Are companies in Poland ready for the obligation to report ESG (Environment, Social and Corporate Governance)?
An increasing number of companies report their sustainability activities. 63% of the largest companies in Poland prepare a separate, dedicated ESG report, and 17% of companies include ESG issues in their annual reports – according to the KPMG report in Poland entitled „Sustainable development reporting study. Reporting in the era of new regulations”. The scope of reported information indicates, however, that companies still have a lot to do to report at least the minimum required by the CSRD directive coming into force in the coming years.
The KPMG report shows that the vast majority of surveyed companies from Polish (81%) report at least basic sustainability issues. This result places Poland slightly worse in relation to Western European countries, where it amounts to 85%, and in North America as much as 97%.
63% of the largest companies in Poland from the surveyed group prepare a separate, ESG report. Since 2020, the percentage of such companies has increased by 7 p.p. This shows that companies are slowly preparing their organizations for the new reporting obligation, in accordance with the CSRD directive adopted at the end of 2022, but the scope of reported data is still small compared to the new requirements. The CSRD Directive also introduces new uniform ESRS reporting standards, the reporting obligation in accordance with them will apply to reports for 2024 (for companies employing more than 500 employees) and for 2025 for all large enterprises employing more than 250 employees. It is worth noting that in Poland only 9% of the surveyed companies have started to integrate financial and non-financial data, but these are not integrated financial and ESG reports within the meaning of the regulator. The situation is similar throughout Europe – in Western European countries, integrated reporting is used by 14% of the surveyed companies, and 15% in Eastern European countries.
– In Poland, the generally accepted and basic reporting standard is GRI (Global Reporting Initiative). Almost half of the surveyed companies (45%) use this standard in their reports. This percentage is consistently growing – two years ago only every tenth company indicated this way of reporting. This was due to the fact that the Accounting Act gave companies freedom in applying the reporting framework, as well as the ability to set their own reporting policy. As a result, companies often did not apply global standards at the beginning of the reporting path, treating them as the next step of advancement. It can be expected that with the introduction of the EU CSRD standard, the unification of companies’ approach to reporting will become a reality. The CSRD required reporting of climate opportunities and risks and the inclusion of environmental issues in the business strategy as well as indicators and measures of achieving the goals will largely coincide with the TCFD (Task Force on Climate-Related Financial Disclosures) Recommendations. The KPMG survey shows that in Poland only every fifth company currently follows the TCFD guidelines, which is 12 percentage points less compared to the global group of 100 largest companies from 58 surveyed countries. It can be expected that adaptation to reporting at the level of detail required by CSRD will require a number of changes from Polish enterprises at the strategic and process level as well as the adopted methodological and systemic solutions – says Iwona Galbierz-Sztrauch, Partner, Leader of Advisory Services for the Financial Sector, ESG Leader at KPMG in Poland.
The new CSRD regulation also introduces the obligation to formally audit and confirm the reported data. This will be a big change for the entire market and a challenge for companies in terms of unification and reliability of data. Currently, formal confirmation of the data contained in the report is rare in Poland. Only 12% of companies decided to do this.
The United Nations has created a list of 17 main goals (SDGs) and related tasks addressing global environmental change to be achieved by 2030. The goals that companies most often refer to in their activities are: decent work and economic growth (72%), climate action (63%) and responsible consumption and production (58%). Less than a third of the analyzed companies in Poland combine their ESG policies and activities with the UN Sustainable Development Goals in their reports. The vast majority of companies in the world report only a positive aspect (61%), only one-tenth take into account the negative impact on the SDGs. In Poland, companies do not report their positive and negative impact in the area of the UN Sustainable Development Goals. Only 6% of the surveyed companies identify specific goals tailored to their business and industry. Communication on negative impacts is already required by directives, e.g. SFDR for the financial market or EU Taxonomy of Sustainable Investments – but it is not standardized with the analysis of the achievement of SDG objectives. The survey also shows that most companies report to specific SDGs, and 10% to all 17.
44% of the surveyed companies in Poland identify and report topics relevant to their business. This shows how much ESG in a given company is related to the company’s business model and its real impact. Almost half (47%) of European companies consider the social factor to be risky for their companies, but its reporting often takes a descriptive form rather than quantitative data.
„Less than half of companies in Poland identify and report ESG factors that significantly affect the value and business model of the company. This percentage shows that Polish companies still largely treat information on climate-environmental, management and socio-employee indicators as CSR communication, which has no connection with the financial materiality of the company. This is an important indicator because it shows stakeholders the connection of knowledge about the financial impact of ESG risks with the company’s business model and strategy. Integrating ESG into your business strategy is crucial, and a structured and holistic integration of non-financial factors into operational processes is absolutely necessary. ESG is not incidental initiatives, but long-term activities that have a direct impact on the value of the company in the coming years. It is worth starting from this when thinking about ESG – says Przemysław Oczyp, Associate Partner in the Business Advisory / ESG Department at KPMG in Poland.
It is a good practice, but also a future obligation, to indicate the person responsible for achieving the assumed goals related to sustainable development. In Poland, such information can currently be found only in 15% of reports of the surveyed companies. It is still rare to report on the sustainability considerations of company compensation, both at the board and management level. In Poland, only 4% of the surveyed companies report such information.
Projekt otrzymał dofinansowanie z Norwegii poprzez Fundusze Norweskie 2014-2021, w ramach programu „Dialog społeczny – godna praca”.
