On the Path to Antifragility: Sustainable Finance as the Foundation for Corporate Growth

A presentation was held for the new book titled "Russian Corporations on the Path to Antifragility. Financial Architecture of Companies", published by the publishing house of the National Research University Higher School of Economics. The authors of the study presented key findings and discussed trends in the development of the corporate sector in both Russia and globally.

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The book was developed as part of the "Social Policy for Sustainable Development and Inclusive Economic Growth" at HSE University, under the Russian Ministry of Education and Science’s Priority-2030  initiative. The editorial board includes Irina Ivashkovskaya, head of the HSE School of Finance (editor-in-chief), Yaroslav Kuzminov, scientific director at HSE, and Rovshan Aliyev, first vice president of finance at AFK Sistema.

Opening the presentation, Irina Ivashkovskaya noted that the second phase of the large-scale project examining domestic business under sanctions pressure had been completed. This phase was based on a database created by the authors, detailing the composition of boards of directors (BoDs), as well as the human and social capital characteristics of BoDs in Russian companies, along with interviews conducted with 30 top executives of domestic firms.

Irina Ivashkovskaya explained the study’s focus on financial architecture by its significant impact on the financial design of businesses, ownership structures, corporate governance, risk distribution among investors, and the strength of cash flows. Any picture of the emerging national model of corporate finance would be incomplete without analyzing how changes in financial architecture affect company resilience. Optimal financial architecture strengthens a company’s financial capacity and resilience, reinforces positive value-creation processes, and helps build antifragility across the entire corporation. Adapting financial architecture to new realities also affects the global role of Russian business.

Yaroslav Kuzminov congratulated the authors on the release of the book. He stressed that Russian economists had long understood that the country’s model of capitalism has several unique features that cannot be explained solely by weak institutions, low household incomes, or the absence of collective investment traditions. Therefore, it is crucial to study and understand the structure of Russian corporations in detail and to synthesize the changes that have taken place since 2022. He also noted that the global division of labor has now become stably segmented into three sectors: the so-called collective West, which seeks to maintain its technological advancement and dominance; China and its aligned countries; and states that prefer not to align with either of the first two blocs.

Other global named by Kuzminov include the digital transformation of the economy –particularly the emergence of platforms that absorb a significant portion of the transaction costs inherent in market systems –as well as the growing capabilities of artificial intelligence, which is increasingly able to replace humans in a substantial share of routine operations. According to Kuzminov, this could lead to a revolution in the labor market due to the large-scale displacement of workers. Over the next 6–7 years, the domestic economy will operate under conditions of labor shortages across various skill levels. These trends are gaining momentum, and the architecture of corporations must adapt to them in a timely manner, he believes. He also highlighted the growing involvement of the state in major projects as an important feature, even though Russian capitalism remains predominantly private in terms of the ownership structure of dominant stakeholders.

Anastasia Stepanova, Deputy Vice-Rector of HSE and Associate Professor at the School of Finance, presented a chapter on the ownership structure of large Russian companies. The study revealed that, taking into account information about ultimate beneficiaries, a stable majority of these companies remain in the hands of an individual owner or their family–67% in 2012 and 59% in 2022–2023.

The shares of companies under state control and those with dispersed ownership increased from 19% to 22% and from 3% to 5%, respectively. At the same time, the proportion of companies controlled by offshore entities dropped sharply–from 43% to 21%.

According to Anastasia Stepanova, more than 40% of large companies and 45% of the largest shareholders faced sanctions pressure in 2022–2023. Nevertheless, a change of key shareholders occurred in only 10% of companies over a period of 1.5 years, while smaller changes in ownership structure took place in an additional 15%.

Key processes in the financial architecture of companies, noted Irina Ivashkovskaya, are linked to changes in the human and social capital of BoDs. The project pays special attention to these issues, as the resources of board members define the competencies needed for corporate transformation and adaptation in conditions of uncertainty.

Elena Makeeva, Associate Professor at the School of Finance, discussed the section of the book devoted to the evolution of board composition in Russian publicly listed companies. She pointed out that up until 2022, the largest studied non-financial corporations showed high levels of engagement of independent directors (33.5–35.9%) and foreign nationals (24.8–27.5%). In 2022, these shares declined, but by 2023 the proportion of independent directors had almost returned to pre-crisis levels (32.6%), while the share of foreign board members continued to fall (14%). The most significant decrease in foreign board representation occurred in companies in the retail sector, fertilizer production, and the oil and gas industry.

Interestingly, between 2012 and 2023, the proportion of independent directors with academic degrees and educational backgrounds in economics and finance increased. Another notable trend in board composition was the growing number of members with government service experience and previous roles as CEOs.

Yulia Fedorova, Head of the Corporate Practice at LegaLitica and co-author of the book, highlighted the specifics of board remuneration practices, including differences based on committee participation and the role of the senior independent director. She also noted certain similarities with European practices.

The effectiveness of corporate governance processes depends on the clarity of the legal framework governing board operations, and several chapters of the book are devoted to this topic. Yulia Zhukova, Associate Professor at the School of Legal Regulation of Business at the HSE Faculty of Law, discussed the evolving approaches to holding board members accountable for negative outcomes the company faces, including the approval of disadvantageous transactions. She noted that the practice of imposing liability on board members remains unstable, as no individual board member can make decisions unilaterally, and the degree of responsibility for collective decisions that negatively affect a company’s financial performance varies significantly.

Olga Novikova, Associate Professor of the School of Legal Regulation of Business (HSE), believes that comprehensive rules for holding board members accountable for negative consequences are currently lacking. In her opinion, difficulties persist in distinguishing between bona fide and bad-faith actions of the board. Most often, the role of board members in the bankruptcy of organizations is under consideration, with their involvement in decisions regarding unprofitable loans playing a decisive role. Since clear rules have not yet been established, courts examine whether individual board members were part of the committee that made the decisions leading to negative outcomes. If the board performed only an oversight function, courts often rule that the board could rely on the opinion of the committee members. Under the new conditions, the work to establish clear frameworks for the responsibility of board members still needs to be completed.

The second section of the book covers the new processes in the market for buying and selling control over companies. Ivan Kuznetsov, Managing Director of the Corporate Finance Department at Gazprombank, presented a chapter on mergers and acquisitions involving the sale of foreign businesses. He noted that the exit of foreign companies had become a new challenge for the Russian market, which had barely recovered from the shock of the pandemic. The sell-off resulted in a large pool of deals and created an opportunity for Russian investors to acquire quality assets at attractive prices.

During the exit of foreign companies, there were changes in pricing, price adjustments to accelerate deals, the emergence of transactions at nominal prices, and the sale of company control to national management with the option of a buyback.

The number of such deals has been rapidly decreasing, which is linked to tighter government regulation of transactions: while about 200 deals were registered in 2022, only 50 were recorded in 2024. This decline is partly due to prohibitive barriers that make the deals economically unfeasible, as well as a strict monetary policy that complicates purchasing assets on credit. Profit realization does not always offset the transaction costs, which often fall on the buyers.

Ivan Kuznetsov also talked about the acquisitions of parts of foreign companies by portfolio investors, who often receive non-core assets "as baggage" along with attractive assets and must now fulfill the social obligations of the previous owners. After the transfer of foreign company assets to Russian investors is completed, the capital of major domestic owners, locked within the country, will play a key role in future transactions. "The period of large-scale sell-offs is coming to an end; it has laid the foundation for a new era of mergers and acquisitions," the banker concluded.

Natalya Serdyukova, co-author of the book and leading specialist at PJSC LUKOIL, stressed the role of tax instruments in control acquisitions and business restructuring deals and summarized the unresolved challenges in tax regulation under the new economic conditions.

The discussion on the role of competencies in the effective adaptation of a company and strengthening its resilience also included participation from Oleg Romanovsky, Head of the Personnel Assessment and Development Department at PJSC LUKOIL.

In conclusion, Irina Ivashkovskaya thanked the authors and participants for their insightful presentations and meaningful discussion, and encouraged researchers and business practitioners to continue collaborating on the study of the transformation of domestic business.