‘Business reputation is not indicators, but their perception by the public’

Businesses will have to fit into government programmes

The national standard of business reputation index, also known as the ECG rating of responsible business, was launched in Russia in early February. Officially, this project was presented back in June 2023, not anywhere, but on the sidelines of the St. Petersburg International Economic Forum (SPIEF), which already hinted at its importance from the point of view of the state. Initially, it was planned to use the rating to evaluate companies only from the Central Federal District (CFD), but later it was decided to extend it to businesses throughout the country.

What kind of rating is this? The abbreviation ECG stands for “ecology, personnel, state”. These are the three main areas in which the developers of the standard, including the Federal Tax Service (FTS), the Financial University under the Government of the Russian Federation, the Russian Union of Industrialists and Entrepreneurs and many others, proposed evaluating Russian companies. Based on the results of the assessment, companies will be able to receive a rating from the lowest — C to the highest — AAA, which will take into account how much the company cares about the environment, and how much it is included in the implementation of various social programmes, and how good its tax history is.

The main question is what tasks this ECG rating will solve and what is its fundamental difference from other similar ratings. For example, the Expert magazine, which published its rating from 1997 to 2003, has already been engaged in assessing the business reputation of Russian companies. In 2015, the first national standard for assessing the experience and business reputation of business entities was approved in Russia (GOST 66.0.01-2015), which was then updated in 2017. Then why do we need the new national standard?

The authors of the project themselves noted that the main difference between the ECG rating is its focus on the social responsibility of companies. At the same time, it was separately stated that enterprises with the highest rating will have the opportunity to count on state support.

The state will be able to influence the composition of tenders

This rating may have another purely practical application: using the new GOST, the authorities will have the opportunity to improve the work of Federal Law No. 44, which regulates the procedure for public procurement. Passing the assessment according to the new national standard can gradually be made mandatory for everyone who wants to conclude a state contract. Thus, the state will get the opportunity to indirectly influence the composition of tenders, cutting off some of them. Probably, first of all, those who do not want to invest in state programmes.

Another task that the ECG rating can potentially solve is import substitution. All Western companies that were previously engaged in evaluating Russian companies have withdrawn from the country. At the same time, the very need to obtain an assessment from enterprises remained — a high rating is important for entering the stock exchange. Even if access to global exchanges is closed, companies still want to trade their shares domestically.

If everything is more or less clear with the possibility of rating to solve practical problems (first of all, of course, the state), its objectivity and universality still raises questions. The problem lies in the criteria by which it is proposed to evaluate companies.

Activity and success of a company affect the reputation when they are talked about

We have studied the questionnaires that participating companies must fill out. Yes, there is really a lot of attention paid, for example, to social guarantees provided to employees, social investments in the regions of presence, and the implementation of environmental projects. At the same time, the presence of companies in the media space, their media activity, openness, and general public image are not evaluated in any way, which is quite strange for a reputation rating.

Of course, no one will argue that participation in charity, eco-orientation and caring for employees are important components on the basis of which a good business reputation is formed. However, both business reputation and just reputation as such are primarily not about specific indicators, but about their perception — by government officials, investors and the general public. All social activity of the company, its economic and industrial successes begin to play into the hands of the reputation when they are known and talked about. Building such communications is an important process that should not be underestimated. And which can eventually pay good dividends.

As an example, we can recall 2006, which saw the boom of Russian companies entering IPOs, and in particular the Rosneft case. The process of the company's listing on the London Stock Exchange took place against the background of a general negative agenda and was accompanied by a series of attacks from opponents. At that time, the company had to throw a significant number of specialists and resources precisely at organising competent public activities. Press conferences were held, publications were published in the media, reports and forecasts were published, experts and opinion leaders were involved — all this eventually led to that Rosneft succeeded achieve its goal.

Bearing in mind all those, even purely practical, tasks for which this index is focused, the absence of reputational indicators in it, in fact, is a huge omission and flaw. Obviously, this is not the last iteration, and the authors who initiated the creation of this index will come to the same idea.