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37 (132) 2018
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Interviews

Deloitte – building sustainability into the business model

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Paulina Kaczmarek, manager, sustainability consulting Central Europe

Corporate social responsibility – what it means to be a good corporate citizen – is continually evolving. Once a bit of well-publicised charity work would do wonders for a company’s public image and reputation – today, firms have show that they are doing right by society and by the environment, as well as making money for their shareholders. CSR does not stand still. Paulina Kaczmarek explains that over the years, it’s less ‘the icing on the cake’ that CSR once was; today it has now morphed into the sustainability built into the very foundations of a company’s business model. And it is about to go further still, as the notion of the circular economy gains traction among consumers and regulators.

Deloitte has in Warsaw a multidisciplinary team, 30 people in all, experts in sustainability, economic analysis and energy issues; they work for companies and the public sector. “We can see different approaches and different levels of maturity across companies. We have ten years’ experience in sustainability services, developing the first sustainability strategies, and preparing the integrated  reports in these markets,” says Ms Kaczmarek.

“There are three approaches, three levels, if you like, of CSR. The basic level, the most traditional form of corporate social responsibility is showing some concern for society, collecting for a charity, for example, or some staff volunteering. The next level is to move up from CSR to sustainability—where the company takes steps to understand and mitigate the impact  of its business activities on society and on the environment; and then comes the next stage – the circular economy, in which the business is remodelled from the ground up to minimise its footprint, moving from a linear to a closed-loop model,” she says.

What is worth to add, by redefining the word ‘sustainability’, start-ups are helping the world become a better place,” says Ms Kaczmarek. She mentions the Deloitte Technology Fast 50 CE awards (More: https://www2.deloitte.com/content/campaigns/ce/technology/fast-50/ce-fast-50-2018.html), which have now been going for almost twenty  years, recognising the fastest-growing start-ups from across the Central Europe region. For the first time, there’s a special category of award  to mark out companies that contribute through their products to achieving at least one of the United Nations’ Sustainable Development Goals 2030 (SDGs). “This year, 300 start-ups entered the ranking, and out of  that number, 100 of them applied for the special impact award. That’s amazing. One in three high-growth start-ups have sustainability embedded at the heart of what they do and who they are! Of this number, some 50 are really nice examples that do interesting things, such as Saule, producing translucent perovskite solar panels. Firms that have as a purpose the reduction of emission, and want to do something good, or have products helping to achieve sustainable development goals in manufacturing are also featured in the Fast 50 special impact category. Another example is Florabo Plants – using indoor vegetation to clear the air in offices, replacing plastic pots full of chemicals,” she said.

The UN’s COP 24 conference in Katowice this month saw the launch of Deloitte’s Polish-language report on the potential of Poland to adapt circular economy in different sectors (The report, Zamknięty obieg – otwarte możliwości. Perspektywy rozwoju gospodarki o obiegu zamkniętym w Polsce, is available here) The report shows different models of how achieve closed loop production, and how to use its potential to change how companies behave.

“People and governments are coming to the conclusion that the current consumption patterns are no longer sustainable. Regulation is changing the way businesses act. Single-use plastics are a good topical example – business has two years to be prepared for the EU Directive banning the of single use plastics; firms are concerned about it – if we look at cafes, for instance, it means a new business model needs to be considered. Should the consumers bring their own cups? Or should cafes introduce 100% compostable cups made of something like corn starch? What about costs, social and environmental impacts?” she asks.

“But business is only reacting. We say – where does all this single-use plastic come from? China, India – but why does it come from there? Because we, the consumers of the developed world, have been demanding the convenience it offers. There must be a better, more balanced way.” The European Commission is rushing the charge with great force – adopting Directives– showing a direction. The EU Circularity Package envisages incentives to companies to move away from the linear extract-make-sell-use-dispose model, and to build circularity into the heart of a new business model,” says Ms Kaczmarek.

"Air quality has become a big issue in Poland, with rising levels of smog leading to pressure from society. Electromobility, for example, creates new opportunities and also challenges for governments. Business should be a force for change – we can organise an ecosystem for electromobility, we can store energy, address the challenges, build a new business models – and do what we can to change attitudes of society, consumers, society, individuals; these changes will have an impact on their wealth and health. Air quality, as I said, has become a big issue. But what about those elderly people living on 1,500 złotys a month pension – they are burning rubbish because they can’t afford less harmful forms of heating… Sustainable development means tacking social as well as environmental problems, if we are to meet the UN’s Sustainable Development Goals. We’re all interconnected. We all see what’s going on. Last month, InnoEnergy published report prepared by our team entitled Clear Air Challenge (More: http://www.innoenergy.com/smog-reduction-could-save-european-citizens-e183bn-by-2025-innoenergy-and-deloitte-find-2/). We mapped innovative transport and heating solutions to protect European citizens from smog and its impact on health. Our research reveals that EU citizens are set to pocket €183 billion by adopting innovative smog-reduction technologies over the next seven years.

Isn’t all this going to be a costly burden on business? “It should not be seen as such – rather, businesses should embrace this as an opportunity to do things differently. Right now, a mere 40% of electronic waste (as defined by the Waste Electrical and Electronic Equipment Directive, WEEE) is recycled in Poland. There is no way out – the EU Directive on Extended Producer Responsibility will come into force within the next couple of years, and for manufacturers, they need to pay more. And pass that cost onto the consumer – or change the business model. Car companies have upset milliennials. Can we build a car that will last 85 years? Again, a change of business model is needed. Young consumers will walk away from companies that don’t care about the planet, or that aren’t convincing in their approach. Take it and remake it – cars as a service. The service model should sit well with shareholders,” she says.

CSR is also about changing workplace culture. Employer branding activities and care for wellness – things that were considered strange a few years ago – have become mainstream because of the shrinking talent pool in the labour market. Ms Kaczmarket says: “Everything from corporate volunteering initiatives to investment in good furniture and benefit cards for health and fitness – these CSR tools have become employer branding tools. Companies’ development statement and claims are now not only aimed at consumers, but increasingly at employees and potential recruits.  At the same time the old kultura folwarczna – the old top-down command-and-control model – is having troubles. It worked when 10 people were waiting outside for work. It doesn’t work in an employee’s job market.”

Change is happening, and with it Poland’s development model. “The amount of money ending up in people’s pockets has an impact on economic models. Redistribution impacts investment; the important thing is that the changes are good for the planet and the people,” says Ms Kaczmarek.

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