On July 7, four leading lawyers from Austria, the Czech Republic, Hungary, and Ukraine sat down for a virtual round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea to discuss the increasing prominence of ESG issues and their impact on M&A transactions, due diligence procedures, and the role of the lawyers themselves.
Between sustainability-linked loans and, more recently, green bonds, the finance world has been one of the early adopters and promoters of the ESG movement. We spoke with CMS Partners Ana Radnev, Cristina Reichmann, Ihor Olekhov, and Rafal Zakrzewski to check in on the status of ESG in this crucial sector.
When you get up to present at a conference, what is your goal? Since lawyers are addicted to billable hours, you are probably gambling some non-billable time with the hope of landing some legal work. To accomplish this, you want to sell yourself to potential clients as a competent, trustworthy, and mildly entertaining lawyer.
Sustainability is no longer the responsibility of legal, public affairs, and corporate governance departments, but has become a top management priority and a central element of business strategy. One hundred years ago, Henry Ford said that the two most important assets of society – reputation and people – do not appear on the balance sheet of a company. Today, ESG standards come to measure precisely these two intangible assets.
Sustainability has been defined by the United Nations as "meeting the needs of the present without compromising the ability of future generations to meet their own needs" and, in a corporate context, it refers to a company's overall approach to managing a wide range of environmental, social, and governance risks and issues. Sustainability and ESG are increasingly becoming part of companies' board agenda, understood by companies through a regulatory, compliance, and risk management lens, and seen as inextricably linked with a green light to operate. Companies engage in ESG not only to “do good,” but also due to a growing recognition that taking a robust approach to managing these issues can mitigate risk and provide benefits such as enhanced consumer trust and loyalty, ability to attract talent, ability to meet stakeholder expectations and improve the company’s resilience, and profitability over the long term.
The importance of ESG in business has become clearer as the moral and ecological reasons are now obvious to everyone. In theory, all companies support the idea of doing business in a more sustainable and climate-friendly way. However, in practice, companies usually only do something when they have to. In Hungary, there isn’t any binding ESG supply chain act in place yet, which could wrongly lead to the conclusion that the topic is unimportant. Yet considerations about ESG in the supply chain are no longer nice-to-have but have become a must-have globally, and Hungary is no exception. There are various locally relevant reasons for which companies must start prioritizing the management of ESG risks in their supply chain.
Green Public Procurement (GPP) is a process whereby public authorities seek to procure goods, services, and works with a reduced environmental impact throughout their life cycle, to achieve environmental policy goals relating to climate change, sustainable consumption, etc., ensuring that tenderers abide with a minimum level of compliance with environmental legislation.
Constantly expanding and becoming increasingly diverse, complex, and risk-laden, the environmental, social, and governance landscape affects and challenges most businesses. New laws and regulations are having broad implications for organizations. According to EY Global Law Leader Cornelius Grossmann, “we are seeing a major pivot from a world in which sustainability was about messaging and voluntary commitments, to a world in which implementation is key and reputational risks are becoming more acute.” Nowadays, society no longer expects companies to simply do no harm, but also expects them to appropriately address environmental and social matters. In order for those matters to be properly addressed, it is crucial to focus on legal requirements for compliance in terms of ESG.
ESG has moved from conference halls to a daily function for many companies worldwide. In Estonia, stakeholder expectations for corporate ESG are still evolving, yet rising. Some companies are already incorporating ESG into their daily business, as they understand its value. Along with stakeholder expectations, regulatory scrutiny is also increasing, showing a dramatic increase in ESG reporting requirements worldwide.
Although the term ESG (Environmental, Social, and Governance) has been around for years, its full application is still quite daunting. Companies face the challenge of integrating ESG values into their strategy, operations, and decision-making processes in order to respond to the increasingly influential voice of stakeholders: citizens, consumers, NGOs, governments, and investors.
Even though the Austrian green bond market has not been very active, issuers like Uniqa, Hypo Noe, Verbund, and the Republic of Austria have taken the first steps toward the new asset class. The main feature of such bonds is the intention and/or commitment to invest the proceeds of the issue in green projects. Most issuers initially established stand-alone green bond frameworks based on voluntarily applied market standards. An Austrian green bond standard has not yet been developed. Frameworks used in Austria are usually based on published guidelines, like the International Capital Market Association's (ICMA) Green Bond Principles. Issuers do consider the upcoming standards of the European Union, too – particularly, the EU Green Bond Standards (EUGBS) and the so-called EU Taxonomy.
In the past decade, the tech industry in Croatia has been growing at four times the rate of the entire Croatian economy, according to research by the Croatian Chamber of Economy. Despite all the obvious positivity of its high growth, the Croatian tech scene has been facing a challenge of its own: talent gaps.
On July 12, four leading lawyers from Croatia, Lithuania, Poland, and Romania sat down for a virtual round table moderated by CEE Legal Matters Managing Editor Radu Cotarcea to discuss the latest in ESG developments with a focus on green financing, its regional and local drivers and roadblocks, its impact on non-financial reporting, and what it all means for the legal profession.
The Polish law firm of Traple Konarski Podrecki is in a position of running and maintaining a network of 15 firms, covering 19 jurisdictions, all working in unison for one of the biggest tech companies the world has ever seen – Google. To gain a deeper understanding of how this network of law firms functions and operates, we reached out to TKP Senior Partner Xawery Konarski and Partner Piotr Wasilewski.