In 2023, the Arctic Development Project Office (PORA), in collaboration with the Faculty of Economics of Moscow State University, released a new report of the Polar Index, a ranking of companies contributing significantly to the development of the AZRF. This report has been published annually since 2018; it is the first of its kind to provide an analytical overview based on open data about Arctic business development. What Changed over the Past Six Years?

Business Development Trends

The expert community that compiles the ranking considers various parameters: not only economic factors such as company profitability, value and working capital ratio, but also social and environmental indicators. Companies are evaluated regarding the following factors: employee illness and injury rates, work intensity and noise levels, as well as access to healthcare, cultural and educational institutions, housing, kindergartens and sanatorium vouchers. Environmental factors are also tracked, including emission volume and type, the presence of modern wastewater treatment facilities and land reclamation efforts. The compilers of the Polar Index have 24 parameters at their disposal, along with expert opinions gathered through surveys.

Due to the scale of their projects and investment volumes, large oil, gas and industrial companies have the most significant impact on Arctic development. Industry giants actively invest in resource exploration, infrastructure development and collaboration with local authorities beyond just tax payments.

In 2023, Rosneft took the lead, followed by Norilsk Nickel, and Gazprom Neft ranked 3rd. The ranking's top three are not constant. For instance, Lukoil, the 2018 leader, fell to Group C this year due to its ‘insufficiently active sustainability policy’ and ranked 15th. Novatek, which ranked 2nd in 2020 and 3rd in 2021, now finds itself at the bottom of Group B with a ‘moderate sustainability policy’.

What Affects a Company's Ranking and Position? Let us take, for instance, Norilsk Nickel, a long-standing player in the North. In 2018, the enterprise ranked 3rd with an index of 0.856, but in 2019, it ranked 2nd with an index of 0.861. The economic efficiency of the enterprise was rated at 0.91; social efficiency — at 0.831; environmental efficiency — at 0.842. However, in 2020, Norilsk Nickel dropped out of the top five, even though its economic indicators were not drastically decreasing. Why? The accident at CHPP-3 on May 29, 2020, which resulted in the spillage of 21 thousand tons of diesel fuel, caused the company's environmental and social indices to plummet, shifting it from A (active sustainability policy) to B category (moderate sustainability policy). Nornickel needed 3 years to fully recover from the rating damage caused by the accident, and by 2023, it has reclaimed its second position in the ranking. One significant factor in regaining its lost positions could be the upcoming launch of the Sulphur Project, aimed at addressing one of the most severe pollution issues in the Arctic (and potentially propelling the Norilsk giant to the first position). This case illustrates that while all rating leaders are economically efficient, they primarily compete for top positions through enhancing their social climate and environmental practices.

Regional Development Dynamics

Besides business, the Polar Index also monitors regional development dynamics. Regions are evaluated based on three sets of parameters: socio-economic, environmetal-economic and socio-environmetal. Each parameter is equally significant in the final tally, with data sourced from official public records. Therefore, the ranking reflects actual, authenticated changes, unaffected by occasionally unreliable insider information.

The Murmansk Region consistently tops the Polar Index, while the Republic of Sakha (Yakutia), the Arkhangelsk Region and the Yamalo-Nenets Autonomous Area vie for the subsequent three spots. Experts evaluate factors such as the ratio of average income per person to the minimum cost of living, gross regional product per capita, housing availability, transport infrastructure, population migration levels, the effectiveness of indigenous minority rights and social guarantees implementation and others.

The creators of the ranking note that the Polar Index aims to encourage the sustainable growth of Arctic companies and regions within the AZRF.