity to strengthen the competitive advantages of companies, relying on a larger market, common approaches and regulatory standards, cultural proximity, as well as political support for the economic integration project. Therefore, regional integration is expected to boost regional trade and investment in sectors other than the oil and gas sector, where supply chains are heavily resource-driven. Further analysis of cooperation between companies within the framework of the GVC in general and interaction in response to climate challenges in particular will make it possible to identify effective practices of companies in managing environmental sustainability. Based on the results of the literature review, the researchers developed an empirical study design. Since the studied phenomenon of green partnerships and environmental sustainability of the GVC is poorly studied in the academic literature, the use of the case-study method seems to be the most appropriate in this study. Criteria were formulated for the selection of representative cases, which will be analyzed at subsequent stages of the project. So, for the analysis, companies were selected that operate in the North-West region, belong to the metallurgical and oil and gas industries. Conducting primary data collection: media materials, company reports and statements, etc. showed that the topic of environmental sustainability of the GVC and strategies for responding to global challenges is one of the key topics for modern MNCs. The role of GVC leading companies in driving the climate transition is to convey high standards of environmental sustainability throughout the value chain. As a result of the analysis of primary qualitative data, the following conclusions were obtained: ESG strategy is an integral part of the overall strategy of Russian companies; compliance with global environmental standards gives companies an advantage in obtaining loans, implementing joint projects with foreign partners; the amount of investment in green technologies is too significant for companies to invest in technology alone, hence the potential for technology partnerships is increasing.

 

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