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On the Social Security Code and the relations with investors

1 October 2015

A conversation with Marina Stefanova, Executive Director of the Bulgarian Network of the UN Global Compact (BNUNGC), on responsible corporate behavior, communications with investors and the relation with success Ms Stefanova, as CEO of BNUNGCyou took part in the conference "IR today – in the eye of the tiger". What did provoke you to join such a discussion? How does “Relations with Investors”relate to BNUNGC? The role of investors in encouraging responsible business behavior is of primary importance. As you know, companies look for external signals that they are on the right track. They may come from end users who buy their goods; from their business partners who make them a preferred supplier; or from those who would help their business through long-term investments. And investor relations experts are the ones who have to present the information, to tell the story of the company – values, mission, way of sustainable development. If they don’t know the matter, if they don’t find the business benefits and communicate them, this will not happen. For the Bulgarian network, they are a natural ally in promoting the values of the UN Global Compact. Do you think that the information about our country that reaches foreign investors manages to orientate them? On one hand, Bulgaria is not among the countries with the most successful economies according to international statistics. At the same time, according to data by the World Economic Forum, we were 13th out of 26 under the “global competitiveness” index for 2014. (I mean, this is contradictory information and which one do the investors choose? The one about the half-full glass or the one about the half-empty glass?) To continue the above considerations, I am sure that we have a historic chance to see “the glass half-full”. Whether we’ll take advantage of itdepends entirely on us. Peace and sustainable institutions are not promised to anybody any longer. We still keep these values. Climate changes have disastrous effect on whole latitudes, and we are still enjoying plenty of water, several harvests throughout the year and relatively minor environmental crises. A great part of the active Bulgarians gain experience abroad, but when faced with an opportunity for decent and fair realisation with perspectives, they often choose to come back to Bulgaria. And because we are talking about money, this can easily be achieved. It would be more difficult to provide water and energy in the deserts of Africa. When we are talking about economically motivated decisions, can news change them? Definitely. Sometimes it is not about content but about the way the news are presented. About the comments that follow beneath. Even more valuable is the role of analysers. When journalists have thorough knowledge to explain the situation, they become a sort of opinion leaders. On several occasions we discussed the role of individual journalists and their positions, since they caused increase/decrease in the price of shares in some enterprises within hours. Do you think the investment climate in Bulgaria is “good”? Has it changed over the past few years in a positive direction? Difficult and ambiguous question. How do we measure this climate – in terms of number or value of transactions, of regulations, maturity of the professional community? There is change and it is positive. We have created all the basic elements of a functioning capital market. I think, however, that sometimes we are not able to believe in ourselves, that we have what it takes to win the investors over. And we really do have it. Is there any connection between the Social Security Code and investor relations? There is, of course. According to data from the initiative UN Principles for Responsible Investment (UN PRI), by the end of 2014, the companies traded on Sustainability Stock exchange numbered 18000, and the assets managed by UN PRI were 45 trillion US dollars. Unfortunately, this relation has not been specifically established in Bulgaria yet. I believe that attracting a new type of “responsible” investors to our market would orient Bulgarian companies and would encourage end users to support the responsible campaigns through their purchases. What is meant by integrated reporting? Integrated reporting is a rather new topic for Bulgarian companies, as well as for many companies worldwide. For decades, the economic model has applied a formula for success, where the sole criterion has been the financial health/state/perspective. Today this is changing and we are looking for an evaluation of the company impact which is more fair, correct and comprehensive. Impact on the market and on society regarding their customers, employees, investors, local communities. Thus, the formula for success now expressly includes the human, natural and intellectual capital. This is a revolution. Very soon, it will demonstrate a large discrepancy between the current market valuation of individual companies and their future cost and value. Bright companies, natural leaders are already refocusing. As far as the rest are concerned, I can predict that a big surprise awaits them, them and their stakeholders. Did this conference change your expectations for the future of economy/public life in Bulgaria? It rather added another partner for achieving the goals of the organisation. Because IR experts can work for attracting responsible investors to our economy. Market valuation, and not the government policies, will solve our problems and change our reality. And we bear the greatest responsibility for that, as consumers and as investors.