CSR Strategy

The Warsaw Stock Exchange and the companies of the GPW Group pursue their business operations in compliance with the highest business standards and taking into account social, ethical and environmental factors.

The Warsaw Stock Exchange Group not only focuses on its sustainable and responsible business but also drives responsible behaviour of its market participants.

The WSE is a member of the Sustainable Stock Exchanges initiative

Since 2013, GPW is a member of the Sustainable Stock Exchanges, a UN initiative of 83 global exchanges which pursue sustainable and responsible business and promote the highest ESG (Environment, Social, Governance) standards on their home markets through initiatives addressed to market participants.

RESPECT Index

The RESPECT Index project is a flagship initiative of the Warsaw Stock Exchange and a part of its educational efforts in support of social responsibility of GPW listed companies and responsible investing in Poland.

Initiated in 2009 as CEE’s first responsible company index, it was the first index of this type in Poland and remains a benchmark for listed companies which aspire to CSR excellence.

The index portfolio includes companies listed on the GPW Main Market which follow the highest standards of corporate governance, disclosures and investor relations taking into account environmental, social and governance (ESG) factors in their business. The companies are audited and the index portfolio is revised once per year in the second half of the year. The index portfolio includes the biggest listed companies participating in the indices WIG20, mWIG40 and sWIG80. The companies are selected in three steps of verification carried out by GPW and the Association of Listed Companies in the areas listed above as well as an audit performed by the project partner since the first edition: Deloitte.

The index requirements take into account the industrial specificity of companies. The survey questionnaire includes questions dedicated to all companies as well as questions for companies which pursue a specific business according to the classification deployed by GPW: Industry, Finance, and Services. The participation of each company in the index is defined on the same terms as for the other GPW indices, taking into account free-float shares, where the weight of the biggest companies is capped at 25% where the number of index participants is under 20 or 10% otherwise.

The RESPECT Index portfolio included between 16 and 31 companies in the twelve editions of the survey, last held in the autumn of 2018. The current index portfolio of the twelfth edition, audited by Deloitte, is comprised of 31 companies, including two new participants (Amrest Holding SE, CCC S.A.), as well as a returning company, PKN Orlen S.A., absent for one year from the portfolio. This year’s edition of the RESPECT Index has the biggest number of participants. The index has evolved since its inception. The requirements for companies have been steadily raised to increasingly accommodate trends typical of mature capital markets, meet stakeholders’ requirements, and provide a full picture of the reported ESG factors

This year’s edition awarded the first RESPECT Certificate. Certificates are addressed to companies which cannot participate in the RESPECT Index but wish to be recognised for compliance with the requirements of corporate social responsibility on GPW. Certificates are awarded to companies which comply with the same requirements as the index participants after they complete the survey questionnaire and score the required number of points. Provident Polska is the first company to win a RESPECT Certificate.

Furthermore, companies which care about the quality of relations with counterparties were awarded for the first time in partnership with the Energy Regulatory Office.

The questionnaire now used to evaluate participants of the RESPECT Index covers the following areas:

• Social – occupational health and safety, human resources management, relations with suppliers, dialogue with stakeholders, social reporting;
• Environmental – environmental management, reduction of the environmental impact, biodiversity, environmental aspects of products and services;
• Governance – strategic management, corporate governance, risk management, fraud management, internal audit and control system, relations with customers.

The twelve editions to date have had more than 40 participants. This year’s edition features two new participants as well as a returning company, PKN Orlen S.A. Eight companies have participated in all of the index editions. They are the market leaders consistently improving on their corporate social responsibility commitments.

Index participants are selected on the basis of a score won in the survey. The average score of all companies was 63.6 points, a modest increase year on year. The index participants include 18 processing companies, 9 financial institutions, and 4 service providers. The average score of processing companies was 65.2 points, the average score of financial institutions was 64.2 points, and the average score of service providers was 55.5 points.

The RESPECT Index performance corroborates the fundamental notion of responsible investing whereby investment in companies managed in a sustainable way which respect the environment and the interests of all stakeholders involves lower risk and generates above-average returns. From the first publication of the index on 19 November 2009 to the end of 2018, the RESPECT Index return rate was 71%, compared to return on WIG20 at 47% over the same period.

Performance of the RESPECT Index and WIG [% change]

GPW Launches the WIG-ESG Index

The Warsaw Stock Exchange (GPW) will begin publishing a new index, WIG-ESG, on 3 September 2019. The index will include stocks participating in WIG20 and mWIG40, i.e., blue chips listed on GPW. As in the case of other indices, their weights will depend on the number and value of free-float shares, but these will be adjusted for ESG ratings and an assessment of compliance with the principles laid down in Best Practice for GPW Listed Companies 2016.

Leading global ESG research and ratings provider, Sustainalytics, is providing the company ESG Risk Ratings, which are among the criteria underpinning the index weights. Sustainalytics’ ESG Risk Ratings measure a company’s exposure to industry-specific material ESG risks, and how well the company is managing those risks. The firm’s multi-dimensional way of measuring ESG risk combines concepts of management and exposure to arrive at a quantitative assessment of unmanaged ESG risk that is comparable both across and within industries.

The weighting of index participants also depends on the degree of compliance with the corporate governance principles laid down in the Code of Best Practice for GPW Listed Companies 2016. Based on companies’ public statements of compliance, the Exchange will determine their weighting depending on the number of principles respected and the quality of the published statements.

Index data will be published every minute from the opening to the closing of each trading session. The participation of the largest stocks in the index portfolio will be capped according to funds’ investment rules. WIG-ESG will be a total return index and will be the underlying of the index fund of NN Investment Partners TFI.

The NN Indeks Odpowiedzialny fund will be created by transformation of the fund NN Akcji 2 (Shares 2), whose assets stand at PLN 1.6 billion. The criteria of stock liquidity and company size are key to the calculation of WIG-ESG.

Institutional and retail investors are attaching growing importance to responsible investing. At the start of 2018, global assets of SRI (S-ocially R-esponsible I-nvesting) funds stood at USD 30.7 trillion, representing a 34% rise compared to 2016. European funds have the largest share in the global market, with assets under management at US$ 14.1 trillion, followed by US funds, with assets of US$ 12.0 trillion (Global Sustainable Investment Alliance figures as at the start of 2018). According to a 2018 Eurosif survey, ESG integration is a fast-growing investment strategy in Europe (up by a factor of five in 2013–2017). In particular, the share of ESG assets in the portfolios of retail investors grew by a factor of nine, from 3.4% in 2013 to 30.7% in 2017.

GPW has promoted the highest ESG standards among listed companies for many years. Over the past 10 years, GPW has been publishing the RESPECT Index, which successfully achieved its educational role. In contrast, WIG-ESG will have a strong investment profile. GPW will publish both the WIG-ESG and RESPECT Index until the end of 2019, but WIG-ESG exclusively as of 1 January 2020.

Main areas of CSR strategy for the GPW Group