Author: Constantin Măgdălina, Expert Trends and Emerging Technologies
In the global context of growing concerns regarding the sustainability and social responsibility of companies, the concept of ESG (Environmental, Social, and Governance) has become increasingly relevant. In Romania, current and future legislation requires companies to report ESG-related information, paving the way for a significant change in the way organizations approach issues.
Strategic opportunities and real value
The new ESG reporting requirements bring along with them a fundamental change involving a significant expansion of key performance indicators (KPIs). They must be monitored and reported, but at the same time, they impose the same standards on all companies.
This development promises to significantly reduce the possibility of greenwashing by providing greater transparency about companies' real commitment to sustainability.
At an organizational level, it means a major shift from an ESG department dealing exclusively with these issues to almost all employees actively contributing to these ESG processes.
That is why it is important to explore some of the existing and future legislative restrictions, the associated ESG benefits and the importance of preparing employees at all levels through specialized training.
ESG legislation transposed in Romania
Currently, Romania is aligning itself with global trends by adopting and implementing regulations that make ESG reporting compulsory for companies. Romania has started to implement the European ESG directives in its national legislation. Until now, these have been embodied in the obligation for certain companies to prepare annual ESG reports.
This trend is expected to continue, with companies subject to increasingly stringent requirements to adhere to ESG standards. The move comes as investors and consumers become increasingly interested in how businesses manage their impact on the environment, employees and communities in which they operate.
According to the latest regulations, companies listed on the Bucharest Stock Exchange and those with the status of public interest entities will be required to present ESG reports starting from the financial year 2023. These reports will have to cover aspects such as carbon emissions, natural resource management, conditions of work, diversity and gender equality.
The benefits of ESG reporting for companies
Access to sustainable financing: Companies that manage their business sustainability effectively become attractive to investors who prioritize ESG criteria in their investment decisions. Thus, they are more likely to obtain sustainable financing and enjoy lower costs of capital.
Enhancing reputation: Transparent and committed reporting on ESG matters builds trust among investors, customers and employees. Companies become more resilient to reputational risks and enjoy a positive image in the eyes of consumers.
Risk mitigation: Proper identification and management of ESG risks can help companies avoid fines and better cope with legislative changes or unforeseen market conditions.
Innovation and efficiency: Addressing ESG issues frequently brings with it an opportunity for innovation. Companies that integrate sustainable practices into their operations can discover ways to become more economically efficient and diversify their revenues.
The need for corporate education in the field of ESG
In order to successfully implement ESG practices, Romanian companies must invest in the education of the organizational culture. This process must start at the top management level and extend to all employees, including those in operational departments.
Management training: Company management must be well informed and aware of the importance of ESG. Training for top management should focus on strategies for integrating ESG principles into business plans and strategic decisions.
Awareness for employees: Trainings should provide clear and concrete information about the impact of daily activities on ESG aspects. Employees must understand that every action counts and that they are part of the common effort to contribute to sustainability.
Monitoring ESG performance: Implementing an ESG performance monitoring system is crucial. Employees must be trained to collect and report relevant data to ensure compliance with statutory standards.
In conclusion, Romania is moving towards an era in which ESG reporting becomes an essential obligation for companies. The benefits associated with this shift are significant, and investing in employee ESG education is crucial to the success of implementing these practices. Companies that take a proactive approach to managing ESG issues not only comply with new regulations, but also build the foundations for sustainable and responsible growth.
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About Constantin Măgdălina
Constantin Măgdălina has 15 years of professional experience, during which he worked for multinational companies, both in the country and abroad. Constantin has a Master's degree in Marketing and Communication at the Bucharest Academy of Economic Studies. He is LeanSix Sigma and ITIL (IT Information Library®) certified, which facilitates a good understanding of processes and transformations within organizations. On the other hand, the certification obtained from the Chartered Institute of Marketing completes his business expertise. In the more than 4 years of activity within a Big 4 company, he initiated and coordinated studies that analyzed aspects related to the business environment in Romania. Among them are the economic growth forecasts of companies, knowledge management, the buying experience in the era of digital consumers, the use of mobile devices or the customer-centricity of companies in Romania. He is the author of numerous articles on topics related to innovation, streamlining business processes, digital transformation, emerging trends and technologies. He is invited as a speaker at numerous events and business conferences.