Olga Pascault, Independent Director, Member of the Boards of Directors and Audit, Remuneration and Nomination Committees, SPB Exchange, Asakabank
For the most part, Russian ratings were created on the basis of Western ratings, using the same methodology, and participation in them was mainly a mechanism to attract Western investors. Now is a good time to start developing our own assessment and rating methodologies and tools, because the ESG agenda in Russia has not been cancelled.
The bad news is that the pool of investors has shrunk significantly and is now represented mainly by Russian players. Therefore, to attract investors from, say, China or the UAE, it would make sense to participate in the relevant ratings.
The good news is that Russia has an opportunity to extend its reach to emerging markets, as Russia has recently made significant progress in implementing the ESG agenda in corporate governance, and Russian companies have a good track record over the past 10 years, which has allowed them to earn high Western ratings. Russia has the potential to become an ESG flagship for emerging markets.
Vasily Andreev, Project Manager, Strategy and Investment Unit, Inter RAO
Recently, the sustainable development agenda has begun to gain momentum in Asia-Pacific countries. For example, Chinese companies are becoming increasingly aware of the importance of following ESG best practices in order to attract foreign investors; yet China’s ESG rating system still needs improvement, as the ESG rating standards and practices used in China are very different from those used in the EU and the US. This is largely due to the fact that the development of the ESG agenda is driven by the government, so changes will be needed to take into account the specifics of the business operations of companies outside the Asia-Pacific region.
Inter RAO Group continues to participate in those Western ratings that remain in the Russian market. The Group also participates in domestic ESG ratings (AK&M, RAEX, etc.) and expects an active development of domestic ESG practices in connection with the growing domestic demand for ESG ratings. Participation in Chinese ESG ratings is not yet a priority for the Group, but at the same time the Group is analyzing existing Asian ESG ratings and their methodologies.
Ekaterina Kuzmina, Head of Sustainable Development Department, Promsvyazbank
The ESG agenda originated in Western countries, so national taxonomies, particularly those of Russia and China, are to a greater or lesser extent aligned with Western standards. Adapting to Chinese ratings will not be a big problem.
Many of the Asia-Pacific countries that Russian companies are now targeting already have sustainability regulations that match, and in some cases exceed, their Western counterparts in terms of both maturity and rigor. For example, all companies listed on the Hong Kong Stock Exchange are required to publish non-financial reports. Yet not all SP500 companies publish such reports.
PSB prioritizes participation in Russian ESG ratings. We are aware that the issue of creating Russian standards is being actively discussed. We believe that such standards should be created taking into account the requirements of ASEAN countries: a uniform global standard is essential for seamless implementation of joint international projects. This approach is more effective than adapting to the national standards of each country.
Representative of NLMK
In our opinion, it is too early to talk about replacing Western ESG ratings with Chinese ones. In Asia-Pacific markets, even in China, well-established Western ratings are more popular than local ones.
Nevertheless, the ESG agenda is gaining momentum, and the ESG ratings market is actively developing in China. However, despite the dynamic expansion, the market remains quite closed, with its own internal specifics. For example, some of the major Eastern ESG ratings still assess only the companies that are listed on Chinese stock exchanges, which is an impossible barrier for us. We are not opposed to working with Eastern ESG ratings, but we need to understand which ones we can work with and whether it makes sense for our investors.
Tatyana Miroshnichenko, Head of Sustainable Development Practice, Metalloinvest Management Company
Chinese ratings are unlikely to replace Western ratings in the near future, as China does not yet have a rating system that is comparable to ISS ESG, SystainАlytics, MSCI ESG and is recognized by the international community.
We do not yet have any plans to participate in any Asian ESG ratings; Russian ESG ratings remain our priority. The company, however, intends to participate in ASRA (ASIA SUSTAINABILITY REPORTING AWARDS 2022) this year with the English version of its 2021 Sustainability Report prepared in accordance with GRI standards.