The Bank of Russia has introduced a new Code of Responsible Investment aimed at banks, insurers, management companies, non-governmental pension funds, and other institutional investors dealing with equity instruments. The regulator advises these entities to follow certain principles to enhance their investment returns not only through effective portfolio management but also by engaging actively with issuers.
Currently, institutional investors are not sufficiently involved in the corporate governance of joint-stock companies. The Code encourages them to engage more actively with issuers to improve long-term development prospects and increase shareholder value. Institutional investors should focus on companies that have strategies for increasing shareholder value. If such strategies do not exist, investors can use their corporate rights to motivate issuers to develop them.
Companies adhering to the Code are expected to publicly report on the implementation of these principles annually.
Adhering to the Code’s principles is anticipated to aid in developing the equity capital market and boosting the capitalization of the Russian stock market.
