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July 12, 2019 www.intellinews.com I Page 2
Russian companies scramble to improve their ESG scores or face losing investors
already changing to the wider concept of ESG. Corporate governance is probably the best- defined part of ESG, but the criteria used to measure the sustainability of an investment are still fluid.
“A number of very large investors — pension and insurance companies — have to make payments in the very long-term in the future and in that context they want people who manage money and make these investments to think about long-term issues. That led to discussion of how do you manage things like environment and government risk. And now ESG is an emerging topic of discussion here in Russia,” says Remy Briand, head of ESG at Morgan Stanley Capital International (MSCI) during an ESG panel at the St Petersburg International Economic Forum (SPIEF) in the middle of June.
There are still no formal ESG requirements
when making investment decisions but funds
are starting to adopt them voluntarily as they realise these changes are coming and there is
no escaping them. Today ESG factors are already affecting the capital markets and investment decisions. Banks and funds are already selling,
or avoiding, stocks if they score poorly in the ESG rankings. Companies in Russia are waking up to the need to improve their ESG record and some of them have already lost substantial shareholders as a result of under par ESG scores, market participants tell bne IntelliNews.
“The trends are entering our life very quickly.
We are not talking just about new investors but there is a risk of losing existing investors as well. Companies really need to pay attention to it. If
Russian Market Data Value
1M YTD
Equity Indices
RTSI
1,408
5%
31.7
MOEX
2,823
3%
19.1
MSCI EM
1,049
3%
9.0%
S&P
2,993
4%
20.0%
NASDAQ
8,203
5%
25.0%
DAX
12,373
3%
17.0%
FTSE
7,531
2%
12.0%
Commodities
Price, $
1M YTD
Brent
66.7
7%
23%
WTI
60.4
13%
33%
Urals
74.2
-4%
65%
Gold
1,419
7%
11%
Silver
15.2
4%
-2%
Nickel
12,785
10%
21%
Copper
5,862
1%
-2%
Aluminum
1,811
5%
-3%
FOREX
Value
Russia sectors performance % YTD
1M YTD
EUR/RUB
71.03
-3%
-10%
Russia sectors performance % YTD
Oil & Gas Utilities Financials Consumers Telecoms
M&M RTS MOEX
34 33
31.7
22 24
14
19.1
0 10 20 30 40
26
Source: MOEX, BCS GM
source: MOEX, BCS GM
Sectors: % return YTD