Ferronordic - ESG profile
25 september 2020
As Ferronordic is a distributor of construction equipment mainly centred on the Russian/CIS market (albeit with Trucks in Germany now as well), we believe corruption concerns are warranted. In addition, tensions between Russia and both the US and EU have historically led to negative sentiment among foreign investors. Nevertheless, we believe Ferronordic’s strategy of being a Swedish company with a Swedish management/board that follows the Swedish Code of Corporate Governance gives it a competitive advantage. We argue that these factors increase confidence, helping the firm to be viewed as a trusted partner by customers and suppliers alike. The company has never had any issue transferring liquid funds to/from Russia, and has never cancelled a dividend. In terms of environmental aspects, we believe that the company’s strategy of offering high-quality Western machines improves fuel efficiency and reduces emissions compared to operating domestic/Chinese machines of lower quality. The transportation of heavy equipment is largely done by rail, lowering the environmental impact.
A Swedish company with Swedish corporate governance
Zero tolerance for corruption is a fundamental part of Ferronordic. Although it is difficult for us to validate, we believe that the compulsory employee training, the whistle-blower function, emphasis from management and the CEO/CFO personally approving contracts support this claim. The company’s employees often operate in harsh environments, but Ferronordic has company-wide labour safety programmes in place.