For most companies listed in Romania, non-financial reporting is a matter of compliance, with only 30% actually having an environmental, social and governance (ESG) implementation plan and only 10% an integrated business and sustainability strategy, according to the report “ESG – A chance for strategic change?” made by PwC Romania in collaboration with the Bucharest Stock Exchange (BVB).
Moreover, 50% of respondents do not yet use any reporting standard, even if by 2023 regulatory and reporting requirements will become stricter.
“Given the European Union’s ambitions to reduce carbon emissions and the new regulations that lie ahead in this area, companies’ sustainability commitments are becoming urgent. The tone is set by listed companies that need to make the transition to responsible and transparent operating models to comply with the new non-financial reporting requirements. Under the European Recovery Fund, financial resources will be allocated to transition projects in this area, and companies that meet certain specific conditions will be able to apply for funding. Consequently, it is worth preparing to already submit the application at the level of strategy and reporting,” said Monica Movileanu, Partner and Leader of ESG, PwC Romania.
Shareholders and investors are placing increasing emphasis on sustainable models. If organizations do not have a sustainability strategy and do not publish quality non-financial reports, they may face evaluation problems in the audit process, as well as difficulties in finding sources of funding and contacting investors and customers.
“From the investor’s point of view, the implementation of ESG at the corporate level is seen as a requirement for better risk management, improved operations and sustainable growth. The projects we have initiated at BVB level, namely ESG ratings for companies listed on the main market, as well as the publication of our ESG guides, aim to improve the understanding and capacity of local issuers, mainly in terms of institutional investor expectations. We hope that all relevant actors, regulators, issuers, investors and ESG organizations will be able to find a balanced approach to address current ESG shortcomings and increase the reliability and confidence of ESG data in the future,” said Remus Dănilă, Head of Business Development, BVB.
Conclusions of the report
About 50% of respondent companies say they only have a business strategy. In 82% of cases, ESG decisions are taken at board level. Among the ESG aspects included in the risk management process, listed companies indicated: cyber security, climate and environment, employee issues, corporate governance and the field of anti-corruption activities, social issues and human rights. The majority of respondents (72%) say that their non-financial reports are audited by external auditors.
Companies are much better prepared to address social, employee and human rights issues. They state that they have codes of ethics (82%), remuneration policies for all employees (71%), policies to protect whistleblowers (65%), diversity policies (47%) and ILO standards (24%).
There is also progress in systematically addressing climate and environmental issues: 53% say they already have an environmental and climate policy, and 12% are working on such a policy.
About 47% of respondents say they do not have a specific human rights policy, while 71% say they have an anti-corruption and anti-bribery policy. Less than 6% of listed companies say they perform audits to assess supplier performance.