ACRA has assigned ESG-5 (category ESG-C) to “Garant-Invest Commercial Real Estate” JSC (hereinafter, Garant-Invest, or the Company). According to the ESG Assessment Methodology, a high score in the field of the environment, social responsibility and governance means that the Company pays sufficient attention to these issues.
The assessment is based on the Company’s acceptable indicators in the field of environmental impact and rather favorable indicators in the field of social responsibility compared to peer companies. In addition, the Company has policies and procedures for managing individual industry ESG risks, as well as a relatively high level of compliance with best practices.
The Company is the main business asset of Financial and Industrial Corporation “Garant-Invest”. The Company owns and manages a portfolio of commercial real estate, and develops and redevelops commercial real estate in Moscow. Garant-Invest owns 13 multi-functional centers, including seven district shopping centers.
Garant-Invest’s sustainability priorities are set out in its publicly available Sustainable Development Strategy. The Company views its sustainability concept as an integral part of its long-term strategy and a key factor of its competitiveness.
key assessment factors
High assessment of the Company’s activity in the area of environmental impact and its actions to minimize environmental risks. This assessment is based on the Company’s acceptable environmental indicators compared to other companies in the sector and the positive performance of individual indicators over the past three years. Indicators such as water consumption and emission of pollutants per unit of revenue show improvement, as the Company is making significant efforts to save resources. Despite growing in 2020 due to an increase in household waste as a result of the specifics of activities of the Company’s real estate properties during the COVID-19 pandemic (higher use of disposable tableware and PPE), the amount of waste has tended to decline over the past three years.
The Company is heavily involved in the sustainability agenda and has placed two green bond issues worth a total of RUB 1 bln on the Moscow Exchange. In addition, it has buildings that are green construction certified. These factors provide additional positive support to the assessment.
In terms of managing environmental risks, the Company actively works in the area of saving resources, lowering water consumption, and waste reduction. Top-level documents on the management of key industry environmental risks have been developed, but the lack of a climate change adaptation strategy, as well as a unified strategy for energy conservation and the transition to electric transport in the form of separate documents has a constraining effect on the assessment.
The Company received a very high assessment for compliance with best practices. The Agency separately notes the presence of a Green Committee management body. Garant-Invest’s Green Committee is not only a center of sustainable development competencies, but also a governance body whose activities include the formation of a responsible supply chain and the introduction of innovative technologies.
High assessment of the Company’s social impact and its actions to minimize social risks. Garant-Invest performs better than its peers for most quantitative indicators of social impact, such as the volume of social investments, gender equality and salary. Injury and fatality indicators have been zero for the past three years, but the Agency notes that there is no data for contractors. Personnel turnover demonstrated significant growth in 2020 due to the coronavirus pandemic.
Garant-Invest’s social impact assessment has been further upgraded in view of the high share of women among the Company’s senior management team (>30%). At the same time, ACRA notes the absence of women in the board of directors, which is a constraining factor. The Company’s significant contribution to the development of the social sphere of the urban neighborhoods where it manages real estate properties serves as an additional positive factor.
The Company has created primary documents for managing key industry social risks. However, the Agency notes that individual policies and procedures do not exist for some types of risks. ACRA notes the high level of elaboration and detail of procedures in the field of the responsible supply chain.
Garant-Invest’s compliance with best practices is sufficient. At the same time, ACRA’s assessment shows that the Company’s policies and procedures for preventing sexual harassment are insufficient. In addition, the Company does not disclose information about gender composition in its public reporting.
The very high assessment of corporate governance quality is driven by the stability of the membership of the board of directors and the high level of disclosure of non-financial reporting. This assessment is also supported by the independence of the chairman of the board of directors.
The Company has carried out actions to minimize corporate governance risks, and has compiled top-level documents and regulations to manage these risks.
The corporate governance assessment is constrained by a lack of anti-monopoly policies and procedures.
The Agency assesses the level of compliance with best practices as high. Although Garant-Invest’s Sustainable Development Strategy does not have any measurable key performance indicators for medium-term and long-term plans, a number of short-term and medium-term tasks in key areas of the strategy has been approved by the Company’s internal regulations. ACRA also draws attention to the absence of structured information about sustainability risks in the Company’s non-financial reporting. At the same time, the Company’s corporate governance risks and environmental and climatic risks are partially disclosed in the Issuer’s Report.
Companies of the construction and development sector (mainly foreign companies) were selected as benchmarks (companies used for comparison).
Data provided by Garant-Invest in the questionnaire and non-financial report is reliable and comparable to benchmarks.
Data on injuries and fatalities is only available for the Company and does not include contractors.
Final ESG assessment: ESG-5.
Final ESG category: ESG-C.
ESG assessment determination: high assessment in the field of the environment, social responsibility and governance. Sufficient attention is paid to the environment, social responsibility, and governance matters.
E assessment: ESG-5.
S assessment: ESG-6.
G assessment: ESG-4.
The ESG assessment has been assigned in accordance with the ESG Assessment Methodology.
An ESG assessment has been assigned to “Garant-Invest Commercial Real Estate” JSC for the first time. The assessment is expected to be revised within one year following the publication date of this press release.
The ESG assessment was assigned based on data provided by “Garant-Invest Commercial Real Estate” JSC, information from publicly available sources, and ACRA’s databases.
The ESG assessment is solicited, and “Garant-Invest Commercial Real Estate” JSC participated its assignment.
In assigning the assessment, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodology.
No conflicts of interest were discovered in the course of the assessment process.
The assigned assessment is not a credit rating.