AFK ‘Sistema’, Lukoil, and Norilsk Nickel, participants of Russian UN Global Compact network, according to the results of the ‘Responsibility and Openness’ and ‘Sustainable Development Agenda’ instalment indices, developed by the Russian Union of Industrialists and Entrepreneurs (RSPP), have joined the ranks of the top leaders on the level of information disclosure on corporate social responsibility. Indices were created based on public annual and non-financial reporting analysis of top-100 largest corporations of RAEX-600 and RBK-500 ratings.
AFK ‘Sistema’ also took the lead in the national rating of corporate transparency in public sector, based on the findings of the annual survey of the Russian Regional Network on Integrated Reporting (RRN), having covered 855 largest Russian companies and public corporations.
In whole, most of 14 enterprises with the highest RSPP index also make part of the group consisting of around 50 companies, which, according to RRN rating, satisfy the contemporary requirements of corporate transparency, accepted in the international business community. It is noteworthy that out of 25 leading companies of the Sustainable Development Index, 10 of the were also included in the top-20 of the Corporate Governance Index, digested by the National Association of Corporate Directors (NACD).
The authors of all the above-mentioned studies pay attention to the positive correlation between financial results of companies with best corporate governance practices, responsibility and high quality of information disclosure on social and ecological aspects of activity.
Thus, based on the pilot modelling of the sustainable development share index, Moscow Stock Exchange and RSPP record its higher profitability in comparison to the Moscow Interbank Currency Exchange Index – almost twice for the last 3 years.
Chief operating officer of NACD, Mikhail Kuznetsov, states that the corporate governance index, built on the companies with the highest level of compliance with the national code, demonstrated at year-end 2016 20% advance to the general market index, and the corporate transparency rating contributors note that transparent enterprises have higher credit ratings.
“We can see that ESG factors start playing more and more significant role while taking investment decisions and start influencing business capitalization, that’s why we pay significant attention to the CSR and non-financial reporting development in the corporation. For a moment, apart from AFK ‘Sistema’, sustainable development reports in line with the international GRI standards are published by our largest portfolio companies MTS, Segezha Group, and ‘Detski mir’,”, informed the AFK ‘Sistema’ press-service.
Experts predict that influence of social, economic and governance factors on companies’ financial sustainability will only grow, as well as the importance of relevant indices and ratings for investors.
According to Elena Feoktistova, deputy chairperson of the Governance Board of the Russian UN Global Compact network, managing director on corporate responsibility, sustainable development social entrepreneurship of RSPP, dynamics of ‘Responsibility and openness’ index in a leading group to large extent reflects the managerial quality by the performance in CSR and sustainable development in these companies. In her opinion, one of the drivers to extend the non-financial information disclosure might become the bigger attention from financial institutions.
“We can observe the process of a new market paradigm creation, in which investors, traditionally concentrated on raising profitability of capital invested, consider in their strategies risks and opportunities related ti the issues of corporate governance quality, human capital, companies’ influence on society and environment, and the investment focus concentrates on directions and areas in which sustainable development and economic growth are inseparable, such as healthcare, education, ‘clean’ energy. The moment when the ‘responsible investment’ trend becomes widespread in our country, as it is abroad, is imminent, connected among other factors to the enforcement of 2030 UN Agenda, involving active participation of private sector. The largest companies with high level of corporate responsibility will become leading change agents of this process. Not coincidentally, even today the leaders are among such companies as AFK ‘Sistema’, one of the most noticeable and active participants of the UN GC in Russia, as well as other large representatives of the Russian UN Global Compact network”, underlined Larisa Ovchinnikova, the chairperson of the Russian UN Global Compact network, managing director of the Institutional development department of VEB (Vnesheconombank).