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ESG, which stands for Environmental, Social, and Governance, are the key factors used to create non-financial ratings for companies, organizations, and countries (for more on ESG, read this article).
The Environmental Pillar (E) focuses on protecting the natural environment and combating its degradation. It encompasses a company's commitment to environmental preservation. This factor is driving rapid changes and transformations within companies, especially in the energy sector in Poland. Environmental awareness is high, and today, businesses are expected to disclose their impact on the natural environment, including climate, through reporting their greenhouse gas emissions.
Implementing ESG strategies in companies should begin with identifying the highest emission sources and initiating monitoring and reduction efforts (if you're unsure how to monitor your carbon footprint, check how Responsiblee can assist you!). Reducing emissions is just one area of the Environmental Pillar and the first step in establishing your company's environmental policy. To be considered a responsible company, your environmental policy must align with your overall business strategy and take into account the opportunities and risks related to climate change and environmental degradation. Focus areas may include:
• Achieving climate neutrality (by 2050 at the latest)
• Reducing carbon footprint
• Declaring collaboration with climate-neutral suppliers and partners
• Disclosing supply chains
• Disclosing sources of funding
• Achieving growth without increasing energy consumption
• Biodiversity conservation and ecosystem protection
• Circular economy
• Sustainable water management
• Sustainable use of natural resources
• Land use
• Climate-neutral end products and customers using them
• Producing recyclable materials
• Renewable energy (incorporating renewable energy sources into business energy supply)
The obligation to report on ESG stems from the European Union's long-term strategic vision to become the first zero-emission continent and encourage European businesses to leverage their potential in emissions reduction. Some of the essential existing European regulations, emphasizing business transformations in the environmental aspect, are: European Green Deal: Introduced in 2019, the European Green Deal comprises legislative proposals aiming to transform the EU into a modern, competitive, zero-emission economy, achieving:
• Net-zero greenhouse gas emissions by 2050
• Decoupling economic growth from resource consumption
• Ensuring no person or region is left behind
• Protecting EU citizens' well-being and health from climate and environmental impacts
Fit for 55: This legislative package, adopted by the EU in July 2021 as part of the European Green Deal, includes additional targets to achieve by 2030:
• Reducing net emissions by at least 55% (compared to 1990 levels)
• Increasing the share of renewable energy in power generation to 40%
• Improving energy efficiency to 36-39%
• Banning sales of combustion engine cars after 2035
Poland's Energy Policy by 2040 (PEP2040): A document prepared by the Ministry of Climate and Environment, aiming to ensure energy security while maintaining economic competitiveness, energy efficiency, and environmental impact. It focuses on three pillars:
• Just transformation: Supporting coal regions, creating new jobs, and developing industries involved in sector transformations while reducing energy poverty.
• Zero-emission energy system: Implementing nuclear and offshore wind energy and increasing citizen energy participation.
• Good air quality: Transforming district heating, electrifying transportation, and promoting zero-emission construction.
With these regulations and the real state of the natural environment, our economy faces significant challenges. Businesses in Europe must undergo a green transformation. Those failing to take action may face long-term consequences affecting their operations and financial credibility. Neglecting transformation, especially in climate-related areas, poses various risks, termed transformational risks, arising from non-compliance before regulations apply to the next group of businesses.
Responsible and sustainable development is not only a moral obligation but also an opportunity for companies to gain market advantage, funding, and new business partners by seriously and proactively implementing ESG strategies.
Start your journey towards running a sustainable and responsible business today by taking the first step of monitoring your greenhouse gas emissions. Responsiblee can assist you in this process.