Financial sustainability factor in assessing responsible business management of enterprises

Abstract

The Business Reputation Index of Business Entities (hereinafter referred to as the ECG rating), which is the National Standard of the Russian Federation and allows for identify responsible business in three components – ecology, personnel and the state – has been studied. The use of an ECG rating is important in assessing investment attractiveness and as a decision-making tool for granting preferences at the regional or federal level. The purpose of the study is to analyze the role of financial stability in assessing responsible business conduct based on an ECG rating, which is directly related to its effectiveness for a wide range of stakeholders such as investors, partners, and government institutions. Statistical analysis of data from more than 500 large business companies operating in the agriculture, forestry, hunting, fishing, and fish farming spheres showed a weak correlation with financial stability in the group of ECG-rated companies and a weak positive relationship in the group of companies with minimal values. A study has been conducted on the interdependence of the ECG rating values and a number of other financial indicators (property book value, revenue, net profit, cash flow, return on equity and assets, cash return on sales and net profit, and enterprise’s debt-equity ratio), which is a prospect for further study of the ECG rating effectiveness and its development.