Śmieja about ESG: If business is to grow, it must act responsibly. - International Climate Summit TOGETAIR 2023
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Śmieja about ESG: If business is to grow, it must act responsibly.

The concept of corporate social responsibility began to form in the late 18th and early 19th centuries. The following decades brought dynamic changes, which today are manifested in the increasingly widespread implementation of CSR strategies, not only in the world of large corporations. An equally important and even more complex issue is ESG. What it is, how it is being initiated in Poland, and whether ESG is still a choice or already a necessity, I was told by Agata Śmieja, president of the Clean Air Foundation, originator of the Polish TOGETAIR Climate Summit and the ESG Congress – Polish Power of Business.

What is ESG?
ESG – an acronym for Environmental, or responsible approach to the environment, Social, or social responsibility, and Corporate Governance, or corporate governance – takes into account three non-financial factors on the basis of which the market can assess a given company’s action to achieve goals other than merely material. On the basis of reports taking into account these three parameters, independent experts prepare an analysis of the impact on the environment of the activities undertaken by the company under review. On this basis it is possible to assess how this translates into sustainable development of the company.

ESG is the responsibility of business towards society, the environment and the economy. That is, a business strategy in which organizations, with their actions aimed at achieving an economic goal, can additionally support social issues, economic development, and at the same time take care of the environment and climate,” explains Agata Smieja, CEO of the Clean Air Foundation.

Efficiently implemented and executed ESG strategy requires combining the perspectives of different stakeholders, so it is a challenging but rewarding task. Skillful action in this area can bring a company numerous benefits. Contractors are more likely to enter into cooperation with companies that share the same values as them. Organizations can also count on greater favor from investors and banks.

The economy of the 21st century is moving expansively to conquer new technologies and markets. However, we must not forget that we are united by one world that we must share. Therefore, social issues are as important as economic and environmental ones. Without balance in these three aspects, we will not succeed. […] After all, business itself is not disconnected from reality, it cannot function without contact with the other sectors. […] If we use the planet’s resources too much, raw materials and space will simply run out. Society, on the other hand, is people for work, families, consumers. It’s a whole network of relationships, interacting with or going to business. […] For this reason, large companies, which employ the largest number of people and operate in many markets, should include ESG and CSR issues in their strategy,” says Agata Śmieja, originator of the ESG Congress – Polish Power of Business.

ESG reporting – who is affected?
Although the green transformation is becoming a reality, the ESG reporting obligation rests, for now, on selected public interest entities, including banks, investment funds, listed companies, and insurers, among others. The listed organizations must employ more than 500 people and the company’s balance sheet total exceeds 85 million zlotys or net sales revenue exceeds 170 million zlotys.

In 2023, however, this obligation will be extended to large companies (with more than 250 employees) and listed companies. The balance sheet and the value of net sales revenue will remain unchanged.

It’s worth mentioning that in 2026 the reporting obligation is expected to already apply to all companies. The changes being introduced are expected to lead not only to an increase in the quality of the activities undertaken, but also to greater transparency of the reported information, crucial for customers, investors, financial institutions and other stakeholders when deciding whether to cooperate with a particular company. In addition, the clarified, more detailed ESG reporting methodology is expected to curb the phenomenon of greenwashing.

Good to know…

Greenwashing is a marketing strategy in which the recipient receives the message that the product or service they choose is environmentally friendly. In reality, however, this is not true. The main motivator for a company to implement ECO communications is the desire to increase revenue, while there is no real environmental benefit behind it.

ESG strategy – consequences of ignoring socio-environmental responsibility
While the most painful seem to be the high fines imposed by regulators, equally painful may be the difficulties in raising capital and financing cited by PwC. Even more painful may be rejection by consumers for resisting market pressures and eco-trends.

Competition, regardless of industry, is increasing, as are expectations and market pressure to conform to green trends. Today, a properly implemented ESG strategy can be an element of competitiveness and support the growth of a company that will consistently meet sustainability goals. The sooner we begin to meet the requirements, which will be a necessity in a few years, the greater the chance to strengthen our position and reap benefits, material and non-material,” explains Agata Smieja.

ESG in Polish – how is it?
Consumer awareness is growing every year, which translates into pressure on entrepreneurs. They are no longer expected not only to make quality products, but also to minimize the company’s negative impact on the environment or care about local communities. According to a survey conducted by the HAVAS agency, up to 77% of consumers expect brands to help people affected by the crisis. And in 2025, 75% of working people will be those for whom CSR is important and relevant.

How does this affect ESG in Poland? Are we already implementing concrete solutions as part of this strategy?

There are large multinationals that have been supporting non-financial reporting and implementing a range of socio-environmental measures for years. More and more companies, especially those that also operate in foreign markets, report or incorporate ESG strategy. A lot of organizations that are planning to expand or are monopolists in a particular area of economic activity, necessarily, because of their openness and understanding of ideology, authenticity or brand authority, want to introduce such activities, because they believe that social responsibility should be the core of business. […] In Poland, there is still a lack of know-how, knowledge or companies that can introduce non-financial reporting in a reliable, simple way. […] Often organizations don’t know where to start and which topics could be most effective. Instead, there is already an awareness that in a few years an organization will not be able to be part of the European market if it does not report non-financially,” explains Smieja.

The last sentence is at the same time a simple answer to the question of whether ESG is still a choice or already a necessity. My interlocutor points out unequivocally that the green transformation and related changes in the closed-loop economy is the direction we need to go. The driving force is not only the European Green Deal and the ambitious goals it sets, but also the broader global environment and geopolitical situation.

How to “play green” to do it effectively and for the overall good? To know, you need to talk and share good practices. There is no shortage of space for this – there is a growing number of events in Poland where representatives of central administration, local governments, science and business come together to seek the best solutions and opportunities for sustainable development in three key elements – environment, society and economy. One such initiative carried out across divisions is, for example, the ESG Congress – Polish Power of Business.

The event is open to companies that already support or are beginning to support ESG and non-financial reporting and want to show these good practices to others, encourage them to join in implementing this strategy. Larger organizations that have expert backgrounds introduce various solutions, and then the rest of the business – colloquially speaking – chases them. This is the right thing to do, because we need initiators of change who will encourage and invite others to participate,” says Agata Smieja.

ESG Congress – Polish Power of Business
The second installment of the ESG Congress – Polish Power of Business will take place on November 7 at the National Stadium in Warsaw.

Our event is aimed at all sectors in the country – from the central administration, to local governments, private business, state business and small entrepreneurs. To this we invite representatives of the world of science, which should provide innovation and technology and ensure that sustainable development is based on all pillars. During the event, representatives of non-governmental organizations that support social and developmental activities of business or business supports this third sector by donating funds for social, environmental and local initiatives must not be missing. This is crucial, because without dialogue and without joining forces, we are unable to achieve success. Micro-activities – small everyday deeds – can result in a macro scale,” adds Agata Smieja.

The 16 panels will discuss how to combine economics and ecology, corporate governance issues, social issues and the transformation of the Polish economy.

Today’s world, the climate crisis and inflation, show that the ESG balance must be maintained. Every major disaster, every conflict causes environmental and social costs. That’s why we want to invite various NGOs, non-governmental organizations (NGOs) to our congresses for free, so that they can present their point of view and debate on an equal footing with state and local government officials, business and economic representatives. We don’t have to think about what topics to bring up at an ESG congress. What affects us socially and what we should be responsible for as a business are: energy conservation, as we face a harsh winter; it’s energy security, which affects social and environmental issues. It’s waste processing, which generates environmental and ecological costs,” explains Smieja.

The public is invited to attend the event live or online (at polskamocbiznesu.pl and in partner media).

Agata Smieja, president of the Clean Air Foundation

Associated with the Clean Air Foundation since its inception. She is involved in many projects aimed at social education and combating energy poverty. Her goal in her activities is to build social ecological awareness, promote environmentally friendly solutions and create innovative actions to protect health and life from the harmful effects of air pollution. She coordinated the public campaign #resumefrommog, which included more than 40,000 consultations and grant applications for the country’s residents and more than 230 meetings in each province (cities and municipalities).

It also managed the information and education campaign “Electromobility – Green Light for Climate” under the “Environmental Education” program of the National Environmental Protection and Water Management Fund. The campaign was aimed at promoting electromobility in Poland.

She initiated the TOGETAIR Climate Summit from 2020 as the originator. TOGETAIR is the flagship project of the Clean Air Foundation, which, under the leadership of Agata Smiea, is the co-organizer of the three-day international event. The Summit discusses the consequences of climate change, a just transition and actions to improve air quality and fight smog. TOGETAIR is a joint effort by all sectors of the country – government, local governments, science, business, NGOS and media – to protect the environment and create an ambitious, economically rational Polish climate policy.

Agata Śmieja is an archaeologist (UW) and manager (SGH) by education.