GPW Publishes The New RESPECT Index Portfolio

• GPW has published the results of the ninth edition of the RESPECT Index on 16 December 2015
• The Index has 23 participating companies, including one new member: Bank Ochrony Środowiska
• The RESPECT Index has gained 31% since its first publication in 2009

The Warsaw Stock Exchange (GPW) has announced the portfolio of RESPECT Index, the social responsibility index, on 16 December 2015. The index now has 23 participating companies, including one new member: Bank Ochrony Środowiska. The following stocks make the biggest contribution to the index: KGHM, PGE, PGNiG, PKN Orlen, and PZU.

The new RESPECT Index portfolio takes effect on 21 December 2015. The RESPECT Index has gained 31% from the first publication on 19 November 2009 to December 2015, while WIG has gained 11%.

“We congratulate those issuers who participate in the ninth edition of the RESPECT Index. The results of this year’s edition confirm that listed companies focus on responsible business despite demanding market conditions. This is demonstrated by the number of enrolled companies and their audit results, which have improved year on year. Polish and international investors are increasingly interested in the index. I believe that it will draw the attention of other companies to the importance of corporate social responsibility,” said Paweł Tamborski, President of the Management Board of the Warsaw Stock Exchange.

This year’s edition of the index includes 23 companies (in alphabetical order):

• Apator S.A.
• Bank BPH S.A.
• Bank Handlowy w Warszawie S.A.
• Bank Millennium S.A.
• Bank Ochrony Środowiska – new participant
• Bank Zachodni WBK S.A.
• Budimex S.A.
• Elektrobudowa S.A.
• Energa SA
• GPW S.A.
• Grupa Azoty S.A.
• Grupa LOTOS S.A.
• ING Bank Śląski S.A.
• KGHM Polska Miedź S.A.
• Lubelski Węgiel Bogdanka S.A.
• Orange Polska S.A.
• Pelion S.A.
• PGE Polska Grupa Energetyczna S.A.
• Polskie Górnictwo Naftowe i Gazownictwo S.A.
• Polski Koncern Naftowy ORLEN S.A.
• Powszechny Zakład Ubezpieczeń S.A.
• Tauron Polska Energia S.A.
• Zespół Elektrociepłowni Wrocławskich KOGENERACJA S.A.

The RESPECT Project is a multi-step research initiative. The index includes companies of strong liquidity and excellent practice of corporate governance and stakeholder relations. They are invited to complete a survey in the last phase of the project. This year’s survey additionally included questions on dispute resolution and diversity management.

Summary of the company audit:

Environmental factors:

• 100% of companies have identified and documented their environmental impact, of which more than a half have measured their indirect impact;
• 96% of companies have defined consumption limitation or no-increase targets for fuel and energy.

Social factors:

• 87% of companies perform employee satisfaction and engagement surveys
  (in 2014: 78%);
• 43% of companies use environmental, ethical or social criteria in the selection of suppliers (in 2014: 50%);
• 70% of companies use mandatory standard ethical, social or environmental clauses in contracts (in 2014: 67%);
• 39% of companies require and enforce audits of ethical, social and environmental compliance (in 2014: 33%);
• 74% of companies prepare reports under the GRI guidelines (in 2014: 67%), and 52% of companies have their reports verified by independent consultants (in 2014: 42%).

Governance factors:

• 61% of companies have developed and implemented a comprehensive corporate responsibility strategy (in 2014: 50%). The number of companies which monitor the implementation of the strategy decreased modestly (to 7) (in 2014: 9 companies);
• 73% of companies have appointed an ethics officer or ethics committee
  (in 2014: 67%);
• 60% of companies have in place risk management policies and procedures and monitor risks in most of the members of their groups of companies (in 2014: 50%);
• 87% of companies perform comprehensive reviews of the key elements of the internal control and risk management system (in 2014: 71%).

“Year after year, companies participating in the RESPECT Index improve their ESG (environmental, social and governance) performance, as demonstrated by the average score, which has increased from 64.08 points to 71.01 points in the last three editions (the maximum score is 90 points). Most importantly, companies in the index are increasingly popular with issuers and investors, as shown by the RESPECT Index return rate,” said Irena Pichola, Deloitte Partner, Leader of Sustainability Consulting, Poland and Central Europe.

A growing number of RESPECT Index companies, but not all of them, report non-financial information. However, all listed companies which have more than 500 employees and total assets exceeding EUR 20 million or net sales exceeding EUR 40 million will be required to report non-financial information as of January 2017 under the EU Directive as regards disclosure of non-financial information (Directive 2014/95/EU).

The RESPECT Index is Central and Eastern Europe’s first social responsibility index. The project was initiated by Warsaw Stock Exchange in 2009 when the first index portfolio was published. The RESPECT Index portfolio covers Polish and foreign companies listed on the WSE Main Market which follow the highest corporate governance, disclosure and investor relations standards, and which also take into account environmental, social and governance (ESG) factors. In the current format, the company survey and index revision are performed annually in the second half of the year. The index portfolio is selected from among the biggest listed companies participating in the indices WIG20, mWIG40 and sWIG80. The participating companies are screened in a three-step process by GPW and the Association of Listed Companies (SEG) in a review of all these factors and additionally audited by the project partner since the first edition: Deloitte. The share of each company in the index portfolio is determined according to the same rules as for other stock exchange indices, taking into account free-floating shares, subject to a cap of the weight of the biggest companies at 25% where the number of participating companies is under 20 and otherwise at 10%.

Figure 1. Performance of the RESPECT Index and WIG in 2009 – 2015