The correlation of Russian companies’ orientation towards sustainable development in the environmental, social and economic realm with trends in stock market indices

Abstract

Subject. We consider interrelations between Russian companies’ orientation towards sustainable development in the environmental, social, and economic sphere with the dynamics of Russian stock market indices. Objectives. The aim is to unveil the correlation between the focus of Russian companies on sustainable development in the environmental, social, and economic realm trends in the Russian stock market indices. Methods. The study employs methods of logical, comparative, and statistical analysis, in particular, the correlation analysis of indicators, like the MRSV index, MOEX index, integrated ESG ranking of Russian companies (our own development), gross domestic product, investment in fixed assets and trade balance, international reserves of the Bank of Russia, money supply and interest rate of the Bank of Russia. Results. We confirmed two formulated hypotheses, i.e. (1) Domestic economic factors influencing the dynamics of the Russian stock market have a similar effect on the general market index and the sustainable development index; and (2) Issuing companies’ orientation to sustainable development in environmental, social, and, economic realms has a direct correlation with trends in the stock index for sustainable development). Conclusions. Monitoring the dynamics of the Russian stock market index of sustainable development, which could provide a basis for investors to make environmentally oriented decisions, is inappropriate, because the index dynamics does not reflect the company's ESG achievements and is highly dependent on the same internal economic factors as the general market index.