Transparency Index for State Companies of Ukraine 2015

TRANSPARENCY INDEX FOR STATE COMPANIES OF UKRAINE 2015

Transparency index has been assessed by the Centre “CSRDevelopment” upon the request of the Ministry of Economic Development and Trade of Ukraine within the project “Social Responsibility of State Authorities”. The project is supported by the Embassy of the Netherlands in Ukraine.

ASSESSMENT METHODOLOGY

Assessment was made following the methodology developed within the framework of the project “Social Responsibility of State Authorities”. Sitesof100 companiesincluded in TOP-100 of the largest state companies of Ukraine were assessed. Out of TOP-100 largest state companies 13 companies don’t have their own sites. Assessment was made during October 8-19, 2015. Information was assessed only for 2014-2015.

Thedevelopedmethodologyforassessingsitesofstatecompaniesincludesthreecomponents, viz:

•Content: availabilityofcompleteinformationintheisusesofcorporategovernance, labourrelations, humanrights, environmentalpolicy, fairoperationalpractices, relationswithstakeholdersandcommunitydevelopmentonthecompany’ssite.

•Strategyandreporting: presentationofabusinessstrategyandcorporatesocialresponsibilitystrategy, financialandCSRreportingaswellasCSRreportingonthecompany’ssite.

•Navigation: convenience of accessing any information on the company’s social responsibility.

ASSESSMENTRESULTS

ThedegreeoftransparencyofUkrainianstatecompaniesmakesup20.03points[1]. 40%of companies (35of 87) have higher than average level of CSR information disclosure level. The results of assessment are provided in table 2.

TOP-10 in the Transparency Index for Ukrainian State Companies. Thefirstplacesgotothefollowingcompanies: SE “NNEC “Enerhoatom” (72points), PJSC “Ukrhidroenerho” (51points), NJSC “NaftohazUkrayiny” (48 points), PJSC“Tsentrenerho” (48points), SE “AdministrationofSeaPortsofUkraine” (45points), SE“NationalEnergyCompany “Ukrenerho” (43 points), SE“Specialized Sea Port “Oktiabrsk” (42 points), “Ukrzaliznytsia” (State Administration of Railroad Transport of Ukraine) (41 point), PJSC JSB “Ukrhazbank” (39 points), JSC “Oshchadbank” (37points)and OJSC “Zaporizhzhiaoblenerho” (37 points).

The level of transparency of TOP - 10 state companies makes up 45.7%.

Table.2. THE RESULTS OF TRANSPARENCY INDEX FOR STATE COMPANIES OF UKRAINE FOR 2015

Place / Company Name / Points
1 / SE “NNEC “Enerhoatom” / 72
2 / PJSC “Ukrhidroenerho” / 51
3 / NJSC “NaftohazUkrayiny” / 48
3 / PJSC“Tsentrenerho” / 48
5 / SE “AdministrationofSeaPortsofUkraine” / 45
6 / SE“NationalEnergyCompany “Ukrenerho” / 43
7 / SE“Specialized Sea Port “Oktiabrsk” / 42
8 / “Ukrzaliznytsia” (State Administration of Railroad Transport of Ukraine) / 41
9 / PJSC JSB “Ukrhazbank” / 39
10 / OJSC “Oshchadbank” / 37
10 / OJSC“Zaporizhzhiaoblenerho” / 37
12 / SE“ServicingAir TrafficofUkraine “Ukraerorukh” / 36
13 / SE“Odesa Sea Trade Port” / 35
14 / OJSC“Kharkivoblenerho” / 33
15 / PJSC“State Export-Import Bank of Ukraine" / 29
15 / PJSC“Sumykhimprom” / 29
15 / NJSC “Nadra Ukrayiny” / 29
15 / USEPC“Ukrposhta” / 29
19 / PJSC“Khmelnytskoblenerho” / 27
20 / OJSC “Turboatom” / 26
20 / State PJSC“NJSC "Ukrahrolizynh" / 26
22 / SE“Presa” / 25
22 / SE“Ukrainian State Centre of Radio Frequencies” / 25
24 / SE“Designbureau “Pivdenne” namedafterM. K. Yanhel” / 24
24 / SE“Illichivsk Sea Trade Port” / 24
24 / PJSC“Mykolayivoblenerho” / 24
27 / OJSC“Ternopiloblenerho” / 23
27 / StateFoofstuffsandCerealsCorporationofUkraine / 23
27 / SE“Sea Trade Port “Yuzhnyi” / 23
27 / PJSC“StateJointStockCompany “MotorwaysofUkraine” / 23
31 / OJSC“Odesa Port Plant” / 22
31 / SE“Antonov” / 22
31 / SE“International Airport Boryspil” / 22
34 / PJSC“Ukrainian Bank of Reconstruction and Development” / 20
35 / SE“Coal Company "Krasnolymanska" / 19
35 / PJSC“Khartron” / 19
35 / SE“Arena Lviv” / 19
35 / Radio Broadcasting, Radio Communication and TV Concern / 19
35 / SEGeneral Directorate on Servicing Foreign Representations / 19
35 / JSC “Rodovid Bank” / 19
41 / SEFEA“Ukrinterenerho” / 18
41 / PJSC“Dniprodzerzhynsk Combined Heat and Power Plant” / 18
43 / SE“Ukrspyrt” / 17
43 / NationalSportsComplex“Olimpiyskyy” / 17
43 / PJSC "ResearchandDevelopment Enterprise "Bilshovyk" / 17
46 / PJSC "SJSC "Ukrvydavpolihrafiya" / 16
46 / KharkivState Aviation Production Enterprise (KSAPE) / 16
46 / SE“Elektrovazhmash” / 16
46 / SE“Artemsil” / 16
50 / SE“Palace of Sports” / 15
50 / “Kherson Sea Trade Port” / 15
52 / SE“Ismail Sea Trade Port” / 14
53 / Polygraphic Industrial Complex "Ukraine" in securities issuance / 13
53 / State Enterprise “Easetrn Mining and Concentrating Industrial Complex” / 13
53 / SE“Plantof Civil Aviation No.410” / 13
53 / “Mariupol Sea Trade Port” / 13
57 / SE "Lvivvuhillia" / 12
57 / "PJSC “Lysychanskvuhillia”" / 12
57 / SJSC Khlib Ukrayiny / 12
57 / SEDerzhhidrohrafiya” / 12
57 / SGE “Ukrheofizyka” / 12
57 / SE“Production Union Pivdennyy Engineering Plant named after O. M. Makarov” (YUZHMASH)» / 12
57 / SE“Dnipropetrovsk Research and Development Complex “Elektrovozobuduvannia” / 12
64 / SE “Kryvyi Rih Combined Heat and Power Plant“ / 11
64 / SE“International Airport “Lviv”» / 11
64 / PrJSC “UkrainianInstitureforDesigningCommunication Means and Constructions “Diprozviazok” / 11
64 / SE“StateReserveSeedFundofUkraine” / 11
64 / SE "Research and Development Union "Pavlohrad Chermical Plant” / 11
64 / State Enterprise “Coal of Ukraine” / 11
64 / SE“NationalCulture, ArtandMuseumComplex “ArtisticArsenal” / 11
71 / National Complex “Expotsentr Ukrayiny” / 10
71 / StateResearchandDevelopment Enterprise “ObjednanniaKomunar” / 10
71 / OJSC“UkrayinskeDunajskeParoplavstvo” / 10
71 / StateAviationCompany “Ukraine” / 10
75 / PJSC“Agrarian Fund” / 8
75 / SPJSC "Building Company "Ukrbud" / 8
75 / State Enterprise “Information Centre" / 8
78 / SE“National Palace of Arts “Ukraine” / 7
78 / SE“Ukrkosmos” / 7
78 / SE“Regional Power Grids” / 7
81 / PrJSC “Kyiv-DniprovskeInterbranchEnterpriseofIndustrialRailroadTransport” / 6
81 / SE“Centre for Certification and Examination of Seed and Planting Material” / 6
81 / SE "Ukrservice of the Ministry of Transport" / 6
84 / SE "Official Delegations Hall" / 5
85 / SIE“Kryvbaspromvodopostachannia” / 4
85 / PJSC“JSCB “Kyiv” / 4
87 / SE "Ukrkhimtransamiak” / 3
SE“Directorate for Construction and Management of the National Project “Air Express” / No site available
SE“ResearchUnit “Proskurivka” / No site available
SE“Koniarstvo Ukrayiny” / No site available
SE“Research Unit “Sharivka” / No site available
OJSC "ОRIANA" / No site available
SE for making supplies to medical institutions "Ukrmedpostach" of the Ministry of Health of Ukraine / No site available
SE "Selydivvuhillia" / No site available
SE "Krasnoarmiyskvuhillia" / No site available
SE "Dzerzhynskvuhillia" / No site available
SE “DnirpopetrovskDirectorateofSubwayConstruction” / No site available
SE "Zhytloinbud" / No site available
SE "Ukrzhytloservis" / No site available
SE "Aluminium Foil Plant" / No site available

INFORMATION DISCLOSURE LEVEL

CSRinformationdisclosurelevelontheweb-sitesofstatecompanies, ifassessedbythemainassessmentparametres, isquitelow(see figure1).

Figure 1.CSR information disclosure level on the web-sites of state companies, if assessed by the main assessment parametres

Diagram decoding:

Strategy and reporting

Content

Navigation

Maximum value

Actual value

IMPORTANT ISSUES

Almost 2/3 of companies (57) have a low level of disclosure of the main aspects of the Transparency Index – they scored lower than average (9 and less).

Criticallylowlevelofinformationdisclosurecan be traced inthecomponents “Communitydevelopmentandsupport”, “Humanrights” and “Ecology”(fig.2).

Figure 2.Level of information disclosure on the web-sites of companies according to “Content” parametre

Diagram decoding:

Corporate governance

Human rights

Labour relations

Fair operational practices

Relations with stakeholders

Ecology

Community development and support

Maximum value

Actual value

State enterprises mainly place on their web-sites information on:

• The company’s management and structure (59 and 29 correspondingly). As a rule, brief bios of managers are provided. Only on the site of SE“State Reserve Seed Fund of Ukraine” there is information about its functional mandate.
• Anticorruptionandcompliancepolicyis highlighted on the sites of almost each 5th company out of the ones that participated in the assessment (17 of 87). Almost on all the sites of those companies there are anticorruption policies (approved mainly during May –June 2015), on some e-mail addresses and hot line telephones are placed for notifying about manifestations of corruption.

Only on the site of SE“NNEC “Enerhoatom” there is information about the results of anticorruption policy implementation.

The sitesoftheInternationalAirport “Boryspil”, RadioBroadcasting, RadioCommunicationandTV ConcernandSE“UkrainianStateCentreofRadioFrequencies”, instead of anticorruption policies, contain only information about the addresses and telephone lines for notifying about corruptive offences among the company’s staff.

• Almosthalfofcompanies (37 of87) haveplacedontheirsitesprocurementplansfor 2015, 32 companies – information about tenders (of which 17 have provided information about the results of tenders).
• Lessthanhalfofcompanies (31of87)haveprovidedinformationaboutstaffdevelopmentpolicy(mainlyrelating to the work of social institutions (recreation and retreat centres, recreation facilities, sanitary institutions), advanced training courses, sports competitions held, etc.).

Informationabouttheresultsofimplementionofstaffdevelopmentpolicy(quantitative data relating to staff training policy, performance figures for cultural institutions, sports institutions, sanitary institutions of the compsny)is available only on the sites of Enerhoatom, Tsentrenerho, Naftohaz, Turboatom and Ukrzaliznytsia.

• Eachfifthcompany (17of 87) provides information about health care policy and employee occupational health and safety policy, information on the results of implementation of such policy can be found on the sites of Enerhoatom, Ukrzaliznytsya and Naftohaz.
• Almost each fifth company (16 of 87) places information on environmental policy.

OnlyonthesitesofEnerhoatom, Ukrenerho, Tsentrenerho, “AdministrationofSeaPortsofUkraine(Green Page project) and Naftohaz the results of their implementation are highlighted.

Information on the results of environmental audit is placed only on the site of Enerhoatom.

• Sixteen (16)companies place information on available vacancies of the company on their sites.
• Thesitesofallcompaniescontaincontactdataofcompanies (telephones, mails and electronic addresses).

Otherissuesoftransparencyandsocial responsibility are covered on the sites of some companies only:

-Asmallpartofsitescontaininformationonavailabilityofstaffagreement(10) and activity of trade unions (12);

-Theissuesofassisstanceprovisiontotheregionofthecompany’sstayarehighlightedonthesitesof 9 companiesonly(Enerhoatom, Oshchadbank, Zaporizhzhiaoblenerho, Mykolayivoblenerho, Ternopiloblenerho, Naftohaz, SE "Coal Company "Krasnolymanska", SE“Presa”, PJSC "State Export-Import Bank of Ukraine”);

-Codesofethicsareavailableonthesitesof 5 companies, viz. SE“AdministrationofSeaPortsofUkraine”(CorporatecodeofSE“AdministrationofSeaPortsofUkraine”), NJSC “Naftohaz Ukrayiny(Code of corporate ethics),“Enerhoatom”(Code of Corporate Ethics of SE“NNEC “Enerhoatom”),SE“Antonov” (Code of SE“Antonov”)andSE“National Energy Company “Ukrenerho” (Code of Corporate Culture);

-Informationonhumanrightsandnon-discriminationisavailableonlyonthesitesofJSC “Oshchadbank”(implementationofprojects “BankingwithoutBarriers” and “InclusiveSociety”), USEPC“Ukrposhta” (project “Accessibility for low mobility groups of residents”)and international airports “Lviv” and “Boryspil” (information on servicing passengers with special needs);

-InformationonthepolicyrelatingtogenderequalityisplacedonlyonthesitesofUkrzaliznytsiaandNaftohaz;

-Informationoncorporateresponsibilitymanagement, includingCSRcommitmentsandplanofinvolvementplusthelistofstakeholdersisavailableonthesiteofSE“NNEC “Enerhoatom”.

No company the site of which was under assessment provided information on:

• Salary, bonuses, managers’ bonusespolicy;
• Information on the employment policy for people with special needs.

STRATEGY AND REPORTING

On the sites of state companies there is, in fact, no information on business goals, accounts, including corporate responsibility accounts (see figure 3.)

Figure3.LevelofCSRinformationdisclosureonthe web-sites of companies according to “Strategy and reporting” parametre

Diagram decoding:

Financial reporting

Audit opinion of financial statements

Business strategy (business goals)

CSRstrategy (CSR priorities)

CSR reports (disclosure of non-financial indices)

Maximum value

Actual value

Information on business goals or development strategies is available on the sites of 12 companies (SE“National Nuclear Energy Generating Company “Enerhoatom”, PJSC“Khmelnytskoblenerho”, PJSC“Ukrhidroenerho”,SE“National Energy Company “Ukrenerho”, SEof Servicing Air Traffic of Ukraine “Ukraerorukh”, SE “Administration of Sea Ports of Ukraine”, SE“Sea Trade Port “Yuzhnyi”, SE“Odesa Sea Trade Route”, SE“Illichivsk Sea Trade Port”,SE“Specialized Sea Port “Oktiabrsk”, SE“Design Bureau “Pivdenne” named after M. K. Yanhel and JSC “Oshchadbank”).

35 state companies place their financial account on the site and 25 place their audit opinion of financial statements.

6 companieshaveplacedontheirsitesCSRpriorities(SE“NationalNuclear EnergyGeneratingCompany “Enerhoatom”, StateFoodstuffsandCerealsCorporationofUkraine, PJSC“Ukrhidroenerho” , SE“DnipropetrovskResearchand Development Complex “Elektovozbuduvannia”, “Ukrzaliznytsia” (State Administration of Railroad Transport of Ukraine) and PJSC“Tsentrenerho”).

Nositecontaineda CSRaccount, howeversomecompaniesdisclosesomenon-financialfiguresingeneralorfinancialaccountsofcompanies(SE“NationalNuclearEnergyGeneratingCompany “Enerhoatom”, PJSC“Tsentrenerho”, NationalEnergyCompany “Ukrenerho”, PJSC "NJSC “Ukrlizynh", SE“PalaceofSports”, NationalSportsComplex “Olimpiyskyy”, SE“Arena Lviv”, PrJSC “Ukrainian Institute for Designing Communication Means and Structures “Diprozviazok”, SE“Administration of Sea Ports of Ukraine”). OnthesitesofUkrhazbankandNaftohazthereareaccountsofcompaniesalsocontaininginformationon separate CSR indicators. PJSC“Ukrhidroenerho” hasplacedonitssitetheCompany’sPerformanceAccountfollowingorderoftheMinistryofEconomicDevelopmentandTrade of Ukraine No. 116dated February 11, 2015.

NAVIGATION

On the whole, the sites of state companies have a good navigation. Out of 87 sites: 59 haveinternalsearchfunction, 42 -regularupdates, 40 sitesprovideinformationinthreelanguages, 31have the feedback function, 11 - mobile site version.

CHANGESINTRANSPARENCYLEVEL

Centre “CorporateSocialResponsibilityDevelopment” supportedbytheEmbassyofthe NetherlandsinUkrainemade assessment of the sites of state companies inAugust2015. If the general results of assessment are compared for August and October 2015, appearance of some positive changes should be stressed:

-Apartofcompanieshaveconsiderablyimprovedtheirresults (forexample, SE“NationalNuclearEnergyGeneratingCompany “Enerhoatom” – from66 to 72 points,“Ukrzaliznytsia” (State Administration of Railroad Transport of Ukraine)– from 21 to 41 points, National Energy Company “Ukrenerho” - from 30 to 43 points, SE“Odesa Sea Trade Port” - from 24 pointsto 35 points, SE“Illichivsk Sea Trade Port”– from 14 to 24 points, SE “Administration of Sea Ports of Ukraine”– from 38 to 45 points, etc.);

-Therehasbeenaminorgrowthintheshareofcompanieshavingbusinessstrategies(from 12% to 13.8%), highlighting non-financial indicators (from 8.8% to 13.8%)and environmental policy issues (from 17.5% to 18.4%).

RECOMMENDATIONS

1. Statecompaniesmust treattheirownsitesasoneofthemain (andbudget) channelsofcommunicatingwiththeirstakeholders. Thatwillnotonlyimprovethelevelofthe company’stransparency, butwillserveasatoolfor building up the company’sreputation.
2. Whileplanningthecontentofthecompany’ssite, oneshouldalsotakeintoaccountlegislativedemands(placementofanticorruptionprograms, informationonpublicprocurement), recommendations of the Ministry of Economic Development and Trade of Ukraine (order No. 116 as of February 11, 2015), and special attention should be paid to the categories of information the public is interested in. With this in view it is necessary to hold regular consultations with the main groups of stakeholders in the issues of determining the categories of information that should, in their opinions, be represented on the site.

3.Thesitesofstatecompaniesshouldcontaininformationonbusinessgoals, developmentstrategies(including CSR strategies) and reports on the results of their achievement (that is non-financial statements). Provision of such information in open space constitutes the sense of transparency policy.

4.Statecompaniesmustplaceontheirweb-sitesmoreinformationaboutthemainnon-financialindicators,viz.: human rights, labour relations, including average size of salary, debt in salary payment, relations with the community. It is these aspects of CSR that influence the reputation of companies.

5. Takingintoaccountthefactthatthemajorityofstateenterprisesproduceanegativeeffectontheenvironment(mostofstateenterprisesunderassessmentaretheenterpisesthatareincludedinthefollowingsectors:electric power, transport, chemical industry, engineering, etc.), special attention should be paid to the issues of environmental policy. In modern conditions environmental protection is becoming an issue of more serious concern for the civil society and international investors.

6.And important component of companies’ transparency is not only provision of information on the company’s policy and different initiatives in the sphere of CSR, but presentation of information that discloses the results of such activity.

7. Itisalsonecessarytoimprovethesitenavigationsystem, viz.:toplaceinformationonnon-financialactivityindicatorsunder the reference “Social Responsibility”. That will enable the main groups of stakeholders to quickly find the necessary information, to installthe “feedback” function and to regularly diagnose new information.

[1]Only the companies having sites have been taken into account