It is worth taking care of the environment — segregating waste, caring for nature, supporting a common order and taking responsibility for the world that we will leave to the next generations. However, individual actions, while important, will not replace systemic solutions. These, in turn, often require concrete and sometimes even revolutionary changes.

Today, ESG (Environmental, Social, Governance), a set of criteria that assess the impact of a company on the environment, society and the way it is managed, is becoming a key element of business strategies. This is influenced not only by new legal regulations, but also by long-term development plans, market pressure and the growing expectations of consumers, whose environmental awareness is constantly increasing. Despite this, we are still dealing with the phenomenon of greenwashing — superficial activities intended only to create the impression of commitment, without real changes or the implementation of new practices. So how do you make changes that really matter? And who should be responsible for them? You can read more about ecology in companies here: Green professions and the role of activism in leadership

Ecology and CSR (Corporate Social Responsibility)

The concepts of ESG and CSR are often confused, although they refer to different aspects of the functioning of companies. In an interview with Dr. Justyna Berniak-Woźny, a specialist in corporate social responsibility (CSR), for the SWPS Management Zone podcast, Joanna Kruszewska explained the key differences between them.

ESG is based on hard data — numbers, indicators, statistics. It allows you to measure the effectiveness of the strategy and compare specific results. CSR, in turn, is a broad strategy that reflects the values, mission and goals of the company. Joanna Kruszewska uses a pictorial comparison: CSR is the heart of the company and ESG is its brain. It also stresses that CSR is not limited to pro-social attitudes, but also includes actions for climate, environment, biodiversity and broadly defined sustainable development, which is closely linked to social responsibility.

Is ESG something completely new for us? Not necessarily. Many of the practices that we include in the ESG framework today were already present in companies before — although they often did not function as part of a coherent strategy or had a clearly defined name.

Examples include a circular economy, reducing waste of resources, or activities related to diversity management. Many companies implemented them intuitively before they even became an official management model.

ESG as a pillar of the European Union

In recent years, ESG has become not only a tool for evaluating companies, but also one of the pillars of the European Union's economic strategy. It is within the framework of the European Green Deal that the EU aims to achieve climate neutrality in the next 25 years. This is accompanied by ambitious regulations — such as a taxonomy (a set of clearly defined criteria that help companies, investors and governments to identify whether a given activity actually supports the EU's climate and environmental objectives) of sustainable investments, the “Fit for 55” package, and new Directives and Reporting Standards (SRS) to unify and streamline companies' approach to environmental, social and governance issues. corporate.

Will this strategy make our economy more competitive and resilient (resilient)? Many companies, especially from energy-intensive sectors — such as steel mills or manufacturers of steel and aluminum components, for which Poland is known — are asking themselves how to reconcile climate goals with market requirements. ESG can prove to be an effective tool for business transformation — not only forcing change, but also pointing the way and opening up access to finance, partnerships and competitive advantage in the new green economy.

What is organizational sustainability?

The definition, and at the same time, the goal of sustainable development of an organization is to conduct activities that do not cause environmental degradation - at least not to the extent that it would endanger us or future generations.

However, it is worth complementing this definition with elements that represent its opposite in order to better understand the full picture of the challenges. These include three key environmental and social risks:

1. Extraction of raw materials in an unrestricted, uncontrolled manner, leading to serious disruptions in the functioning of ecosystems.
2. Production and consumption of artificial materials, which are difficult to dispose of and interfere with the natural circulation of matter.
3. Tbreaking down social barrierswhich exacerbate inequality and exclusion within the community.

Companies pursuing an ESG strategy should know where they source materials, what type they are, and how they affect the environment. Despite this awareness, we don't always know what actions we can realistically take — and sometimes our choices as an organization are simply limited by external factors.

Regulation and Greenwashing

While many ESG regulations are designed to promote transparency and corporate accountability, some fear that they may — paradoxically — contribute to greenwashing, which is superficial actions taken only to meet formal requirements. Meanwhile, their primary objective is to genuinely support the transition and protect the interests of investors and consumers.

In the past, activities in the area of corporate social responsibility (CSR) were completely voluntary. Today, they are increasingly becoming a duty — and it is duty, not goodwill, that often brings more tangible results.

Although the implementation of the new rules can be difficult, especially for small and medium-sized enterprises, the increased transparency of companies' actions brings tangible benefits — also from a business perspective. Investors gain a greater opportunity to assess the reliability and effectiveness of environmental or social actions, which affects their financial decisions. It is worth remembering that today's climate crisis is also a crisis of resources — such as water, food or health. EU regulations can help Member States implement sustainable solutions faster, more efficiently and — in the long run — cheaper. While large companies are often better able to adapt to ESG requirements, it is for small and medium-sized enterprises that they present the greatest challenge.

Final Report on Greenwashing

In June 2024, the Greenwashing Report was published in response to the European Commission's request (May 2022) to the three European Supervisory Authorities (ESAs) to prepare a report on greenwashing and sustainability oversight. The final report (2024) builds on ESMA's previous Interim Report (2023) and the National Supervisory Authorities (NCAs) survey.

For the purpose of the study, a single, concrete definition of greenwashing was adopted as a practice in which sustainability claims are imprecise or misleading, regardless of intent (may also result from negligence or lack of sound procedures). The results of the research showed the actual scale of greenwashing in the EU and the extent to which supervision works. Detected A small number of cases of greenwashing — this may be due to a low number of complaints, limited resources, low financial awareness and data access problems and supervisory actions are moderate for the time being. It is preferred and recommended for now gradual supervision, supporting market participants in adapting to new regulations.

What we can see as a challenge is certainly the lack of clear definitions in the regulations that hinder law enforcement and limited resources and expertise among supervisors and difficulties in accessing high-quality, comparable data. In addition to recommendations to the European Commission, the report also includes Recommendations for market participants: 1) responsibility for fair, transparent and evidence-based ESG communications;

2) modernisation of risk management systems, due diligence, remuneration policies and data infrastructure,

3) maintaining transparency towards consumers.

Is that enough?

Many actions based on ESG or more broadly CSR sound good and seem to be making sense, gradually being implemented. Companies are happy to educate employees on pro-environmental attitudes — and these are valuable activities. But in the face of sudden and progressive climate change (or rather: the consequences of more than 150 years of uninterrupted exploitation of the Earth by industry), it is worth asking the question: do we have time for small steps and soft strategies? Does it still make sense to shift responsibility mainly to consumers — people with often limited agency —? Are EU strategies capable of realistically confronting the powerful fuel companies and corporations that effectively circumvent the law?

The climate crisis is not waiting. The crisis of resources — water, food, health — is already happening. That is why voices about the need are increasingly appearing Radical changes: redefining business models, moving away from the linear economy, profound transformation of entire sectors. It is not without reason that organizations such as the famous ones are protesting in the streets The Last Generation, demanding concrete actions and responses from politicians.

In a business context, pro-environmental strategies make sense — but they often seem too slow against the pace at which global warming is progressing, for example. Education and awareness-building are necessary foundations, but in a world of real, growing threats, we must ask ourselves: will we be able to do business at all if the climate and social consequences exceed the tipping point?

Already today we are struggling with floods, extreme weather events and deepening social inequalities. In such a reality, the idea of the main goal of the business - that is, generating profits - recedes into the background. Because in a world of destabilization, it is difficult to talk about healthy, ethical entrepreneurship.

summary

While ESG and CSR activities can be the foundation of sustainable business development, today we need much more than strategies based on goodwill and soft action. In a world of rapid climate change and resource crisis, the real challenge is the courage to transform — even if it means revolutionizing business thinking.

Sources:

1. https://web.swps.pl/strefa-zarzadzania/artykuly/25825-czy-ekologia-to-tylko-moda-w-biznesie
2. https://web.swps.pl/strefa-zarzadzania/artykuly/25877-czy-swiadomosc-ekologiczna-przynosi-firmie-korzysci
3. https://odpowiedzialnybiznes.pl/publikacje/final-report-on-greenwashing/?cn-reloaded=1
4. https://www.esma.europa.eu/sites/default/files/2024-06/ESMA36-287652198-2699_Final_Report_on_Greenwashing.pdf