The growing importance of ESG in the Polish market

The changes are dictated both by a number of external factors and by the internal drive for a revised approach to business among company decision-makers. The expectations of external stakeholders are also proving crucial. When implementing ESG measures in their operations, Polish companies are often motivated by image issues and the positive perception of such activities among customers. However, other aspects have also gained importance in recent years. Establishing and meeting ESG targets is more and more required to stay in the contractor's supply chain. The importance of ESG activities in obtaining external funding is also on the rise. The expectations of investors and banks in this respect are growing. It seems that in the coming years we should also expect to see a greater importance of ESG aspects in the due diligence processes preceding M&A deals. 

Sustainability, and in particular sustainability-related reporting obligations, are becoming increasingly important not only among the largest Polish enterprises and listed companies, but also in members of international corporate groups. ESG requirements are often imposed on them by the parent companies. In addition to the reporting itself, groups require their subsidiaries to achieve the individual objectives they set for themselves, e.g. environmental or social objectives. This often affects the range of products companies offer, the materials they use or the suppliers they choose (in the case of manufacturing companies). 

Sustainability objectives are pursued through various activities. However, the most popular are infrastructural projects including investments in modern machinery and equipment. Then, there are investments in human resources and better working conditions, as well as measures to decarbonise and improve the energy efficiency of companies. The latter are obviously linked to the need to reduce the environmental impact of business. Corporate governance measures are also popular. In order to better understand the needs and goals of the organisation, more and more enterprises are also choosing to implement ESG strategies. 

The new demand for ESG solutions is boosting interest in the services of professionals who can provide training, advice and support in the implementation of organisational and technical ESG tools. Admittedly, more and more companies are choosing to hire ESG-dedicated specialists. However, it is still a rather uncommon practice and the ESG aspects in an organisation are usually handled by employees who deal with other tasks. When implementing ESG strategies, the vast majority of Polish companies retain specialised consultancies or law firms. 

Polish companies that have sustainability reporting obligations under the Corporate Sustainability Reporting Directive (CSRD) are most concerned about meeting the reporting requirements under the European Sustainability Reporting Stand-ards (ESRS). This is a challenge that many Polish companies still do not feel ready for. In this respect, Polish companies seek the support of specialised advisers. Interestingly, a significant number of companies report that one of the obstacles to the development of ESG is insufficient access to subject-matter experts. Therefore, it appears that the Polish market expects further development of services in that area. Additionally, the role of statutory auditors in the attestation of sustainability reports will increase along with arrival of the CSRD implementing regulations.

ESG-related challenges for the Polish economy are not limited to transposition of the CSRD and further EU legislation. It is necessary to create an increasingly better environment for businesses to operate based on ESG values. Indeed, the change that is taking place before our eyes implies a real change in the way companies approach doing business by being guided by sustainability goals on a par with purely financial objectives. Therefore, the Polish economy must, among other things, undergo the energy transition to maintain the competitiveness of Polish enterprises. At present there is no doubt about it and many steps are being taken to accelerate the energy transition. One measure of this can be the apparent decline in the share of fossil fuels in energy production and the recent developments in the RES sector. The Polish economic development based on ESG values at the national level is likely to support Polish businesses and turn the challenges they face in terms of sustainability into significant competitive advantages. ​