ACRA has upgraded the ESG rating of PJSC TransContainer (hereinafter, TransContainer, or the Company) to ESG-3, category ESG-B, which corresponds to a very high assessment in the field of the environment, social responsibility, and governance. According to the Methodology for Assigning ESG Ratings, a very high score in the field of the environment, social responsibility and governance means that increased attention is paid to these issues.
The increase in the rating is due to the positive dynamics of a number of environmental impact indicators, favorable dynamics of wages at the Company, as well as the introduction of certain sustainable development best practices.
The assessment is based on the Company’s favorable indicators in the fields of environmental impact, social responsibility, and corporate governance compared to companies in the sample. In addition, the Company has policies and procedures for managing individual industry ESG risks, as well as a sufficient level of compliance with best practices.
TransContainer is a leading intermodal container operator in Eurasia. The Company has a container fleet that includes over 140,000 units with a total capacity of about 220,000 TEUs and 40,000 flatcars. The Company owns 37 container terminals in Russia and manages three others via subsidiaries and joint ventures. Delo Group is the sole shareholder of TransContainer.
KEY ASSESSMENT FACTORS
The Company’s indicators for waste generation, greenhouse gas (GHG) emissions, water and energy consumption per unit of revenue are better than most companies in the sample, while the indicator for emissions of harmful substances is scored as medium. At the same time, the Agency notes the positive dynamics (decrease in specific indicators) of waste generation and GHG emissions indicators in recent years. The specific wastewater discharge indicator is on average worse than that of the sample companies.
In the Environmental Impact block, the Agency applied a positive modifier for the high share of normatively clean discharged wastewater (88.6%). An additional positive analytical adjustment was applied for the Company’s disclosure of information on GHG emissions under the Scope 3 parameter, since this information is only disclosed by a small number of companies in Russia.
The Company actively manages environmental risks. Top-level documents have been developed to manage key industry environmental risks. Necessary measures are taken to mitigate all risks that are relevant to the Company.
Development of key performance indicators (KPIs) and relevant internal regulatory documents with regard to the risks Sanitary and Epidemiological Risks, Emissions of Pollutants into the Atmosphere and Conducting Operations in a Region with a Shortage of Water Resources are areas of improvement for the Company.
The Company is has a high degree of elaboration of environmental issues in terms of compliance with best practices. TransContainer regularly monitors and assesses environmental risks, publishes information on GHG emissions for Scope 1, 2 and 3, has its own environmental policy, carries out certification of environmental management systems, and has created a center of competencies for environmental issues. At the same time, the development of a public environmental strategy, as well as a program to improve energy and water efficiency with specified targets, is a potential area of improvement.
The Company received high scores for all the social responsibility indicators specified by ACRA’s methodology — gender equality, personnel turnover, level of average wages, injury rate, fatal injury rate, and social investments. The Agency notes the positive dynamics for the wage indicator.
The assessment of the social responsibility factor received an additional upgrade thanks to the high level of employee training coverage (>100%[1] of the average headcount in 2022), annual wage indexation for 100% of employees at no lower than the inflation rate, and the high percentage of women (47%) in the Company’s senior management.
At the same time, the Agency applied a negative modifier in view of the high (31%) share of the variable component in the structure of employee remuneration, with the exception of senior management.
The Company received the maximum score for most of the relevant social risks because it has existing policies and measurable performance indicators enshrined in them, and procedures and measures ensure that these risks are managed and minimized. However, the Agency notes that the development of relevant KPIs and top-level documents for the risks Insufficient Digitization of Services, Human Rights Violations in Company Labor Practices and Supply Chain Interactions, and Lack or Outflow of Skilled Workers is an area of improvement.
From the viewpoint of social responsibility best practices, the Company’s assessment is also high, and its approach to these matters generally corresponds to best international practices. The Company has adopted a Supplier Code and developed a Human Rights Protection Policy, which specifies mechanisms for filing complaints in cases of human rights violations, including sexual harassment at work. The Company regularly publishes information on its gender composition, conducts staff training and external audits in the field of occupational health and safety, has a corporate program for supporting motherhood and childhood beyond established market practices, and has a rent compensation program for relocated employees.
However, the Agency notes that the Company has neither certification of the occupational health and safety management system, nor targets for hiring employees from among local residents, nor a transparent personnel appraisal system that covers 100% of employees. These are areas for improvement.
As part of the corporate governance quality assessment, the Company received high scores for the industry experience of the members of the board of directors, quality of strategic planning, and the degree of information disclosure. The most conservative scores were given for the absence of independent directors in the board of directors, low stability of the board’s membership, and high concentration of shareholder ownership.
The assessment was further upgraded due to the presence and disclosure of a Corporate Governance Code and a Report on Compliance with the Principles and Recommendations of the Corporate Governance Code.
For all relevant corporate governance risks, the Company received the maximum score, taking into account the availability of relevant regulatory documents, risk management measures, and measurable performance indicators.
TransContainer demonstrates a high level of compliance with the best corporate governance practices. The Agency notes the presence and disclosure of a Code of Corporate Ethics and a Dividend Policy, a risk management and internal audit system, and a corporate secretary.
The lack of a public sustainable development strategy, a description of the appetite for ESG risks in the sustainability report, a public policy on related-party transactions, and a stakeholder policy had a restraining effect on the corporate governance quality assessment. Moreover, there are no independent directors in the remuneration committee. However, the Agency notes that the Company will draw up a sustainable development strategy in the near future, including the climate agenda, for the period until 2040.
1 The value exceeds 100%, since this is the total indicator of training provided; the same employee could have received training in several areas.
KEY ASSUMPTIONS
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Companies that belong to the Logistics industry were used as benchmarks.
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Information presented in the questionnaire and the TransContainer’s Sustainable Development Report is reliable and comparable to benchmarks.
RATING COMPONENTS
Final ESG rating: ESG-B.
Final level: ESG-3.
ESG rating determination: very high assessment in the field of the environment, social responsibility and governance. Increased attention is paid to the environment, social responsibility, and governance matters.
E assessment: ESG-3.
S assessment: ESG-2.
G assessment: ESG-5.
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 PJSC TransContainer was published by ACRA for the first time on December 27, 2022. The ESG rating is expected to be revised within one year following the publication date of this press release.
The ESG rating was assigned based on data provided by PJSC TransContainer, information from publicly available sources, and ACRA’s databases.
The ESG rating is solicited and PJSC TransContainer participated in 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.
