Navigating ESG Regulations: Preparing for Change in the EU and Poland
26 May 2023
Environmental, Social, and Governance (ESG) considerations have gained significant traction in recent years, becoming crucial aspects of corporate responsibility and long-term sustainability. Governments and regulatory bodies worldwide have recognized the importance of ESG factors in driving positive societal and environmental outcomes. As a result, several legal changes have been implemented, both at the European Union (EU) level and within individual member states such as Poland. In this article, we will explore the current ESG regulatory landscape, highlight key developments in the EU and Poland, and provide guidance on how companies can prepare for the forthcoming changes.
The Growing Importance of ESG:
ESG factors encompass a wide range of criteria that evaluate a company’s impact on the environment, society, and its governance practices. These factors include climate change mitigation, resource efficiency, labor rights, diversity and inclusion, supply chain transparency, and ethical governance, among others. Increasingly, investors, consumers, and stakeholders are demanding transparency and accountability from companies, placing ESG considerations at the forefront of corporate decision-making.
EU Regulations:
The EU has been a pioneer in promoting ESG initiatives and has recently taken significant strides to strengthen its regulatory framework in this area. One of the most notable developments is the EU Corporate Sustainability Reporting Directive (CSRD) which entered into force on 5 January 2023. The Directive modernizes and strengthens the rules concerning the social and environmental disclosures of companies. A broader set of large companies, as well as listed SMEs, will now be required to report on sustainability – approximately 50 000 companies in total by 2027. .
Furthermore, the EU Taxonomy Regulation aims to create a classification system for environmentally sustainable activities. It provides companies with a framework to assess and disclose their alignment with environmental objectives, helping investors identify sustainable investment opportunities more easily.
Poland’s ESG Regulations:
Poland, as an EU member state, is also embracing ESG regulations to align with the broader EU framework. In recent years, Poland has focused on developing its renewable energy sector, reducing greenhouse gas emissions, and enhancing sustainability practices. In 2021, Poland introduced a Renewable Energy Act, setting ambitious targets for increasing the share of renewable energy sources in the country’s energy mix.
Additionally, Poland has taken steps to address social and governance issues. For example, Poland has amended the Labour code to improve standards for remote working and implemented a work-life balance directive. Companies operating in Poland are expected to adhere to these evolving regulations and integrate ESG considerations into their operations.
Our Approach to Prepare the Organization for the ESG Reporting – Opportunities & Challenges
To navigate the evolving ESG regulatory landscape, companies must be proactive to ensure compliance and demonstrate their commitment to sustainability. At Elitmind, we see that there are three main areas in the Sustainability Management journey.
The high-level approach can be described with the following steps:
- Assess and Identify ESG Risks and Opportunities: Conduct a thorough evaluation of your company’s ESG performance and identify areas of strength and improvement. This assessment will help develop a clear roadmap for integrating ESG practices into business strategies.
- Establish Robust ESG Governance: Implement strong governance structures to oversee ESG initiatives and ensure accountability at the highest level. Appoint dedicated personnel responsible for ESG compliance and reporting.
- Enhance ESG Reporting: Invest in comprehensive and transparent ESG reporting mechanisms. This includes disclosing relevant ESG metrics, targets, and progress toward achieving sustainability goals.
- Engage Stakeholders: Foster open dialogue with stakeholders, including investors, employees, customers, and communities. Understand their expectations and concerns regarding ESG issues and incorporate their feedback into your ESG strategy.
- Collaborate with Industry Peers: Engage with industry associations, networks, and initiatives that promote sustainability and share best practices.
However, there is no one generic solution for all companies – it always must fit your business needs and fulfill the applicable regulatory requirements. We adjust our offer to your needs – we can support you in the whole journey in each area, or we can step in when you are ready for Data collection & Automation!
