By Michał Opioła, senior director at Michael Page
Michael page_pole

 

The Corporate Sustainability Reporting Directive (CSRD) is transforming the EU’s business landscape, mandating specific ESG (Environmental, Social, and Governance) reporting requirements. While this regulation presents challenges, it also provides companies with opportunities to build greater trust with investors and customers. Implementing ESG principles can significantly influence a company’s reputation, stability, and profitability. And as many job candidates now prioritise an organisation’s sustainability policies when considering job offers, ESG factors are increasingly impacting recruitment processes.

A major step towards sustainable business

The CSRD is an EU directive that standardises corporate sustainability reporting across all member states. It aims to align ESG reporting with financial reporting standards, requiring company managers to account for the social and environmental impacts of their activities, and to disclose their ESG management strategies alongside financial results. This will provide investors with reliable and comparable information on companies’ sustainability efforts. Ultimately, the CSRD will affect over 3,500 Polish organisations and about 50,000 entities across the EU, and it will soon be incorporated into national legal systems by member states.

Challenges and opportunities for companies

Currently, ESG reporting lacks the specificity and clarity of financial reporting, allowing for some flexibility. Many Polish companies have long implemented sustainability policies as a key part of their PR strategy, enhancing their appeal to potential investors and meeting regulatory criteria. At this point, ESG efforts are primarily used to foster a positive and sustainable company image. Even though it is not yet a decisive factor for investors, the role of ESG reporting is starting to become increasingly important.

CSRD challenges companies to meet stringent ESG reporting standards. This will necessitate changes in data collection and the implementation of sustainability strategies. Companies that successfully comply with these requirements can build greater trust with investors or customers, and cultivate a reputation for being sustainable and ethical. The implementation of ESG guidelines will affect organisations’ reputation, stability, and ability to generate profits in the long term.

ESG and talent acquisition

ESG reporting will also impact other areas of business operations, including talent recruitment. Job candidates are increasingly concerned with an organisation’s sustainability policies, prompting companies to be more transparent and consistent in their ESG practices.

ESG is now a topic of interest not only in investment and financing – such as the criteria imposed by banks – but also in recruitment. Job candidates born after 2000 are likely to ask about a company’s carbon neutrality and sustainability policies during interviews. We are facing an unprecedented shift in employee attitudes, as such questions do not usually come up during the initial stages of choosing a new employer. Candidates also independently research this information, often scrutinising companies’ ESG reports.

Dedicated ESG teams in organisations

The CSRD may lead companies to establish dedicated teams responsible for ESG reporting. This will pose a challenge for employers and recruiters, as assembling teams with diverse competencies – from data analysis to marketing and graphic design – will be necessary. Building and developing these multidisciplinary teams can make ESG reporting more transparent and effective.

In future, as ESG reporting becomes fully regulated, it will be crucial to build teams with the necessary competencies to produce such reports, similar to today’s financial reporting teams. This will require highly qualified professionals with appropriate certifications and authorisations. Currently, only a small number of companies (looking at the market as a whole) prepare ESG reports, resulting in limited demand for such experts for the time being, as well as their low availability.

Significant change in employee benefits

For decades, company cars have been a valued employee benefit, especially for managers and, increasingly, for lower-level employees and partners. Having a company car has become a common and valued salary supplement, often affecting the attractiveness of the job offer. However, as environmental awareness grows, offering perks that are harmful to the environment may cease to be considered an appealing benefit.

I expect that companies will start phasing out company cars in favour of more sustainable and environmentally friendly options. Both candidates and employees want to work for organisations that adhere to ESG guidelines. Achieving carbon neutrality is becoming a standard and goal for many organisations. Thus, eliminating company cars in order to reduce CO2 emissions and promote greener transportation options will likely become a new employee benefit.

Following this trend, companies will increasingly evaluate additional benefits, bonuses, and activities for their sustainability impact.