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Prosperity Capital Management

PRI reporting framework 2020

You are in Strategy and Governance » Promoting responsible investment

Promoting responsible investment

SG 09. Collaborative organisations / initiatives

09.1. Select the collaborative organisation and/or initiatives of which your organisation is a member or in which it participated during the reporting year, and the role you played.

Select all that apply

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

During 2019, PCM has been active member of UNPRI, including participation of Global Policy Reference Group and co-signing of one of PRI policy letter.

Also, PCM continued support and promotion of the steps supposed by the Paris Climate Agreement (Russia formalized participation in it in September 2019), including support of Draft Russia’s Greenhouse Gas Law, and proposed by the Governmental Concept of development of public non-financial reporting, including law-in-draft on non-financial reporting and a draft of key indicators of such reporting.

On soft-law side, following PCM engagements, the Central Bank of Russia drafted the first Russia’s Stewardship Code and PCM contributed to its promotion and drafting.

Also following PCM engagements, Moscow Exchange became a Partner Exchange of the UN Sustainable Stock Exchanges initiative.

As a part of PCM’s ESG promotion efforts, during the year PCM spoke on a number of Moscow ESG events, including one jointly with PRI representative.

Also, as a part of PCM’s ESG promotion efforts, PCM continued its engagements with Bank of Russia in relation to measures needed to ensure large public companies disclose of “E” and “S” information.

For other details of our initiative, please see responses below, as well as responses to section SG 10.

Your organisation’s role in the initiative during the reporting period (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Through Association of Professional Investors, PCM contacted Eumedion regarding the joint nomination of an independent candidate to the Board of a major Russian public company

          Corporate Governance Working Groups
        

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

As an active investment manager, PCM cooperated with the Government, regulators, Supreme Court, stock exchanges and legislators to improve the overall corporate governance and ESG standards in Russia. PCM’s representatives have been involved in the activity of “Corporate Governance Improvements” Working Group within Governmental “Business Climate Transformation” platform, Expert Council on Corporate Governance of the Bank of Russia, Committee on the Interpretation of Provisions of the Corporate Governance Code under the Expert Council on Corporate Governance of the Bank of Russia, Transparency Council of the Bank of Russia and also Moscow Exchange’s Listing Committee.

The PCM’s representatives were involved in the preparation of a number of laws-in-draft and amendments to existing laws-in-draft, related to issues mentioned above and defended the proposals on various meetings with representatives of the Government, Ministry for Economic Development, Ministry of Finance and Central Bank.

          Association of Institutional Investors (previously known as Investor Protection Association)
        

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

Prosperity Capital Management was a co-founder (in 1999) of the Investor Protection Association, and Alexander Branis, PCM's Chief Investment Advisor, serves as its Chairman. It is the only organization in Russian that was created by investors, financed by investors, that worked for investors. It has corporate goveranance and ESG promotion goals, and it is active in its independent directors’ nomination, minority shareholders’ rights’ defence and ESG issues, such as corporate and ESG legislation’s enhancements plus improvements on the efficiency of corporate governance at state-owned companies.

          Active and proactive engagement with portfolio companies
        

Your organisation’s role in the initiative during the reporting year (see definitions)

Provide a brief commentary on the level of your organisation’s involvement in the initiative. [Optional]

In 2019, PCM advocated high standards of corporate governance, social and environmental policies in investee companies also through an active and a proactive approach to important corporate actions (including charters’ amendments, take-overs, mergers and acquisitions, large-scale and related party transactions, additional share issues) to ensure shareholders’ rights’ observance during such actions, and also by way of engagements, including shareholders proposals,  communication, including in cooperation with other minority shareholders, with Boards, management and controlling shareholders of investee companies throughout PCM’s portfolio with aim to promote good corporate governance and, in cases when respective flaws exist, more transparency of social and environmental factors, responsible and balanced social and environmental policy (some of such projects were done as collaborative initiatives).


SG 09.2. Assets managed by PRI signatories (Not Applicable)


SG 10. Promoting RI independently

10.1. Indicate if your organisation promotes responsible investment, independently of collaborative initiatives.

10.2. Indicate the actions your organisation has taken to promote responsible investment independently of collaborative initiatives. Provide a description of your role in contributing to the objectives of the selected action and the typical frequency of your participation/contribution.

Description

          Prosperity Capital Management continues to pursue better corporate governance, sustainable development and stewardship standards in Russian and other FSU States through active ownership. This includes meetings and seminars.
        

Frequency of contribution

Description

          PCM supported and spoke on a number of Moscow ESG events, including one jointly with PRI, addressed to local investors, local companies and involving different related state bodies’ representatives.
        

Frequency of contribution

Description

          On soft-law side, following PCM engagements, the Central Bank of Russia (being financial market regulator in Russia) drafted the first Russia’s Stewardship Code and PCM contributed to its promotion and drafting.
        

Frequency of contribution

Description

          Member of Global Policy Reference Group, Co-signed of one of PRI policy letters
        

Frequency of contribution

10.3. Describe any additional actions and initiatives that your organisation has taken part in during the reporting year to promote responsible investment [Optional]

As an active investment manager, PCM cooperated with the Government, regulators, Supreme Court, stock exchanges and legislators to improve the overall corporate governance and ESG standards in Russia. PCM’s representatives have been involved in the activity of “Corporate Governance Improvements” Working Group within Governmental “Business Climate Transformation” platform, Expert Council on Corporate Governance of the Bank of Russia, Committee on the Interpretation of Provisions of the Corporate Governance Code under the Expert Council on Corporate Governance of the Bank of Russia, Transparency Council of the Bank of Russia and also Moscow Exchange’s Listing Committee.

The PCM’s representatives were involved in the preparation of a number of laws-in-draft and amendments to existing laws-in-draft, related to issues mentioned above and defended the proposals on various meetings with representatives of the Government, Ministry for Economic Development, Ministry of Finance and Central Bank.

Initiatives that became the law during 2019

During such engagements, PCM actively proposed and supported law amendments that were approved in 2019 and provide for:

- Stricter delisting and related buy-back rules.

- Streamlined regulation of related party’s transactions.

- Fairer buy-back price in case of mandatory buy-backs of public JSC shares.

- Improved shareholders’ rights defence in case of new type of shares’ issues (extension of pre-emptive rights).

Over and above legislative corporate governance developments, PCM highlighted and supported a number of positive ESG legislative developments:

During 2019, PCM continued its support and promotion of the steps suggested by the Paris Climate Agreement (Russia formalized its participation in the Paris Climate Agreement in September 2019), including support of Draft Russia’s Greenhouse Gas Law, and proposed by the Governmental Concept of development of public non-financial (ESG) reporting, including law-in-draft on non-financial (ESG) reporting and a draft of the Government’s order “On the approval of the list of key (basic) indicators of public non-financial reporting”.

On soft-law side, following PCM engagements, the Central Bank of Russia (being financial market regulator in Russia) drafted the first Russia’s Stewardship Code and PCM contributed to its promotion and drafting.

Also following PCM engagements, Moscow Exchange (MOEX) became a Partner Exchange of the UN Sustainable Stock Exchanges initiative (and was ranked 16th amongst stock exchanges based on issuers’ ESG disclosure).

As a part of PCM’s ESG promotional efforts, during the year PCM spoke on a number of Moscow ESG events, including one jointly with PRI representative, addressed to local investors, local companies and involving different experts and related state bodies’ representatives (two MOEX round tables, Russia’s Corporate Secretaries Forum, ESG Roundtable at Renaissance Capital Annual Conference, Moscow State University and Kazakhstan’s IFC "Astana" sustainable development expert discussion and Moscow State University program for Board members).

Also, as a part of PCM’s ESG promotion efforts, PCM continued its engagements with Bank of Russia in relation to measures needed to ensure large public companies disclose of “E” and “S” information.


SG 11. Dialogue with public policy makers or standard setters (Private)


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