Friday, June 14, 2024

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ESG key to attracting investors and employees

According to the latest Navigating ESG: ABSL’s 2023 Overview report, more than 70% of companies in the business services industry have introduced global ESG strategies to their branches in Poland. 

Defining and implementing ESG (Environment, Social, Governance) policies, integrated with an organization’s business goals, helps build innovation and prepares companies for changing stakeholder and employee expectations. ESG has the potential to be one of the most important drivers of growth in the business services industry.

The business services sector, which employs more than 435,000 people in Poland, provides a steady contribution to the economy in the form of service exports, with the industry’s estimated contribution to GDP at 4.5%. Poland maintains a leading position in Europe in terms of the number of jobs created as a result of foreign direct investment and tops the rankings of investment attractiveness in Europe and the world. According to ABSL’s analysis, one of the main driving forces for attracting more investment is ESG factors.

ESG – an area of growth for the business services sector 

The role of complex processes and highly specialized services is steadily growing in the sector, with a market share of 57% in 2023. Global roles, including those related to ESG reporting, are being transferred to Poland, which could become a new specialty of business service centers in our country.

Business service centers can benefit from the growing ESG role in two ways. As centers employing specialists in many fields, with an emphasis on implementing these assumptions into their strategies, they have the opportunity to become examples of sustainable and responsible development for the entire business. The companies surveyed show motivation to challenge and learn from each other on this issue, which gives rise to the belief that the sector is made up of truly responsible leaders. This belief is illustrated in the numbers – more than 70% of companies have implemented global ESG guidelines in their Polish branches. On the other hand, the implementation of ESG obligations by companies represents an opportunity to further develop our industry based on the competencies of Polish employees, especially those in the analytical area, explains Agnieszka Orłowska, ABSL vice president for ESG.

Outsourcing ESG reporting to the business services sector will require, among others, certified specialists in the areas of ESG audits, DE&I and environmental consultants, and inspectors and analysts for the carbon footprint produced by a company and its supply chain – ESRS requires reporting at both the company level and its energy suppliers and subcontractors.

“Analysts currently working in business intelligence departments have the knowledge needed to aggregate and analyze the data needed for ESG reporting. This allows them to enter the ESRS reporting market virtually overnight. Already, 37% of the companies surveyed in our report have dedicated ESG reporting resources. 68$ already prepare reports at the global corporate level,” says Andrzej Gutowski, director of ESG at Colliers.

Requiring dual ESG materiality reporting – both financial materiality and impact materiality – could further expand the scale of opportunity for the sector. Financial sustainability materiality reporting involves identifying areas that are likely to affect a company’s financial performance in the short, medium and long term. Impact materiality, on the other hand, is concerned with an organization’s positive or negative impact on the environment and society, both through its direct operations and the company’s value chain.

“In light of legal changes and the growing role of corporate social responsibility, ESG reporting may become one of the most rapidly growing branches of the business services sector in the near future, creating new opportunities for the member company community,” according to Piotr Jaskiewicz, Head of International Trade Practice at Baker McKenzie’s Polish branch.

A directive of opportunities and challenges

New EU directives require companies reporting so far according to NFRD (Non-Financial Reporting Directive) guidelines to start reporting according to ESRS (European Sustainability Reporting Standards) as early as January 1, 2025. As a result, more and more companies are seeing the implementation of ESG guidelines as a necessary part of their strategies.

Reporting mandates are not the only reason for companies’ interest in ESG topics. This reporting implies actions to increase social responsibility and improve the lives of employees. These issues translate into both improving the image of companies and increasing their competitiveness in acquiring talent in the labor market, says Magdalena Lech, Senior Consultant at Mercer.

According to the report, 95% of companies indicate attracting and retaining top talent as the main reason for focusing on DE&I (Diversity, Equity & Inclusion) which is part of ESG. Other reasons include making a social impact (89%) and strengthening brand reputation (86%). Companies in the sector surveyed point to the need for further activities to level the playing field between genders. According to the survey, organizations are increasingly looking at the gender pay gap (more than 50% of companies) and 38% have taken corrective action to close pay gaps. In the long term, ESG will therefore be one of the most important growth drivers for the industry as a whole.

The report Navigating ESG: ABSL’s 2023 Overview was prepared by experts from the Association of Business Service Leaders (ABSL) in cooperation with Baker McKenzie, Colliers and Mercer.

Sylwia Ziemacka
Sylwia Ziemacka
“I believe our unique selling point is that we focus on what brings us together. Poland Weekly offers something you will not find anywhere else: a truly international and unifying perspective focused on content that builds cooperation and mutual understanding. This attitude doesn't make us naïve, but it allows us to focus on mutual understanding and a search for solutions. There are so many new challenges that we are all facing, such as energy transformation, climate change and supply chain disruption, to name but a few. By working together and sharing good practices, we can achieve so much more.”