ACRA has affirmed the ESG rating of Open-End Mutual Investment Fund of Market Financial Instruments “First — Global Internet” (hereinafter, the Fund) at ESG-BB, level ESG-12 (ESG-E on the scale effective before March 25, 2024), which corresponds to an acceptable score in the field of the environment, social responsibility and governance.
According to the Methodology for Assigning ESG Ratings, an acceptable ESG assessment means that some issues of environmental impact, social responsibility and governance are not considered.
First Asset Management, Joint-Stock Company (hereinafter, AM First, or the Company) is one of the oldest asset management companies in Russia, which has been operating since 1996. The total volume of assets under management as of June 30, 2024 was RUB 1.74 tln.
Key assessment factors
Companies that make up the core part of the portfolio (more than 55.40% as of July 31, 2024) belong to sectors that have a low environmental risk. Companies from sectors with a medium environmental risk account for 42.19% of the portfolio. Companies from sectors with a high environmental risk account for 2.41% of the portfolio.
50.40% of the Fund’s portfolio is made up of shares of companies with a low level of social risks. 48.70% are shares of companies with a medium level of social risks, while 0.90% are shares of companies with a high level of social risks.
The Fund’s portfolio does not include financial instruments of the companies whose business relate to the national taxonomy of green and adaptation projects, as well as to the exclusive list as per the Agency’s methodology.
When assessing the portfolio, the Agency did not apply any additional adjustments.
According to the methodology, the Company received high scores for the independence of the board of directors, as well as for the industry experience of board members. At the same time, the Company received low scores for information disclosure (the Company has no experience in independently publishing non-financial reports), as well as for the stability of the board of directors. The Company received conservative scores for factors such as concentration of shareholder ownership and management strategy.
For most relevant environmental risks, the Company received conservative assessments due to the lack of high-level and internal documents for managing these risks, as well as relevant measures and indicators for assessing the effectiveness of managing these risks. The most developed, in the Agency’s opinion, is the approach to the risk factor “Irrational Use of Paper”.
Among social risks, the risk factor “Risks of Labor Protection and Industrial Safety” has been worked out in the most detail, according to ACRA. The Company has provided high-level and internal documents for the management of these risks, and is also carrying out measures to minimize them. The Company received conservative scores for other relevant risks.
The Company has regulatory policies and internal documents for the following corporate governance risks, and the Company also carries out special monitoring activities in relation to them: 1) “Corruption Risks”; 2) “Business Ethics Risks”; 3) “Risks of Insufficient Protection of Personal Data of Clients and Employees and Insufficient Information Security”. At the same time, there are no key performance indicators (KPIs) for the specified risks.
For the factor “Risks Associated with Proceeds from Crime”, the Company received a moderate score due to the lack of a top-level internal regulation for managing these risks and relevant KPIs. The Company received conservative scores for other corporate governance risks.
“Risks of Conflict between Shareholders”, “Risks Related to the Protection of Shareholders' Rights”, and “Risks of Accountability to Shareholders and Transparency” are considered irrelevant for the Company.
The degree of elaboration of environmental matters in the Company is relatively low. At the time of the assessment, the Company had two environmental practices, including green financial products, and publicly available “Principles of Responsible Investment”, which take into account sustainable development factors, including environmental ones, in making investment decisions.
ACRA assesses the social policy of AM First conservatively. At the time of the assessment, the Company’s best practices in the field of social responsibility were the following: “Feedback and Remedies”; “Human Resources Development Program”; “Official Regulations and Procedures Regarding other Violations of Business Ethics”; “Specialized Financial Products”; “Voluntary Medical Insurance and Corporate Medicine”.
In the Social Responsibility block of factors, ACRA applied the following positive modifiers: 1) the financial institution has exchange-traded mutual funds in the field of social responsibility; 2) a high percentage of employee training coverage; 3) a high percentage of women in management bodies.
In terms of compliance with the best corporate governance practices, the Company received a conservative score. When assessing the quality of corporate governance, the Agency additionally applied a number of positive and negative modifiers.
KEY ASSUMPTIONS
- Data specified by AM First in ACRA’s questionnaire is reliable.
rating components
Final ESG rating: ESG-BB.
Final ESG level: ESG-12.
ESG rating determination: acceptable assessment in the field of environment, social responsibility and governance. Some issues of environmental impact, social responsibility and governance are not considered.
E assessment: ESG-13.
S assessment: ESG-10.
G assessment: ESG-13.
ADDITIONAL INFORMATION
The ESG rating has been assigned in accordance with the Methodology for Assigning ESG Ratings and the Key Concepts Used by the Analytical Credit Rating Agency within the Scope of Its Rating Activities.
The ESG rating of Open-End Mutual Investment Fund of Market Financial Instruments “First — Global Internet” was published by ACRA for the first time on December 30, 2021. The ESG rating is expected to be revised within one year from the publication date of this press release.
The ESG rating was assigned based on data provided by First Asset Management, Joint-Stock Company, information from publicly available sources, and ACRA’s databases.
The ESG rating is solicited and First Asset Management, Joint-Stock Company participated its assignment.
In assigning the ESG rating, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
No conflicts of interest were discovered in the course of the assessment process.
The assigned ESG rating is not a credit rating.
