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ESG in company management strategies in the twenty-first century
The environment, corporate social responsibility and the highest standards of corporate governance are key elements of the functioning of modern companies. This area has always been important, but now it is considered one of the pillars of business strategies of enterprises. In the following years, its role as a factor determining the directions of development of companies will grow - says Magdalena Trzynadlowska, director of the Sustainable Development Office at Bank Millennium during a discussion at the University of Warsaw.
The dynamically changing situation in Poland and in the world requires that people making their first steps in their professional careers are characterised by knowledge of current economic trends. In addition to theoretical knowledge, it is extremely important to get to know the perspective of practitioners associated with various industries. One of the opportunities to broaden knowledge was the Business Conference of the University of Warsaw, organised in May this year by the Scientific Circle of Real Estate Law of the University of Warsaw, the Scientific Circle of Economic Strategy of the University of Warsaw and the Student Scientific Circle of Finance of the University of Warsaw.
The two-day conference consisted of four discussion panels: Economics, Law, Business and Management. The topics discussed during the talks were inflation, legal challenges in today's real estate market, startups and ESG in business. During the last of the discussions, moderated by Arkadiusz Klej, Magdalena Trzynadlowska, director of the Sustainable Development Office at Bank Millennium and Jan Rączka, manager in the PwC consulting company, member of the Climate Change Professionals Group and the Warsaw Centre for Ecological Economics, shared their experiences.
The future of ESG
The participants of the debate wondered whether in the coming years ESG will really become the main strategic trend in the economy. – This type of change is a process that has been gradually implemented for many years. Today, company stakeholders, such as employees and customers, pay a lot of attention to the need to take these factors into account in many areas of business activity. In the near future, ESG will be naturally implemented into strategic initiatives and business models – said Magdalena Trzynadlowska.
During the discussion, the reasons for the growing importance of ESG in the area of strategy and business models of companies were also discussed. Experts agreed that this phenomenon is not so much the result of coercion resulting from legal regulations, but above all from growing awareness and social responsibility, as well as opportunities faced by participants of economic life. – From my observations, it appears that in today's world it is impossible to create and sell products without looking at the expectations of stakeholders, including employees and customers. The need to take into account ESG factors in everyday operations is clearly visible in the approach of financial institutions to social and corporate governance issues, characterised by high maturity compared to other industries – noted Magdalena Trzynadlowska.
Banks and ESG
During the discussion, the representative of Bank Millennium drew attention to the special role of banks in the area of environmental issues. – Climate change and the consequences of the greenhouse effect threatening us, may be halted, but this process requires gigantic financial outlays, exceeding the budget capabilities of countries. This is where there is room for representatives of the private sector, including banks, as the sponsors of these changes. Banks are aware not only of their role, but also of the benefits they can derive from their commitment to fighting climate change, she said.
As part of the debate, the issue of the work of ESG units in companies was also raised. According to the expert, this area concerns almost every element of the organisation's functioning, which means that many departments are involved in processes related to sustainable development, and the role of ESG units is coordinating. In such an arrangement, it is important to properly define competences and responsibilities, as well as to establish an effective process for reporting and monitoring the initiatives carried out.