Bank of Russia recommends that public joint-stock companies disclose information about ESG factors
Public companies are encouraged to disclose information about how they take into account factors related to the impact on the environment, the social sphere and corporate governance (the ESG factors), as well as how they implement these factors into their business model and development strategy.
The Bank of Russia aims to help companies consider the risks that arise during the transition to sustainable development goals. The recommendations developed by the regulator will allow market participants to structure information about their environmental impact and social responsibility of doing business, which will enable investors to judge their long-term financial stability. An assessment of ESG risks is necessary, since over time they can be transformed with a high degree of probability into financial risks.
The recommendations pay special attention to the composition of non-financial information and the principles of its disclosure. Companies are invited to independently determine the scope and format of disclosure, depending on the nature and scale of their business. They may establish a document where they will report on their non-financial activities, but the Bank of Russia recommends doing this in the company’s annual report. It is important that the information is relevant, useful, consistent, and comparable with the performance indicators of other joint-stock companies.
‘Our recommendations are aimed at raising the investment attractiveness of joint-stock companies, increasing the responsibility of executive bodies for doing business considering ESG factors, as well as improving interaction with investors, employees, the state, and public organisations,’ said Elena Kuritsyna, director of the Corporate Affairs Department. ‘Their implementation will ensure a more balanced and sustainable development of the economy and society.’
The recommendations have been developed based on the international standards TCFD (Recommendations of the Task Force on Climate-related Financial Disclosures) and GRI (Global Reporting Initiative Standards) and can serve as methodological material for anyone interested in disclosing information about ESG factors.