What challenges lie ahead for sustainable development? Interview with Robert Grey, publisher of the magazine “biznes & EKOLOGIA”
In recent years, more and more importance has been paid to the role of sustainable development in big business, through the introduction of ESG indicators, which cover the Environment, Social Responsibility, and Corporate Governance. Something we have been waiting for so long is finally becoming a fact, as large corporations have been obligated to report their activities according to this model, based on the European Union directive from April 2021. As a result, we get a tangible depiction of the impact of companies’ activities on the natural environment and society, as well as, learn about the way these companies are managed. On the one hand, ESG may limit the development of companies managed according to old models, which are not always advantageous to the environment. On the other hand, it can help them build a more positive image and gain the trust of customers or investors.
Is it just about image factors, or is there something more?
In addition to obvious image benefits, ESG aspects are also important from a risk perspective. Companies that do not take into account environmental and social aspects in their operations expose themselves to the risk of conflicts with customers and society, as well as, regulatory controls. In turn, the lack of proper management, ethical decision-making, and transparent reporting may lead to negative financial consequences for these companies. We are therefore witnessing a positive phenomenon, where more and more companies are starting to take into account ESG aspects in their business and operational strategies, not only out of obligation, but also out of maturity. Companies that effectively integrate ESG aspects into their activities are better able to attract investors who are looking for sustainable companies, thereby increasing their market value.
So, it is an opportunity, but what challenges are involved?
Certainly, ESG requires a fundamental change in the way companies act, think, and make decisions. However, in order to implement ESG effectively, they must embed it in their corporate culture and integrate it with all aspects of their processes and measures. This means that they should have an integrated management system that allows them to monitor ESG related issues on an ongoing basis. Such a system should take into account all areas of the company’s activity, i.e. supply chains, production processes, investments, employment, and stakeholders relations.
Are companies ready to introduce such changes to their internal culture?
Embedding ESG in corporate culture means that issues related to ecology, society, and good management practices should be part of the company’s DNA, constitute its values, and be its mission. Implementing ESG in practice also means supporting initiatives related to environmental protection and the communities living there, as well as, taking actions that will help achieve sustainable development goals. Frankly, the internal corporate culture has no choice but to enrich itself with these aspects.
Are these processes profitable?
Today, well-integrated ESG allows companies to gain a competitive advantage in the market. Companies that implement sustainable practices enjoy a better reputation and trust among their stakeholders, and are more resilient to crises. This was demonstrated by the COVID-19 pandemic, which highlighted the importance of ESG and had a vast impact on the way companies conduct their business. The crisis confirmed the need to pay more attention to the health and safety of employees, support local communities, and implementing sustainable practices. Companies that previously did not pay attention to these issues had to rapidly change their approach. Those that demonstrated business resilience and agility, and provided the essential products and services while tending for the safety of their employees, were recognized as exemplary models that emerged from the crisis in better condition than their competitors. As a result, these companies are more attractive to investors who are increasingly looking for investment opportunities that not only bring financial gain, but also contribute to social development and environmental protection.
How should smaller players approach this issue?
ESG is becoming an increasingly popular “topic” in the business world, and implementing sustainable practices has become crucial for companies that plan to achieve success in the long term. However, it is worth noting that ESG is not only the obligation of large corporations. SMEs (Small and Medium Enterprises) will certainly play a key role in promoting ESG in the future. These companies are more dynamic and can introduce changes faster.
That is a good start, but what’s next?
The next, very essential step should be to implement only ethical business practices, which in the case of SMEs can be the key to attracting an increasing number of customers looking for “local physicality” from suppliers or producers today. Another step should be to cooperate with local organizations and entities, which can help SMEs build positive relationships with local communities and contribute to increasing interest in their products or services. Moreover, SMEs can also contribute to promoting social responsibility by organizing charitable activities and other forms of socially engaged activities.
Are ethical motives a sufficient argument?
Implementing sustainable business practices is not only a matter of morality, but above all of economic rationality. Companies that implement ESG in their business strategy often achieve better financial results, and their market value continues to grow. Research shows that investors are increasingly taking sustainability factors into account when making investment decisions. This is influenced, among other things, by increasing social awareness and growing expectations regarding corporate responsibility. Therefore, SMEs that take steps to implement sustainable practices can gain a competitive advantage and attract new customers and partners . An example of this can be seen in the tourism industry today, where an increasing number of customers are looking for sustainable and ecological offers. Companies that implement such solutions attract more and more new customers and gain a more positive reputation in the industry.
Image is important, but there is still the issue of costs.
Many investors and financial institutions prefer to invest in companies that conduct their business in accordance with the principles of sustainable development. In addition, many funds and support programs are targeted specifically at SMEs that implement innovative solutions related to environmental protection and the promotion of social responsibility. The conclusions drawn from the above considerations are clear: Companies that want to achieve long-term success must implement ESG in their business culture and integrate it into all of their operations and activities. This means that business decisions should be made in a manner consistent with the company’s values and mission, and every aspect of the business should be monitored for sustainable development. Consequently, implementing ESG requires time and effort, but the value of this concept will certainly outweigh these costs.
How is ESG perceived in other sectors, such as higher education, which you also know well?
Polish universities play an important role in disseminating knowledge about ESG, placing great emphasis on social responsibility and sustainable development, incorporating these values into their educational and social activities. Lecturers provide professional education, including climate education, which is becoming increasingly indispensable for future generations. In the past, corporations treated CSR (Corporate Social Responsibility) as a marketing element or an irrelevant detail of social engagement, but today ESG has become a key element of conducting business and engaging in social life. ESG is a very broad issue that is closely related to the fight against climate change and the building of a modern, low-emission and efficient economy. Accordingly, it is a global trend that is becoming increasingly important, and the energy transformation, innovation, and introduction of corporate governance represent a challenge, but also a tremendous opportunity for Polish companies to adapt to changing market conditions in an orderly and planned manner. Higher education institutions have the task not only to prepare us for this, but also to have their own part in it.
What do you mean?
As in the management of any other sector, higher education leaders want to act in accordance with the principles of ESG, as such behavior not only constitutes a part of the common good, but is also perceived by the academic community as an indispensable element of strategic development that will provide to long-term success. Universities by their own conduct must demonstrate the direction of their actions in terms of environmental, social and management strategies, which is equally important in terms of attractiveness for students, lecturers, and employees. Every one of us wants to be part of an organization that functions properly within transparent, socially oriented ESG strategy.
What can you say about the publishing and educational activity carried out by the “biznes & EKOLOGIA” magazine?
The editors of the “biznes & EKOLOGIA” magazine have been aware of the issues discussed for a long time, they have been following these challenges on an ongoing basis from the beginning of their 26 years of operations, and have been addressing these topics in successive publications. Within the pages of the magazine, we have given experts from various industries and fields the opportunity to convey their knowledge and opinions on sustainable development, presented through diverse positions and views. The printed magazine and the information portal of the same name provide ongoing guidance not only on professional business management but also caution against the challenges related to the transformation of business towards ESG standards. The “biznes & EKOLOGIA” magazine is a Media Patron of numerous Forums, Conferences and Scientific Symposiums in Poland and abroad, where the topic of sustainable development invariably recurs in every area of our economy, business activities, including local government and politics.
Robert Grey is a former Undersecretary of State at the Ministry Foreign Affairs, an expert in international relations and economic diplomacy, as well as, in building public-private partnerships. As the publisher of the “biznes & EKOLOGIA” magazine, he aims to bridge the dialogue between correlated areas of business and the environment. Currently, he serves as the Chancellor of the University of Warsaw.
Last Updated on September 28, 2023 by Anastazja Lach