ACRA has assigned ESG-3, category ESG-B, to PJSC POSSETI (hereinafter, ROSSETI, or the Company). This very high assessment in the field of environment, social responsibility and governance means that, according to ACRA's ESG Assessment Methodology, the Company pays much attention to those matters.
The assessment is backed by that the quantitative indicators of the Company in the field of environmental impact and social responsibility significantly exceed those of 23 industry peers (19 foreign companies and four Russian companies). In addition, the Company has established policies and procedures for management of certain industry-specific ESG risks.
ROSSETI is an operator of electric grids in Russia and one of the largest electric grid companies in the world. The Company operates 2.4 mln km of power transmission lines, as well as 528,000 substations with transformer capacity of over 809,000 MVA. In 2020, the effective supply of electricity to consumers amounted to 734.1 bln kWh. The ROSSETI Group of Companies employs 216,500 people.
The ROSSETI Group of Companies' priorities in the field of sustainable development are outlined in the Electric Grid Complex Development Strategy and the Development Strategy of PJSC ROSSETI and its Subsidiaries and Associated Companies for the period up to 2030. The Group has formulated the following sustainable development priorities:
- Ensuring reliability, quality and availability of power supply for consumers;
- Increasing the operational and investment efficiency, technological and innovative development;
- Improving energy efficiency, protecting environment and combating climate change;
- Maintaining stable business relationships with stakeholders, including shareholders, investors, lenders, local communities, and other stakeholders;
- Personnel care, including opportunities for professional growth of each employee, development of corporate culture, and compliance with industrial safety standards.
Key assessment factors
The assessment of the Company's activities in the field of environmental impact and minimization of industry environmental risks is the highest, which is conditioned by extremely low specific values of key quantitative indicators of emissions and environmental pollution. The rates of waste generation, water consumption, emissions of harmful substances, greenhouse gases, energy consumption and wastewater discharge per unit of revenue of ROSSETI are significantly lower than those of peers (a sample of 23 companies). This is largely due to the unique business profile of ROSSETI, which only transmits electricity and have almost no generating capacities of its own. In addition, the Company has developed key top-level documents for the management of key industry environmental risks. However, the assessment in Part E (Environment) is constrained by the lack of specific policies and procedures for managing climate and decarburization risks.
The assessment of the Company's social impact and social risk minimization is very high. For most quantitative indicators of social impact, including staff turnover, gender equality, and injuries (including fatal injuries), ROSSETI looks more favorable compared to peers. The only exception is salary (recalculated in US dollars, taking into account purchasing power parity), where ROSSETI is noticeably inferior to peers. In turn, this is due to the dynamics of the ruble exchange rate observed in recent years. The assessment of the social impact of ROSSETI is further supported by the availability of practices for using automated security control systems. The Company has developed the main top-level documents for the management of key industry-specific social risks. In particular, the Agency notes the detailed approach to procedures in the field of safety of employees and local communities, and HR management. At the same time, the assessment is constrained to a certain extent by the absence of criteria for social and environmental responsibility of suppliers in the Company's procurement documents.
The very high assessment of the corporate governance quality reflects the extensive experience of the members of the Company's board of directors, the presence of independent members on the board of directors, and a high level of disclosure of non-financial statements (ROSSETI has experience in publishing non-financial statements under GRI Core). The assessment is also supported by the fact that the Company has a well-developed strategy. The assessment was additionally increased taking into account the fact that ROSSETI has an external independent opinion on its non-financial reports. In addition, the Company had effective anti-corruption policies and procedures that had an additional positive impact on the assessment. This is confirmed by the fact that ROSSETI was included in the list of companies with the strongest anti-corruption practices and the lowest level of corruption risks, according to the Anti-Corruption Ranking of Russian Businesses for 2020 maintained by the Russian Union of Industrialists and Entrepreneurs. However, the high concentration of shareholdings, as well as the lack of policies and procedures to monitor the risks of using resources of doubtful origin, have a restricting effect on the assessment.
- 23 companies (19 foreign and four Russian companies) from the "Electricity: Grids" industry were selected as benchmarks (i.e. peer companies), of which Power Grid Corporation of India Ltd. matches the business profile of PJSC ROSSETI to the greatest extent.
- The data presented in the questionnaire and the sustainable development report of PJSC ROSSETI is reliable and comparable to benchmarks.
- PJSC Rosseti has data on greenhouse gas emissions for Scope 1 only. Based on this data, the Company was compared with benchmarks. If data on Scope 2 is available, the assessment can be modified.
Final ESG assessment: ESG-3.
Final ESG category: ESG-В.
ESG assessment determination: very high assessment in the field of environment, social responsibility and governance. An increased attention is paid to the environment, social responsibility and governance matters.
E assessment: ESG-1.
S assessment: ESG-4.
G assessment: ESG-4.
Regions of the Company's operations
Region of the Company's operations: Russia (100% of revenue).
The ESG assessment has been assigned in accordance with ACRA's ESG Assessment Methodology.
An ESG assessment was assigned by ACRA to PJSC ROSSETI for the first time. The assessment is expected to be revised within one year after the publication date of this press release.
The ESG assessment was assigned based on the data provided by PJSC ROSSETI, information from public sources, as well as ACRA's databases.
The ESG assessment is solicited, and PJSC ROSSETI participated in the assessment process.
In assigning the assessment, ACRA used only information, the quality and reliability of which was, in ACRA's opinion, appropriate and sufficient to apply the methodologies.
No conflicts of interest were discovered in the course of assessment.