Social values in ESG‐transformation of mining companies in the Arctic and Northern territories

Recently, the social transformations have occurred more frequently due to changes in the world such as the crisis caused by COVID‐19, and ongoing social tensions caused by income gap, and changes in traditional values under the influence of digitalization of all spheres of life. The article covers issues of place and role of mining companies, ESG‐transformation, the social values creation and the social expenditures in the system of social risk protection of the Northern regions of Russia. Theoretical approaches were analyzed to understand the process of design social risk protecting strategies with the focus not only on the micro‐level of firms or companies, but on the meso‐level of a region and description of social issues which have arisen in a region. Literature review shows that companies operated play a significant role in the risk protection systems of the territory where they operate. In turn, the place of social values in the system of risk protection is determined by the stage of transformation period. The analysis of corporate social activities is made on companies contributed the most to the economic development of the Northern region such as «Karelsky Okatysh» (the subsidiary of Public Joint Stock Company (PJSC) «Severstal»), Public Joint Stock Company «ALROSA» (hereinafter PJSC «ALROSA») and its subsidiary company “Severalmaz”, Limited liability company «LUKOIL‐Komi» (hereinafter LLC «LUKOIL‐Komi»). The methodological frame is based on garnering corporate activities and calculation share of corporate expenditures in risk protection systems. It was found that the features of the Northern regions should be taken into account when company chooses the directions of social policy and plans the budget for social programs. For example, it is noted that expenses on support of the Indigenous people of the North are more significant and constant than other categories. At the same time, the following controversial issue of the social activity of companies was identified: corporate activities and social expenses have a sinusoidal waveform which is determined by the stage of ESG‐transformation and by the main actor in the risk protection system such as governments or companies operated in the Northern regions. The research result shows that social role of extractive companies is currently on “possible” or “desirable” stages and has not yet become absolutely “necessary”. Moreover, any of social activities can be “undesirable” after its legitimization. A balance of interests must occur between the state, companies and the communities to strengthen the role of social values and distribute the responsibility for risks.