Corporate Social Responsibility Reporting in the 35 Most Liquid Listed Baltic Companies

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1 Corporate Social Responsibility Reporting in the 35 Most Liquid Listed Baltic Companies Shana Vida Gavron, Equity Analyst MBusSc (Finance) MPhil (Wildlife Management)

2 Baltic Market Brief 70 companies are listed in the Baltic Markets: Riga Stock Exchange = 11 Tallinn Stock Exchange = 16 Vilnius Stock Exchange = 43 Only 50% had a volume turnover greater than EUR5 million in the past year L ist e d B a lt ic C om p a nie s t ha t a re G lob a l C om p a c t P a rt ic ip a nt s B a lt ic C om p a nie s G roup e d b y V olum e T urnov e r (E U R m ln) 0 4 /0 9 / /0 9 / Source: OMX Stock Exchange Lithuanian Global Compact Participants Non-Global Compact Participants Source: United Nations Global Comapct Latvian Global Compact Participants 8 companies are UN Global Compact participants Riga Stock Exchange = 1 Tallinn Stock Exchange = 0 Vilnius Stock Exchange = 7

3 Survey Criteria & Companies Survey criteria based on Partners for Financial Stability Program s Corporate Social Responsibility Reporting Survey: Corporate Governance Environmental Policy Social Policy Top 50% of Baltic companies in terms of volume turnover are surveyed: Riga Stock Exchange = 6 Tallinn Stock Exchange = 12 Vilnius Stock Exchange = 17 This represents companies with an annual turnover greater than EUR5 million

4 Corporate Governance Survey of: Disclosure of audit information Disclosure of the governance structure Disclosure of the company s shareholder rights policy 100% 75% C orp ora t e G ov e rna nc e D isc losure 50% 25% 0% Audit Information Governance Structure Shareholder Rights Policy Lithuanian Companies Latvian Companies Estonian Companies

5 Environmental Policy Survey of: Disclosure of compliance with environmental standards E nv ironm e nt a l P olic y D isc losure Disclosure of a department responsible for the environmental policy Disclosure of environmental considerations Disclosure concerning environmental performance Disclosure concerning water and energy use 100% 75% 50% 25% 0% Environmental Standards Environmental Policy Department Environmental Considerations Environmental Performance Water and Energy Usage Lithuanian Companies Latvian Companies Estonian Companies

6 Social Policy Survey of: Disclosure of compliance with regulations regarding human rights, labour standards and labour legislation Disclosure of community support and sponsorship Disclosure of employee development and benefit policies Disclosure of health and safety policies Disclosure of employment policies 100% 75% 50% 25% S oc ia l P olic y D isc losure s 0% Human Rights Compliance Community Support and Sponsorship Employee Benefits and Development Health and Safety Policies Employment Policies Lithuanian Companies Latvian Companies Estonian Companies

7 Survey Results Best results from corporate governance disclosure Environmental disclosure still limited not yet considered as valuable? Employee benefit and development disclosure prominent, but other social disclosures could be developed further 100% 80% 60% 40% 20% 0% S um m a ry D isc losure S urv e y R e sult s Audit Information Governance Structure Shareholder Rights Policy Environmental Standards Environmental Policy Department Environmental Considerations Environmental Performance Water and Energy Usage Human Rights Compliance Community Support and Sponsorship Employee Benefits and Development Health and Safety Policies Employment Policies

8 Survey Results 54% of the most liquid Baltic companies disclose at least 50% of the surveyed criteria 42% of these companies have foreign shareholders as the largest shareholder Only 31% of the companies disclosing less than 50% of the surveyed criteria have foreign shareholders as the largest shareholder B a lt ic C om p a nie s G roup e d b y D isc lose d C rit e ria Number of Baltic Companies Number of Foreign Owners

9 Index Performance Custom Baltic CSR Index Custom market cap weighted index Based on most liquid companies that conform to at least 50% of the surveyed disclosures Baltic CSR Index performance versus BALTIX YTD: Baltic CSR has lost 22% and BALTIX has lost 7% B a lt ic C S R Ind e x v s B A L T IX 13.9% vs 13.9% 19.7% vs 8.2% 15 June: Baltic CSR has gained 13.9% and BALTIX reach 2006 low and gained 13.9% 3 August: Baltic CSR gained 19.7% from 2006 low and BALTIX gained 8.2% Baltic CSR BALTIX

10 Conclusion Based on the Partners for Financial Stability Program s Corporate Social Responsibility Reporting Survey: Czech Republic 50% of companies meet at least 50% of survey criteria Hungary 56% of companies meet at least 50% of survey criteria Poland 60% of companies meet at least 50% of survey criteria Baltic States companies are comparable in their CSR disclosure to these three more developed Central and Eastern European countries companies In particular, the Baltics have developed their corporate governance disclosure But more emphasis can be placed on environmental and social disclosure A CSR Baltic Index consisting of only the companies with better CSR disclosure has shown the potential to perform better than an All Share Baltic Index

11 Thank you! Contact details Shana Gavron DnB Nord Bankas Tel