Environmental framework in Poland: What role can we play?
Societe Generale Securities Services (SGSS), keen to help our clients to be ESG-conscious when investing on the Polish market.
SGSS Poland’s Client Service team email traffic generated 671g of CO2 last month1 : such information is being delivered to Societe Generale employees each month. The goal is not only to raise awareness of our impact on the company’s carbon footprint, but it also allows managers to set SMART ESG goals for their teams. On the face of it, other companies on the market are also doing very well in this field: according to the IBRIS survey made for EY12, 90% of companies in Poland claim their mission includes ESG aspects, top of which are: i) recycling (91%), ii) energy-saving solutions (83%), iii) limiting waste (80%)
However, if we look closer at this data, it turns out that only 67% of those companies implement ESG aspects in their daily activities and only 48% transpose those assumptions into the relevant areas. Furthermore, when it comes to goals, only 60% of companies have listed limiting carbon footprint and 57% the use of renewable energy. This clearly shows that although there is an understanding of the need to implement ESG goals, there is still room for improvement when it comes to the execution part.
Several organisations provide assistance by offering know-how and resources that help companies with ESG aspects. One example is the United Nations Global Compact (UNGC) – the world’s largest corporate sustainability initiative. UNGC provides its members with a know-how and opportunities to join various programs and projects while working towards achieving UN goals. Another organisation is the Responsible Business Forum which is the largest Non-Governmental Organisation (NGO) in Poland, operating since 2000 and whose main objective is the promotion of diversity management in the workplace.
Unfortunately, this increasing environmental awareness carries a drawback: it raises concerns over greenwashing. Since all stakeholders (regulators, investors, business owners and ordinary clients) put larger emphasis on sustainable development goals (SDG), there is a risk that companies start claiming to be environmentally conscious, while in fact not making any noticeable effort towards sustainability. To address this, local governments, and supranational organisations such as the European Union, are working on their regulatory environment to develop frameworks for sustainable finance. This resulted in a 14% increase in the number of sustainable finance policy measures and regulations in G20 countries3 in 2021.
Warsaw Stock Exchange (WSE) has been helping the market to navigate through the increasing number of policies as well as adjusting to the ever-growing expectations towards ESG policies and disclosures. This is being achieved by issuing ESG standards and organising training workshops for brokers and analysts. Additionally, in 2009 WSE launched the RESPECT index – the first index of socially responsible companies in Central and Eastern Europe. The index was replaced by WIG-ESG in 2019 and gathers 60 of the largest and most liquid securities on WSE. Their weight in the index portfolio depends on two ESG rankings, one based on independent company scores (Sustainalytics) and the other on WSE Best Practice rules.
These efforts have had a very positive impact and as per WSE data 4, 84% of professional participants of the capital markets take ESG data into consideration when making decisions, with a further 3% of participants claiming they will include those within the next 2 years. On top of that, more and more companies are reaching out for green financing. One of the recent transactions was a green loan funded by Societe Generale granted to the Polish company Tele-Fonika Kable. This allowed for the construction of a new manufacturing facility and R&D centre in the UK to produce submarine cables to support the global renewable energy market.
The SGSS team will happily share their expert knowledge on the tools available for investors on the Polish market that can increase ESG consciousness when making investment decisions. Furthermore, in cooperation with the Global Banking & Advisory unit, Societe Generale Poland can provide preferential financing options for clients meeting certain ESG criteria.
The nine years from 2013 to 2021 rank among the ten warmest years on record5 and the impact of this has been more and more noticeable. We therefore need to stop focusing on local goals and put more effort into global goals such as limiting our carbon footprint. This has been increasingly challenging recently as the energy crisis has prompted a return to the carbon-based fuels and puts pressure on banks to loosen their environmental policies. Pekao, the second largest bank in Poland, has already removed the ban on coal trade finance from its credit policy6 as without it, the local heating plants might not be able to work this winter.
Having this in mind, now more than ever, we need to increase our efforts to fight the negative effect we have on the environment by using the tools that are available to us. As Mahatma Gandhi said, “Be the change you wish to see in the world”: we need to take matters in our own hands and start working on them. And if we look close enough, we may realise that it might be as simple as deleting old emails.
Wiktor SUSICKI, Client Service Manager, Societe Generale Securities Services Poland
1 Societe Generale Internal Report – 13/09/2022
2Research - Is Polish business sustainable? - was carried out by the Institute for Market and Social Research (IBRiS) on behalf of EY in February 2022 on a sample of 200 companies operating on the Polish market, employing at least 200 employees.
3UNCTAD World Investment Report 2022.
4GPW study on the impact of ESG factors on investment decisions.