Environmental Transparency Rating for Fossil-Fuel Power Generating Companies Operating in Russia

Rating Structure

The rating consists of three sections: environmental management, environmental impact and disclosure.

1. Environmental Management

   assesses the quality of environmental management in the companies. The criteria included in this section are, for the most part, substantially more rigid compared to the Russian legislation on environmental protection. However, these criteria correspond to the best global practices in the industry.

2. Environmental Impact

   it shows the degree of negative impact on the components of the natural environment (atmospheric air, water bodies, soil) as a result of economic activities, as well as the level of sustainability for corporate production. Most criteria are composed basing on elements of national statistical reporting in the field of environmental protection. The data sources are represented by 2-TP reports (air, waste, water, land), 4-OS reports (costs and payments), which reflect the impact of the companies on the environment as a result of their activities.

   This Section presents quantitative indicators (criteria), which are transformed into a qualitative scale using the industry average values for each criterion. In the absence of official sources (Federal Service of State Statistics, Ministry of Natural resources, Ministry of Economic Development and affiliated agencies), the average value of the criterion is to be calculated as the arithmetic mean of the values for the companies represented in the rating. For comparative analysis between companies, this Section includes specific environmental impact indicators derived by the division of gross values by the volume of net generation of electric and thermal energy.

3. Disclosure of Information

   It evaluates the extent of the companies' readiness to disclose information with respect to environmental impact of their industrial activities. Criteria 3.5 and 3.6 are assessed as follows. Each environmentally controversial situation or accident/incident with environmental consequences is evaluated in terms of publicly available information on it. If the company provided no comments on the situation, the criterion is colored red. If the company comments on at least one controversial situation or incident with obvious environmental consequences, it is marked yellow. If the company provides information (in its Annual Report or on its website) and comments on more than half of the environmental disputes and accidents/ incidents with environmental consequences that are known to the rating compilers, the criterion is colored green. Also, if neither accidents nor disputes have been found this year, the company is also assigned a green level.

Rating Calculation

The Rating is calculated as follows:

1. Companies are assigned color flags for each creterion: Red, Yellow, or Green. When a criterion is not relevant to a given company, no flag is assigned. For such cases, the company is required to present proof of being irrelevant to the criterion. If no information is publicly available, and the company has not provided a justification for the non-relevance of the criterion at the stage of sending work materials, the company is assigned a red level.

2. At the next stage, companies are ranked for each section. A Red flag counts as 0, a Yellow one means 1 point, and a Green one, 2 points. For each section, companies are assigned an arithmetic mean of their points for the criteria in the corresponding section. In this calculation, only those criteria that have been assigned color flags are taken into account, i.e. the criteria that are not relevant for a given company are not included. As a result, each company is assigned final points for the Management Section, for the Environmental Impact Section and for the Disclosure Section. Final points vary from 0 to 2. At this stage, the leader is determined in each of the three areas: management (Section "Environmental management"), operational (Section "Environmental impact"), information (Section "Disclosure of Information")

   In order to avoid the disappearance or replacement of data that was used for calculating ratings in the previous years, the organizers proposed the following motivational solution to the problem. During the next data collection, a retrospective assessment is made for each company over the past three years. If data has disappeared from the public space or has been modified, a request is sent to the company about the reasons for such changes. If there is a logical explanation (for example, a new website, a new methodology, unaccounted data, etc.), the data modification is registered. If the official response that has been provided is inadequate or has not been submitted at all, an additional red indicator "data from previous years modified or removed" is introduced for each criterion when calculating the current year's rating. Thus, the overall score for this section and the total ranking will be reduced for the companies that failed to explain the disappearance or replacement of data on their websites for the previous years of the rating.

3. The final Rating is then calculated for each company by averaging the three values assigned at the previous stages.

   The current rating calculation starts in September. In late October, the preliminary results of data collection are published on the WWF Russia website with the Preliminary status and are sent to companies so that they can clarify the reliability and completeness of the information assessed. The participating companies' feedback is planned to be received until mid-November. The final rating calculation is planned for the end of November. The results of the rating calculation are scheduled to be presented in mid-December. Final company profiles become available to the public after the results of the current Rating are published on the WWF website and on the Interfax-ERA environmental disclosure portal.

   The rating organizers reserve the right to apply penalties in the form of decreasing coefficients (up to suspension from the calculation of the current rating) in case of proven violation of laws and norms in the field of human rights (e.g. claims or negative assessment of the company's activities by the Human Rights Council (HRC) or relevant judicial verdicts), as well as in the case of high-profile federal or international accidents with significant damage to the environment.