ACRA has affirmed ESG-5, category ESG-C to OOO “DeloPorts” (hereinafter, DeloPorts, or the Company), which corresponds to a high assessment in the field of the environment, social responsibility, and governance. According to the Methodology for Assigning ESG Ratings, a high assessment in the field of the environment, social responsibility, and governance means that the Company pays sufficient attention to environmental, social responsibility, and governance matters.
DeloPorts is a Russian stevedoring holding that manages the assets of the Delo group of companies (the Group) at the Port of Novorossiysk. The Company’s structure includes NUTEP LLC (container terminal), KSK JSC (grain terminal), and SC Delo LLC, which provides towing services. In 2022, the Company’s total cargo throughput was 12.7 mln tons.
key assessment factors
The Company’s specific (per unit of revenue) indicators for greenhouse gas emissions and energy consumption are assessed better than for the most companies in the sample, but at the same time, the indicators for water consumption1 and pollutant emissions are generally in line with the industry averages. Waste generation and wastewater discharge per unit of revenue are worse than those of peer companies.
The Agency notes a positive trend (decline of specific indicators of impact) in waste generation, water consumption, emission of pollutants, and wastewater discharge over the past three years.
The Agency has applied a positive modifier for environmental impact due to a significant share of energy consumed by the Company from renewable energy sources. KSK JSC and NUTEP LLC receive energy from wind farms, and the Company concluded an agreement with Atomenergopromsbyt JSC for the supply of 100% renewable electricity generated by wind. In addition, the Company calculates and discloses its GHG emissions (Scope 3), so that the Agency applied a positive analytical adjustment in the Environmental Impact block.
The Company is active in the field of environmental risk management. Top-level documents on the management of key industry environmental risks have been developed. Relevant measures are being taken to minimize all risks relevant to the Company.
The area of improvement for the Company is the development of key performance indicators (KPIs) and relevant internal regulatory documents in relation to most risks.
The elaboration of environmental issues is high. The Company regularly monitors and assesses environmental risks, discloses information on greenhouse gas emissions (Scopes 1, 2 and 3), has its own environmental policy and certification of environmental management systems, and has established an environmental competence center. At the same time, the potential areas of improvement include development of a biodiversity protection policy and proactive declarations aimed at preventing projects in areas with high biodiversity value and in specially protected natural areas, development of a public environmental strategy and an energy efficiency and water efficiency program, as well as more systematic work with non-profit organizations and research institutes on environmental issues.
The social impact indicators that have the most positive impact on the Company’s score for this block are the level of social investments, staff turnover, and injury rate. The average salary (in US dollars, taking into account purchasing power parity) is generally equal to the industry average. The assessment is constrained by the gender balance indicator and fatal injury rate. The Agency notes a positive trend in salary and injury indicators.
The assessment of the Company’s social impact was additionally upgraded due to the use of automated safety systems and the 100% employee training coverage and the annual increase of salaries for 100% employees at least on par with the inflation rate.
Negative modifiers were applied for a high share (21%) of variable part of salary (excluding top managers) and the absence of women from the board of directors.
DeloPorts is active in the field of social risk management. Top-level documents on the management of key sectoral social risks have been developed. Relevant measures are being taken to minimize all risks relevant to the Company. The lack of measurable performance indicators in corporate governance documents and no information on any internal regulations had a constraining effect on the assessment for most risks.
From the viewpoint of the best social responsibility practices, the Company received a high score, and its approach to these matters generally corresponds to the best international practices. The Company has adopted a Supplier Code and developed a Human Rights Policy, which specifies mechanisms for filing complaints in cases of human rights violations, including sexual harassment at work. The Company regularly discloses its gender composition, conducts staff trainings and external audits in the field of occupational health and safety, and has a corporate program to increase fertility, support motherhood and childhood beyond the established market practices. In addition, 100% of the Company’s employees are covered by a personnel attestation system with transparent KPIs. However, ACRA notes that the Company does not have certification of OHS management systems; issues of notifying stakeholders about any disputes or conflicts in the field of social responsibility and labor rights remain insufficiently developed, and employee housing programs have not been developed.
In terms of the quality of corporate governance, the Company received high scores for the quality of strategic planning and the level of information disclosure, as well as moderate scores for the industry experience of members of the board of directors (50%) and the concentration of shareholder ownership. The lack of independent members on the board of directors and the low stability of its membership (average length of membership is 1.8 years) limit the assessment.
The score for this block was further increased due to the Company’s public corporate governance code and a third-party opinion on non-financial reporting.
The Company actively works on corporate risk management. Top-level documents and internal regulatory documents have been developed to manage key industry corporate governance risks. Necessary measures are taken to mitigate all risks that are relevant to the Company. The assessment of most risks was constrained by the lack of information on measurable performance indicators in corporate governance documents.
DeloPorts demonstrates a high level of compliance with best corporate governance practices. A Code of Corporate Ethics and a Code of Corporate Governance have been adopted at corporate level, the implementation of corporate governance practices is supervised, there is a risk management and compliance service, and the Policy for Interaction with Stakeholders is disclosed in the Sustainable Development Policy. At the Group level, there is a Related Party Transaction Policy and an audit committee.
The absence of a public Sustainable Development Strategy and a public Dividend Policy, as well as the lack of a description of risk appetite with regard to ESG risks in the sustainable development report had a restraining influence on the assessment of the quality of corporate governance. In addition, there are no independent directors in the Company’s remuneration committee.
KEY ASSUMPTIONS
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Companies from the logistics industry were selected as benchmarks (i.e. peer companies).
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Data specified in questionnaire and the sustainable development report of OOO “DeloPorts” is reliable and comparable to benchmarks.
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The audit committee and the Related Party Transaction Policy of OOO “DeloPorts” are assessed at the Group level, since these factors apply to all subsidiaries companies.
rating components
Final ESG rating: ESG-C.
Final level: ESG-5.
ESG rating 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-5.
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 OOO “DeloPorts” was published by ACRA for the first time on January 1, 2023. 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 OOO “DeloPorts”, information from publicly available sources, and ACRA’s databases.
The ESG rating is solicited and OOO “DeloPorts” 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.
The assigned ESG rating is not a credit rating.
1 For the purposes of this assessment, water consumption indicator was used without the intake of runoff waters to ensure the comparability of data to previous periods.
