CEOs have to get ESG requirements right
In this interview, Diana Dumitrașcu, Executive Director of Doingbusiness.ro, shares insights into the important role CEOs play in achieving ESG (Environment, Social, and Governance) goals and creating long-term value for their organizations.
How important is it for CEOs in Romania to get ESG requirements right?
Diana Dumitrașcu: It’s extremely important for CEOs in Romania to get ESG requirements right. According to a study by the Bucharest Stock Exchange, the number of companies listed on the main segment of the stock exchange that report on their ESG performance has increased by 37% between 2019 and 2021.
Investors are increasingly taking ESG factors into account when making investment decisions, and companies that fail to meet ESG standards may face financial penalties or exclusion from investment portfolios.
What challenges do CEOs in Romania face when trying to implement ESG?
Diana Dumitrașcu: CEOs in Romania face several challenges when trying to implement ESG requirements. One of the biggest challenges is the lack of clear ESG standards and metrics that are specific to the Romanian context.
According to a survey by PwC Romania, 65% of Romanian executives believe that there is a lack of clear and consistent ESG metrics. Another challenge is the limited availability of ESG data and resources, particularly for smaller companies.
How can CEOs in Romania identify the most relevant ESG issues for their business?
Diana Dumitrașcu: CEOs in Romania can identify the most relevant ESG issues for their business by conducting materiality assessments that take into account the local context and stakeholder expectations.
According to a survey by KPMG Romania, 77% of Romanian companies have conducted a materiality assessment to identify their most relevant ESG issues.
These issues may include environmental risks and opportunities, social impacts on local communities, and governance practices that ensure transparency and accountability.
How can CEOs ensure that ESG initiatives are integrated into their business strategy?
Diana Dumitrașcu: CEOs in Romania can ensure that ESG initiatives are integrated into their business strategy by aligning ESG considerations with their company’s purpose and values, and embedding them into decision-making processes.
According to a survey by Deloitte Romania, 71% of Romanian companies have integrated ESG into their business strategy, and 64% have set specific ESG targets and KPIs.
This requires a culture of sustainability that engages all employees and stakeholders and provides adequate resources and support for ESG implementation and monitoring.
How can CEOs in Romania measure the impact of their ESG initiatives?
Diana Dumitrașcu: CEOs in Romania can measure the impact of their ESG initiatives by establishing clear and relevant ESG metrics and reporting mechanisms, and by regularly monitoring and communicating their progress.
According to a survey by PwC Romania, 79% of Romanian companies report on their ESG performance, but only 44% use third-party verification or assurance.
This highlights the need for transparent and accurate reporting that is verified by independent auditors and that takes into account the specificities of the Romanian market and stakeholders.
How can CEOs in Romania communicate their ESG efforts to their stakeholders?
Diana Dumitrașcu: CEOs in Romania can communicate their ESG efforts to their stakeholders by using a variety of channels, such as sustainability reports, social media, and investor relations.
According to a survey by KPMG Romania, 92% of Romanian companies communicate their sustainability performance to their stakeholders, but only 28% use social media to do so.
This suggests that there is a need for more creative and engaging communication that reaches a wider audience and that reflects the values and expectations of Romanian stakeholders.
In conclusion
Getting ESG requirements right is critical for CEOs in today’s business landscape. As companies face increasing pressure from stakeholders, regulators, and investors to address environmental, social, and governance issues, CEOs must navigate complex challenges and seize opportunities to drive sustainable growth.
