In today’s world, having robust Environmental, Social, and Governance (ESG) principles integrated into a company’s daily operations is essential. Compliance with ESG standards helps energy sector companies modernize their assets, make their business sustainable, raise private investment, and attract other investments. USAID, through its Energy Security Project (ESP), supported the Gas Transmission System Operator of Ukraine (LLC “Gas TSO of Ukraine”, GTSOU) with the development and implementation of the Operator’s ESG Strategy.
The initiative aimed to comprehensively analyze GTSOU’s current operations and benchmark them against best international practices, ensuring GTSOU is well-equipped to meet numerous ongoing challenges. The strategy is not merely a regulatory requirement but a fundamental tool for fostering sustainable growth, enhancing stakeholder trust, and ensuring long-term resilience.
Opening the meeting, Andriy Zinchenko, Project Management Specialist of the Office of Critical Infrastructure of USAID Ukraine, stated: “By integrating ESG principles, GTSOU can better navigate regulatory and market changes, ensuring our operations remain sustainable and resilient. Demonstrating a commitment to ESG fosters stronger relationships with stakeholders, including employees, communities, and investors, enhancing GTSOU’s reputation and social license to operate. A robust ESG strategy positions GTSOU as leaders in responsible business practices, attracting investment and ensuring compliance with international standards and best practices.”
According to Justin Goonesinghe, USAID ESP Gas Sector Lead, as Ukraine navigates its path to the EU, the ESG strategy will be extremely beneficial for GTSOU. It will position it as a leader of sustainable business practices amongst large Ukrainian state-owned entities, facilitate and efficient operations, and drive a focus on accountability and transparency. As modern-day investors prioritize ESG principle, GTSOU will continue benefiting from its implementation.
GTSOU General Director Dmytro Lyppa noted that the Operator’s ESG activities have already yielded the first positive results. “At a recent meeting with potential business partners, we announced that we are implementing ESG principles in our daily activities and heard approval. We are proud to have become one of the first state-owned companies in the sector to develop and implement an ESG strategy per international best practices and to be an innovator in the sustainable transformation and post-war ecological recovery of Ukraine.”
The USAID ESP ESG consultants presented the results of benchmarking the Operator’s activities across 16 different parameters, comparing with best-in-class peers. Additionally, ESP provided an overview of government regulations, offered recommendations on decarbonization, conducted the climate vulnerability assessment and risk mitigation analysis, and developed a governance and management plan. Based on these findings and the implemented changes, GTSOU is expected to enhance its position, gaining benefits like increased access to investments/funding, sustainability of future business models, innovation, security, and advantages for Ukrainian consumers.
By addressing environmental concerns, GTSOU will not only reduce its carbon footprint but also ensure continuity of operations in the face of rapidly shifting energy markets and regulations. GTSOU’s commitment to social responsibility strengthens its relationships with stakeholders, employees, communities, and customers. Governance, the third pillar of the ESG strategy, ensures that GTSOU upholds the highest standards of integrity and accountability.
The ESG standards, incorporated into GTSOU’s ESG Strategy, will ensure the Operator’s compliance with EU requirements and best practices of TSOs’ sustainable development, helping Ukraine fully integrate into the European gas market.