ACRA has assigned ESG-A, level ESG-5 to Limited Liability Company “A101” (hereinafter, A101 or the Company), which corresponds to a high score in the field of the environment, social responsibility and governance.
The rating is driven by the Company’s current indicators in the field of environmental impact, favorable social responsibility indicators compared to international peers, and the high quality of corporate governance. In addition, the Company has policies, procedures and measurable performance indicators in the field of management of key industry ESG risks and a high level of compliance with best corporate governance practices.
According to the Methodology for Assigning ESG Ratings, a high score in the field of the environment, social responsibility and governance means that sufficient attention is paid to these issues.
A101 is one of the largest developers in the Moscow area. The Company is engaged in the implementation of residential, commercial, office and other real estate projects as part of the integrated development of the New Moscow area. As of November 2024, the Company’s current housing construction portfolio, according to the Unified Resource of Developers, was 1.4 mln sq. m. The total construction area, taking into account commercial and social infrastructure, according to the Company, is 2.2 mln sq. m.
KEY ASSESSMENT FACTORS
In general the Company has a moderate impact on the environment. А101 demonstrates positive (low) indicators for water consumption and wastewater discharge per unit of revenue in monetary terms compared to companies from the sample. At the same time, the Agency notes that the Company only records water consumption at its offices and not at construction sites.
A moderately conservative score was given for the Company’s energy use per unit of revenue. At the same time, the Agency notes positive dynamics in terms of the specific indicator over the past four years. The Company received a similar score for the indicator of greenhouse gas emissions per unit of revenue, as well as for the indicators of waste generation and emissions of harmful substances. In the Environmental Impact block, the Agency applied a positive modifier for the operation of green buildings, as well as an analytical adjustment for the calculation and disclosure of information on Scope 3 greenhouse gas emissions.
In general the Company has a high level of environmental risk management. The Company has developed primary documents and carries out actions to minimize risks for most of the industry risks. In particular, ACRA notes the high quality of waste management and recycling risks. At the same time, the Agency draws attention to the fact that work to manage some relevant risks is an area of improvement for the Company.
In terms of assessing compliance with best practices, the Agency notes that environmental issues have been thoroughly elaborated. The Company continuously assesses environmental and climate risks, has created the necessary competence centers and divisions, developed mechanisms for external communication on environmental issues, planned to adopt a public environmental policy in 2024 (including a declaration on preventing the placement of projects in specially protected natural areas), and has developed a sustainable development strategy, including a program to improve energy efficiency.
The Company also has a partnership with noncommercial organizations that specialize in resolving environmental issues, and has carried out a scenario analysis as per the Bank of Russia’s climate risk recommendations for financial organizations1.
At the same time, obtaining external certificates verifying the environmental and energy management systems, as well as measures to calculate and offset the carbon footprint and verification of greenhouse gas emissions are areas of improvement.
The Agency notes that the Company developed an action plan to increase the efficiency of water usage, as well as a biodiversity conservation action plan in 2024. However, these plans were at an early stage of implementation as of the assessment date, and therefore the Agency applied a conservative approach.
The Company has a zero fatal injury rate (taking into account the injury rate of subcontractors) and a high level of social investments relative to revenues. The Agency also notes the favorable gender equality and comparatively high average salary for the industry. It should be noted that the injury rate taking into account the injury rate of subcontractors) has declined at the Company over the past two years. Personnel turnover was close to the industry averages in 2023, taking into account comparison with the international sample of companies.
When assessing the Social Responsibility block, the Agency applied the following positive modifiers: 1) the Company’s significant contribution to developing the social sphere of the regions of presence; 2) the use of automated safety control systems; 3) the high percentage of women among the Company’s senior management; 4) the high percentage of women among the Company’s board of directors; 5) the annual revision of employee remuneration taking into account current and projected inflation; 6) the presence of a corporate university.
In terms of social risk management, the Company received the maximum score for neutralizing the responsible supply chain risk. Development of internal regulations and/or setting corresponding KPIs is an area of improvement for a large number of social risks.
The Company has implemented many of the social responsibility best practices. The Company’s gender balance is disclosed, a human rights policy and a code of business and corporate ethics are in place, and the overall information transparency in the field of social issues is sufficiently high. A private health insurance program covers all employees; a transparent personnel assessment system has been introduced; the Company collaborates with universities; an external communication mechanism has been established.
The Company has provisions aimed at preventing sexual harassment at work. In addition, the supplier code is being implemented, which contains criteria for social responsibility, and quantitative targets for the share of purchases from local suppliers.
The Company’s housing programs are represented by incentive tools for purchasing housing, as well as discounts for the purchase of apartments for employees. External audits in the field of occupational health and safety are carried out irregularly; certification of the occupational health and safety management system has been introduced. The Company’s areas of improvement also include human rights programs and comprehensive parenting support programs beyond existing market practices.
The Company received the highest scores for such factors as the board members’ experience in the industry and the level of information disclosure. In 2024, A101 disclosed its non-financial information for the first time; the 2023 report was compiled in accordance with the standards of the Global Sustainability Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB): SASB Home Builders. The Company is also expected to release an annual report for 2024 that includes a sustainable development section, in compliance with the GRI and SASB standards and recommendations from the Ministry of Economic Development of the Russian Federation.
The Company received high scores for the share of independent members on the board of directors, the stability of the board of directors, and the quality of strategic planning. The Company received a moderately conservative score for the concentration of shareholder ownership. The Agency applied a positive modifier for the presence of a remuneration system for members of executive bodies that takes into account key performance indicators that create material incentives to achieve the Company’s priority goals and objectives in the field of sustainable development. At the same time, according to the Agency’s methodology, the assessment for this section is constrained by the lack of an audit opinion for non-financial reports.
The Company’s level of corporate governance risk management is relatively high. The Company has received high or medium scores for most of the relevant risks. The area of improvement for certain risks remains development of internal regulations and approval of relevant KPIs.
The Agency notes a high level of corporate governance at the Company. Its practices largely align with best international standards. The Company has implemented a code of business and corporate ethics, a corporate governance oversight system, a sustainability strategy (with key provisions publicly disclosed), and regulations for internal audit and risk management functions. Corporate governance risks are tracked and disclosed in the annual report. The compliance service collaborates with the board of directors, and the key beneficial owners are disclosed in IFRS reports. Sustainable development KPIs are expected to be introduced for senior management by the end of Q1 2025.
The Agency notes the high readiness of the stakeholder engagement policy and the provisions for the strategy and sustainability committee (currently being approved). The Agency believes that the approval and introduction of these documents will likely positively impact the assessment of the Corporate Governance block. Areas for further improvement include the development of a policy on related party transactions and structural changes to the remuneration committee.
1 Appendix to the letter of the Bank of Russia on recommendations for taking into account climate risks for financial institutions dated December 4, 2023 No. IN-018-35/60.
key assumptions
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Companies in the housing construction and development industry were selected as benchmarks (companies used for comparison).
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Information presented in the questionnaire and А101’s report on social responsibility and corporate sustainable development is reliable and comparable with benchmarks.
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The dynamics for all environmental indicators, except energy consumption, were assessed for three reporting years due to the lack of relevant data for 2020.
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By the end of Q1 2025, the Company will approve the following documents: Sustainable Development Policy; Environmental Policy; Climate Policy; Waste Management Policy; Human Rights Policy; Policy on Engagement of Local Communities; Regulation on Assessment and Selection of Contractors and Suppliers.
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The Company will prepare and disclose an annual report for 2024, including a sustainable development section, using the GRI and SASB standards, and recommendations from the Ministry of Economic Development of the Russian Federation.
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Documents scheduled for approval after March 31, 2025 were not taken into account in the assessment.
rating components
Final ESG rating: ESG-А.
Final ESG category: 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 issues.
E assessment: ESG-6
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.
An ESG rating has been assigned to Limited Liability Company “A101” for the first time. 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 Limited Liability Company “A101”, information from publicly available sources, and ACRA’s databases.
The ESG rating is solicited and Limited Liability Company “A101” 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.
