ESG Booklet 2024

booklet

ESG

June, 2024

contents Introduction

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ESG reporting and ESRS

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ESG: Environmental indicators

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ESG: Social indicators

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Third pillar of ESG: Governance

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ESG courses and programs

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Interview with Colliers

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Interview with Allegro

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Interview with Materiality

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Partners

45

Acknowledgements

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introduction Dear readers, as a student organization for susitainable development “oikos” Warsaw we would like to present you our newest project - the ESG Booklet.

This brochure aims to provide you valuable information regarding the future of business in the view of changes related to ESG reporting.

After reading our work you will gain knowledge about the meaning of ESG acronym, available courses for people wanting to learn more about transparency and sustainability in business and answers to important questions given by experts from Colliers, Allegro and Materiality.

“Oikos” Warsaw is the only Polish chapter of an international student organization called “oikos international”. We educate about sustainable development both in business and in everyday lives. In this project, thanks to partnership with Colliers, but also with Allegro and Materiality we would like to share with you opinions and perspectives of specialists from different areas.

Creators of this booklet, members of “oikos” Warsaw and collaborating student organization for ESG, are truly passionate people who treat their role of promoting conscious and responsible business very seriously. In the name of our whole organization I would like to kindly invite you to read this brochure and I hope you will find some interesting infomration about ESG.

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President of “oikos” Warsaw Zofia Szajner

ESG reporting and ESRS Author: Klaudia Urbaniak I Editor: Wiktoria Kulesza

Definition of ESG reporting ESG reporting is non-financial reporting by companies, which covers three areas of activity: E - environmental, S - social, and G governance [1]. You can learn more about each of these three ESG areas in other articles in this booklet.

Who is obliged to provide ESG reports As of January 1st, 2024, the CSRD, which replaces the previous NFRD, took effect. According to the previous directive, companies employing more than 500 people and being public interest entities were subject to non-financial reporting obligations, which means.... With the new directive, the group of companies covered by the obligation will gradually expand. Large entities already reporting will have to apply new reporting standards in their reports for 2024. A year later, in 2026, reports for 2025 will have to be published by large companies, i.e. those that meet at least two of three criteria: balance sheet total of more than €20 million, net revenues of more than €40 million, number of employees of more than 250. Lastly, small and medium-sized listed companies (excluding listed microenterprises) will be subject to the reporting obligation. They will have to report for the first time in 2026 [2].

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ESG reporting and ESRS Forms of ESG reports The CSRD stipulates that information on sustainability reporting will most likely be included in the entity's general activity reports.

The directive also states that activity reports will be published in XHTML format.

Issues addressed in ESG reports Companies will be required to include the following aspects in ESG reports: strategy and business model with reference to sustainable development management and organization in relation to sustainable development assessment of the materiality of sustainability impacts, risks and opportunities implementation measures, including policies, goals, actions and plans, resource allocation performance indicators

ESRS standards

European Sustainability Reporting Standards or socalled ESRS are European sustainability reporting standards prepared on behalf of the European Commission by the European Financial

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ESG reporting and ESRS Reporting Advisory Group - EFRAG. According to them, companies will present information on environmental, social and human rights issues and corporate governance in their management reports [3].

The ESRS standards are structured in a modular way, meaning that they include separate but related elements described below.

ESRS 1 General Requirements This is a cross-cutting standard that does not contain any indicators, but only describes the general principles for using the standards and creating ESG reports in accordance with the ESRS. ESRS 2 General Disclosures The second cross-cutting standard contains a set of mandatory 12 disclosures, concerning general information about the reporting entity, its strategy, management methods, as well as the materiality analysis conducted for the report.

ESRS E The first group of thematic standards relates to the environment. It consists of standards on climate change (E1), pollution (E2), water and marine resources (E3), biodiversity and ecosystems (E4), resource use and the circular economy (E5).

ESRS E The first group of thematic standards relates to the environment. It consists of standards on climate change (E1), pollution (E2), water and marine resources (E3), biodiversity and ecosystems (E4), and resource use and the circular economy (E5).

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ESG reporting and ESRS ESRS S The next group relates to social topics. It includes standards for employment (S1), employees in the value chain (S2), the social environment (S3), and consumers and end users (S4).

ESRS G The last group of standards is governance standards. It includes standards on business practices.

The ESRS introduce very detailed rules for non-financial reporting.

Preparing a non-financial report will be the most challenging for entities with little or no experience in the area of non-financial reporting. With this in mind, it is worth ensuring that entities become familiar with ESRS as soon as possible and, most importantly, begin the sustainability transformation of their business model early [4].

Changes brought by the CSRD directive With the CSRD will come some changes. One of the most significant is that non-financial reports will be subject to mandatory auditing, and the provision of false information will be subject to criminal and financial liability.

The directive also introduces the principle that sustainability reporting will require attestation by a certified auditor or independent accredited certifier.

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ESG reporting and ESRS Among other things, reports will be checked for compliance with ESRS standards. In the first stage, there will be an audit of reports at the level of the so-called limited level of assurance. And in the second, it will be raised to the level of reasonable assurance, to ultimately achieve a similar level of assurance for reporting as for financial reporting.

Another significant change is the introduction of the principle of double materiality, according to which companies have been obliged to provide information not only necessary to illustrate their situation, but also those necessary to understand the impact of the company's activities on environmental, social, human rights, anticorruption and anti-bribery issues [5].

The information provided in the reports will have to be relevant from a financial perspective, as well as the impact of the organization's activities on each of the three ESG areas. Financial materiality is about making the information relevant to external stakeholders and helping them make decisions such as investments. The impact materiality perspective, on the other hand, is about looking at how a company affects its environment.

Following the principle of dual materiality, the company determines which of the ESRS thematic standards it will include in the report. If it chooses to omit any standard, it will have to justify that choice [6].

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ESG reporting and ESRS Purpose of ESG reporting The purpose of ESG reporting is to provide transparent information to investors, stakeholders and the public about the environmental, social and corporate governance impacts of a company's operations.

The reporting obligation is quite a requirement for companies.

However, it carries significant benefits, such as improving a company's image, better managing risks or, above all, contributing to sustainable development.

sources [1] M. Chmielewska (2023) Raportowanie niefinansowe - raportowanie ESGa dyrektywa CSRD [2] CSRD - Corporate Sustainability Reporting Directive [3] Kompas ESG (2023) Czym jest dyrektywa NFRD i jak wpływa na raportowanie ESG [4] Envirly (2024) Sprawozdawczość zrównoważonego rozwoju - co przyniesie dyrektywa CSRD? [5] Stowarzyszenie Inwestorów Indywidualnych (2012) Co to jest ESPI i EBI? [6] R. Kamiński (2023) Raportowanie zrównoważonego rozwoju przedsiębiorstw w świetle regulacji Unii Europejskiej [7] KPMG (2024) Raportowanie ESG - czym są ESRS i w jaki sposób rozpocząć ich wdrażanie?

[8] R. Kamiński (2023) Dyrektywa Parlamentu Europejskiego i Rady 2464/2022 w odniesieniu do sprawozdawczości na temat zrównoważonego rozwoju przedsiębiorstw i rozporządzenia Komisji Europejskiej dotyczące “taksonomii” założenia i cele [9] Grant Thornton (2023) Raportowanie ESG - jakie zmiany przyniesie 2024 rok?

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ESG: Environmental indicators Author: Zofia Szajner I Editor: Piotr Szumski Environment. This is the first pillar addressed by the new reporting guidelines introduced by the European Union through the CSRD Directive. This document aims to steer companies toward more sustainable value creation than has been the case before. The term ESG itself first appeared as early as 2004 in UN publications [1], but still not everyone knows what the letters stand for. It's an acronym for the three pillars (Environment, Social, Governance) within which organizations are committed to making changes for the good of the planet and society. The following article is the first of three parts in which we will decipher this environmental acronym.

Environmental indicators allow monitoring how an organization's activities affect its environment. There are 4 categories: climate change, natural resources, pollution and waste, as well as environmental opportunity. [2]

Climate change This is a category that focuses on the size of an organization's carbon footprint and CO2 emissions. Among other things, the staff in charge of calculating these quantities create special analyses of direct emissions (fuel combustion in the organization's energy, technology and transportation sources, as well as emissions related to the loss of refrigerants from, for ex. room air-conditioning equipment) and indirect emissions (energy emissions generated outside the organization related to

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ESG: Environmental indicators purchased electricity, heat, process steam, refrigeration, and related to raw materials, services or products purchased by the organization). [3] In addition, it is important to examine the scale at which the organization is financing activities aimed at transforming it into a more sustainable one. In the budget, there should be funds meant to reduce negative environmental impacts.

The predisposition of an organization to be severely affected by climate change is also included in this category. Monitoring such indicators allows the organization itself to adapt its strategy to climate challenges and risks, but also allows to compare organizations among themselves. [4] This will make it possible to create appropriate assistance programs for sectors most dependent on environmental stability.

Natural resources The next category takes into account the analysis of how organizations manage their resources. Firstly, indicators should monitor so-called water stress. This means that water should be used in such a way that it does not violate the limit of its availability in a given region over a certain period of time. Exceeding this limit, causes water stress and leads to destabilization of the stressed area in the long term. [5] Among the resources that should be measured is also the use of land. In this subcategory, it is important to take care to preserve the biodiversity of organisms and to cultivate the land responsibly,

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ESG: Environmental indicators which does not lead to its destruction. It is also important to choose the right sources of raw materials.

Currently, there are documents that, for the manufacturing industry, set specific ranges for the amount of substances that can be used, including the RoHS Directive [6] (restricts the use of hazardous substances), and the REACH Regulation [7] (restricts the use of chemicals).

Pollution and waste The next category indicates how organizations should monitor the amount of pollution produced and how to manage it. The production rate of toxic emissions and waste is needed to determine the level of environmental degradation of water, land and air due to production processes.

It is also important for organizations to have a system for managing waste, including electronic waste. Proper disposal of electronic equipment is very important to reduce the negative impact on ecosystems. What's more, creating packaging that is as recyclable as possible and requires the use of as few materials also falls into this category.

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ESG: Environmental indicators The European Union has released new standards and guidelines for the appearance, construction and transportation of packages, and compliance with them will be directly reflected in one of the ESG environmental indicators. [8]

Environmental opportunity The term "environmental opportunity" refers to a kind of hope brought by modern economic solutions. During a sustainable transformation, new sources of value are needed that allow organizations to become more environmentally friendly, but at the same time maintain their competitiveness. [9] Environmental opportunities are created by new ICT technologies, green building and renewable energy, among others. Each of these industries is focused on providing cutting-edge solutions to complex environmental problems related to, for example, excessive greenhouse gas emissions or irresponsible management of water resources. As metrics designed to monitor organizations, they rely on reporting what and how many solutions are being introduced into the company's operations to increase its commitment to sustainability.

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ESG: Environmental indicators Environmental indicators as a tool for stakeholders The indicators described are crucial not only for the organization itself, which uses them to improve its strategy and the way it operates.

Stakeholders who operate in the organization's environment are increasingly interested in the organization's actual impact on the environment, as society views this topic as very important. [10] However, in the context of sustainable development, which economies should strive for, environmental indicators are only part of the important topics to be analyzed. We invite you to read the following articles, which will decipher the other letters of the ESG acronym for you.

sources [1]The Corporate Governance Institute - What is the history of ESG? [2]PWC- ESG, what’s it all about?

[3]Teraz Środowisko - Jak wyliczyć ślad węglowy?

[4]European Environmental Agency - Climate Change Vulnerability Index [5]European Environmental Agency - Water Stress Definition [6]European Commission - RoHS Directive [7]European Union - Registration, Evaluation, Authorisation and Restriction of Chemicals [8]European Union - Packaging and Packaging Waste [9]D.B. Neele - Environmental opportunity/analysis on corporate strategy/performance [10] The European Investment Bank Climate Survey 2022-2023

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ESG: Social indicators Author: Dominika Machul I Editor: Zofia Szajner In an era of intense globalization, the concepts of sustainability and corporate social responsibility are becoming known as crucial cornerstones in the market. These are undoubtedly key elements determining the success of a given company. The second pillar of ESG (Social) focuses on the impact of a company's activities on society. It groups together a rich range of undertakings including employee rights, as well as business relations with customers and investors, and involvement in local life and environmental protection.

Caring for the community is undeniably an integral part of the sustainability outline, which plays an important role in defining aspects of responsible corporate activity. Indicators belonging to the "S" group mainly touch on relations with employees, involvement in the development of local social groups, environmental protection, protection of human rights, social diversity and business ethics. It is extremely important to state that the well-being of the working people should be as important a priority as the profits of a given company. It is people who are the heart of any organization.

The systematic implementation of the above principles guarantees companies a long-term relationship with the surrounding community, and will help promote important ethical values - essential in this day and age.

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ESG: Social indicators With absolute conviction, the presence of a social pillar in the ethical management of a company will facilitate many benefits such as a positive reputation, a competitive advantage in the market, trengthening trust among consumers and increasing the motivation of employees, thanks to whom the company exists.

The importance of this concept stems from the observation that modern corporations are much more socially conscious.

Of course, their activities are, to a huge extent, selected in a way that positively influences their success, but increasingly important is the desire to have a real impact on the environment in which a company operates.

The rights of employed workers, as well as business owners, are an integral factor in any enterprise. This is due to the fact that employers who constantly take care of the safety and well-being of their subordinates not only contribute to better operational performance, but also build a positive image of the organization in the market.

The same applies to equal opportunities and adherence to the principles of non-discrimination, i.e. eliminating beliefs regarding gender, origin, age, sexual orientation, disability, among others.

Employers are required to provide employees with safe facilities with a high standard of hygiene and ergonomics.

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ESG: Social indicators Investment in training is another important aspect of organizational development. The development of employee competencies, effective human capital management and company safety are increasingly dependent on entrepreneurs. Such a need shapes conditions favorable to the reconstruction of competitive advantages and structures that efficiently realize the needs of not only employees, but also employers. The chance to participate in general development workshops and educational programs increases the commitment, productivity, quality of performance of employees, which in turn translates into further results. The goal is to significantly increase the effectiveness of the use of the principles of ethical values in the management of the organization with particular emphasis on the concepts of sustainability and social responsibility.

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Third pillar of ESG: Governance Author: Piotr Szumski I Editor: Wiktoria Kulesza Governance concepts may seem obvious but they are often difficult to explain with formal definitions. The same is true of the issue of corporate governance, the third pillar of ESG. The term can be partially understood by intuition, but the exact explanation of its meaning proves a bit more problematic. So I will try to do so succinctly in this text.

Corporate governance actually means a number of diverse issues in the area of corporate management, the interconnectedness of which, as well as the relationship to issues of environmental and social i Impact of the company, determine stakeholder confidence in a key way. Fulfilling corporate governance standards is, in a sense, a sufficient condition for positive perception of a company's actions. In short: a company must play fair and earn the trust of its environment. But what specific actions can it take to earn it? It is necessary here to point out what issues the mythical letter "G" actually refers to.

The authors of the text published by the WSE, "Guidelines for ESG Reporting. A Guide for Companies" divide them into two broader categories. The first is related to the sphere of responsible management, i.e. the area concerning the observance of procedures and transparent information policy,

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Third pillar of ESG: Governance the correct selection and control of the company's highest bodies, as well as respect for the rights of shareholders, including minority shareholders. The second, in turn, concerns business ethics, that is, the company's code of ethics, anti-corruption policy and the availability of mechanisms for reporting violations. In addition, an area mentioned separately in the guide, but also framed by corporate governance, is data security[1].

It is best to navigate through these intricate meanders of concepts one at a time. It is worth starting with the first issue mentioned, highlevel governance. For a company's actions to be considered consistent with corporate governance, it must treat its most influential stakeholders fairly. This means that the position of none of them must be particularly privileged. In practice, it is a matter of balancing the powers of management and the board of directors, transparency and diversity in the personnel structure of these bodies, as well as a responsible compensation policy so that it does not exacerbate the stratification between the company's management and lowerranking employees.

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Third pillar of ESG: Governance Equally important is the aspect of the company's policy toward shareholders. The pattern of corporate governance calls for shaping the shareholding structure as diversified as possible, so that it is not too dominated by one entity. In addition, it is important to respect the rights of all shareholders, which is manifested, among other things, in an open policy of access to general meetings.

Issues of business ethics apply to all of a company's activities, but in order to evaluate its actions in this area, formalization of the principles professed by the company is needed. For this reason, it is a very important element of corporate governance for a company to present a clear code of ethics. Equally important is the company's anti-corruption strategy, which can be part of a broader document defining standards of conduct or published separately. It indicates what actions the company intends to take in typical situations where there is a risk of corruption. In addition, the company should have specific corrective procedures and make available to stakeholders a clear mechanism for reporting legal or ethical violations, which should ensure efficiency and anonymity.

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Third pillar of ESG: Governance Another indispensable element of corporate governance is the protection of personal data of employees, customers and suppliers.

A key task of the company in this area is to prevent their leakage, which places demands on the implementation and proper use of cyber security systems. In addition, the company should clearly inform stakeholders of the purpose and scope of the processing of their data, and allow for the withdrawal of consents to this procedure in accordance with the law.

Ensuring a company's compliance with corporate governance principles requires the ability to evaluate its actions through standardized procedures. Accordingly, regulators are enacting further legislation aimed at enabling reliable comparisons of companies' actions in this area. In the European Union, such an instrument is the European Sustainability Reporting Standards[2]. They are effective under a European Commission regulation adopted in July 2023 and impose ESG reporting obligations on some of the largest companies as early as 2024. Corporate governance issues are addressed by one of the directive's thematic areas: Z1 "Business Conduct."

The common denominator of corporate governance activities is to increase stakeholder confidence in the company. Ultimately, this is expected to stimulate business growth through the favourable view of investors, as well as enable the company to reduce negative impacts and generate certain

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Third pillar of ESG: Governance benefits for its environment. In addition, compliance with standards in this area increases the credibility of the company's positive actions on environmental and social issues. The legislation currently being enacted at the European level to regulate and standardize corporate actions on corporate governance issues confirms that the issue is becoming increasingly serious. Everything indicates that the future is marked by the letter "G," so I hope that this text will be helpful in understanding its significance.

sources [1] Giełda Papierów Wartościowych w Warszawie (2023) Wytyczne do raportowania ESG: Przewodnik dla spółek.

[2] Ministerstwo Finansów (2023) Europejskie Standardy Sprawozdawczości Zrównoważonego Rozwoju przyjęte.

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ESG courses and programs Author: Lidia Surgiel I Editor: Wiktoria Kulesza ESG (environment, society and governance) today opens up many new avenues for growth, both for individuals and for companies and organizations. It is not only a key issue related to responsible business conduct, but also an important factor influencing investment strategies, corporate reputation and relations with customers and stakeholders.

There are a growing number of opportunities to gain knowledge in this area in order to be able to effectively manage ESG aspects and use them as a tool for professional success. One of the most popular solutions are online courses. No wonder - with their accessibility and diversity, they attract a multitude of followers. Such training courses offer, among other things, an introduction to ESG, ESG analysis in finance, knowledge of sustainable investments or a sustainable business model. Such courses allow participants to gain valuable qualifications.

Specialized courses focusing on specific aspects of ESG, such as ESG risk management, sustainability reporting, social auditing or green technologies, are also available on the market. Their purpose is to deepen knowledge and skills in a particular ESG-related area.Training courses on sustainable disign or sustainable architecture are an interesting initiative.

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ESG courses and programs In the case of courses for design, classes focus on designing products, services and infrastructure with sustainability in mind. Their goal is to shape design skills in accordance with ESG principles, minimize environmental impact and promote innovative and eco-friendly solutions. Sustainable architecture courses, meanwhile, offer knowledge on how to design and construct buildings in accordance with sustainable development principles, such as energy efficiency, use of renewable energy sources, efficient use of natural resources, and creation of user- and environment-friendly spaces.

Another important element in ESG's activities is certification, which means not only an increase in knowledge and skills, but also prestige or access to a network of professionals. By holding such a document, an entrepreneur increases the trust of customers and investors, which can be crucial or business development and building a positive reputation.

Such certificates are, for example, CFA Institute ESG or CFA UK Certificate in ESG Investing. Unfortunately, earning an ESG certification comes at a cost, which can be significant. The total expense can range from several to as much as a dozen thousand zlotys. The price consists of, among other things, the registration fee, the cost of courses or educational materials and examination costs.

It is worth noting the educational offerings of some universities some of them provide the opportunity to study both at the undergraduate and graduate level, the program of which is linked to the idea of ESG. . These majors may educate in sustainability management, sustainable finance or environmental studies.

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ESG courses and programs A characteristic of such studies is interdisciplinarity; they often combine economics, social sciences or science and technology to provide the most comprehensive approach to ESG possible. While attending such a course, through multiple research projects, cooperation with companies or organizations working in the sphere of sustainable development, the student is able to gain a large dose of practical knowledge and a network of international contacts.

Another option is corporate training; some companies or organizations offer ESG training for their employees to increase their awareness of sustainability topics, responsible investment principles and socially responsible practices. The purpose of such training is to tailor ESG to the company's needs. Employees' knowledge of these topics allows a company to act more ethically and conduct its business in accordance with the idea of caring for the environment.

Educational programs are a common initiative for public sector employees: aimed at civil servants, public employees and policymakers to increase their knowledge of ESG-related policies and practices. These programs can cover topics such as urban planning, waste management, nature conservation or emergency management.

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ESG courses and programs Workshops and seminars are also held on specific ESG-related issues, which may include the climate crisis, labor rights, resource extraction and exploitation, or corporate social responsibility (CSR).

Participants in such workshops discuss the aforementioned sample topics and share their experiences and opinions on the latest trends and related innovations.

As you can see - the idea of ESG is increasingly popular in many fields. The principles of sustainable development open up many new opportunities for development. Applying them in practice, creates a good prognosis for the future.

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Interview with Colliers Author: Zuzanna Bielska I Editor: Wiktoria Kulesza Interview Colliers Poland - questions answered by Andrzej Gutowski - Director CEE | Sustainability Services What do you think the development of ESG in Polish business will look like in the next few years?

ESG topics are developing extremely fast - it is estimated that in the next 3 years about 4,000 Polish companies will be forced to publish reports on sustainability and non-financial areas. Competence and experience in ESG topics are therefore increasingly in demand and sought after. However, sustainability itself is not limited to reporting.

ESG sets new areas for companies to compete in, it can mean transforming or modifying current services, monitoring relevant supplier metrics, or setting new scopes of cooperation with customers - all of this opens companies to new fields of activity, which, however, require specialists - and I suspect there will be a race for such employees in the coming years.

What is the current importance of environmental building certifications in your business?

Competences related to ESG are currently more and more seeked

Building certifications are a very important aspect of our services - for many years it has been environmental certifications (such as LEED or

or BREEAM) and wellbeing certifications (e.g.: WELL) issued for buildings that have brought innovative environmental and social requirements to the market.

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Interview with Colliers Building certifications allow their owners or developers to independently verify the standard of a building, but on the other hand, they represent a huge resource of good practices and solutions for the real estate sector. Due to the usefulness of certifications, which are an easy way to verify and assess how a building can fit into the requirements of funds, owners or tenants, their popularity continues to grow, covering more real estate sectors - offices, warehouses, shopping centers or residential projects.

How do you assess the degree to which companies in the industry are prepared for the upcoming sustainability reporting requirements?

We observe a very high degree of differentiation among companies on the one hand, financial institutions and large listed companies are the obvious leaders and are preparing strongly for reporting, but on the other hand, the majority of the market is still not fully aware of the impending legislation and requirements. I expect, however, that companies will become more and more active, especially the closer we get to 2025, as data from that year must be reported in 2026 by all large organizations, including OTC ones, not yet covered by the nonfinancial reporting requirement. Seeing as how much time is needed to prepare for reporting, developing materiality analyses or streamlining information channels, companies may wake up too late.

What do you think about the direction of EU regulations and what do you expect from potential industry standards under the ESRS? Reporting standards (ESRS) have already been published. Companies will only be able to report on material aspects and indicators under the ESRS, which is a significant change from the initial plans and the requirement to report on the full suite of indicators.

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Interview with Colliers Regulations are certainly moving in the direction of transparency and access to ESG data - since these are to be competitive areas on which companies will build business strategies, access and data quality will be key. Hence the evolving regulations and reporting requirements, under SFDR, CSRD or Taxonomy.

In your experience, do clients in the real estate industry have higher expectations for sustainability and/or ESG metrics?

The real estate sector has a very strong impact on the environment, and hence real estate companies have a higher responsibility.

Basically every company owns or leases a property, hence this element of the value chain will always be important, if only in terms of CO2 emissions. But as in the rest of the market - the awareness and attitude of companies in the sector varies widely - some organizations see it as an opportunity, others see it as a risk, others wait for developments.

What is the job of a sustainability or ESG expert in your industry? Recently, you can see many offers for just such a position....

Sustainability experts can cover a wide area - in the context of real estate, it will most often be

Due to very strong impact real estate companies have a higher responsibility

about issues of conducting green building or space certification, developing real estate strategies, decarbonization plans and assessing buildings to support reporting needs or compliance with the Taxonomy - an EU tool for assessing "green" economic activities.

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Interview with Colliers How do you assess the level of education and awareness about the new ESG guidelines?

It is very difficult to keep pace in terms of knowledge of the new ESG guidelines and areas. Further specialization of ESG experts is to be expected - topics even limited to the real estate sector can range from technologies supporting reporting, monitoring consumption on buildings or counting the carbon footprint, through analyses of building accessibility and its impact on occupant comfort, through assessment of subcontractors, decarbonization of organizations and buildings to formal ESG reporting itself. The number of directives, good practices and regulations is very large, and growing rapidly. In contrast, the wave of sustainability is just now gaining height, it is worth entering the topic now and co-creating market standards and practices.

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Interview with Allegro Author: Zuzanna Bielska I Editor: Wiktoria Kulesza Interview Allegro - questions answered by Anna Goraczka - ESG & Sustainability Group Manager What is the work of a sustainability expert in your company?

I would like to start by emphasizing how I understand sustainability and ESG. As I understand it, the term is about transforming a company's responsibility and operations, not just its communications.

In effect, ESG requires fundamental changes in the business, processes and the way people work in a company like Allegro, but also in other collaborating companies. Therefore, the competencies needed for the job include the ability to influence others, understanding of the business, courage, perseverance and patience.

This is because transformations take time, they do not happen overnight or even within a month, but often take years.

ESG requires fundamental changes in the bisiness

It all starts with developing a strategy and planning for longterm development. The goals we pursue are not set by me individually, but at the level of the entire organisation. In effect, these are not ESG goals, but company goals .

Many company employees work to achieve these goals, even if their positions are not directly ESG-related. My daily job is to monitor progress, motivate and support others in this long journey of transformation.

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Interview with Allegro For example, in order to reduce a company's carbon footprint, it is necessary to change the way the organisation operates, especially in in-house operations, warehousing and transport. These are typically the areas with the largest carbon footprint, but often unnoticed by consumers. Transformation involves working with the employees responsible for these areas to understand the need for change and introduce new ways of doing things, e.g. looking at ways to reduce the amount of energy used or obtain energy from renewable sources.

ESG work is all about working on people's attitudes and behaviours and motivating them to change.

What does it look like to engage with employees who are not necessarily directly involved in ESG and sustainability-oriented activities?

Employee engagement starts with setting common goals and strategies for the company. It is important to identify areas of importance to the company and priorities for transformation.

However, in order to achieve this, it is essential to include the diverse perspectives of employees and other stakeholders, even those who are not familiar with the concept of ESG. As part of this process, we conducted a survey with more than 5,000 employees and other stakeholders such as sellers and buyers. Based on their feedback, the Board approved the company's priorities. This gave us legitimacy to

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Interview with Allegro continue working on these issues. When moving on to the implementation of activities, it is important to be close to the operations and the people responsible for the area. They are the ones who have the knowledge and experience necessary for effective transformation. Understanding the business and knowing the operations are key to effective ESG management. For example, one of our priorities is to strive for sustainable packaging in our own operations, so we enter into discussions on how to improve this aspect with all those who have an influence on the purchase or use of packaging. Only by working closely with employees and understanding our processes and business needs can we achieve sustainability success. Only then can we effectively manage the transformation and bring about positive change. Collaboration, dialogue and knowledge of both people and business are the foundations of successful ESG and sustainability engagement.

From the perspective of a sustainability expert, what do you think the labour market demand is for people in this field?

We are currently seeing demand for ESG experts growing at the speed of light on recruitment portals. This is mainly due to new EU regulations that will affect an increasing number of actors. In addition, regulations are changing all the time which means that ESG experts will have to continuously learn and adapt to changing requirements.

While some competencies may be lacking today, it is worth remembering that these skills can be acquired through courage, perseverance, humility, knowledge of business processes and a desire for continuous improvement. It is important to remember that ESG reporting is only part of the process. Therefore, it will be important not only to report, but also to lead real transformations, motivate employees, oversee processes and, above all, collaborate. Soon, the demand for people leading ESG transformations may be as high as for reporting experts.

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Interview with Allegro Have you conducted research or examined how important Allegro’s engagement in sustainability is for its users both sellers and buyers ?

Demand for ESG experts is growing with light speed

Kantar's research shows that the majority of Poles recognise the urgent need for action on sustainability, however they often lack knowledge of specific ways in which they can contribute to this transformation. The same applies to both Allegro customers and sellers. That is why we have decided not only to educate, but also to provide ready-made solutions. Our aim is to make sustainability the default choice, eliminating decision-making discomfort for customers. Our activities include the introduction of eco-friendly packaging for sellers and the promotion of parcel machine deliveries, which generate a carbon footprint over 30% lower than courier deliveries straight to homes. We want our solutions to be easily accessible, responsible and convenient for everyone.

Turning a bit to your company's plans for the future, what ESG areas do you primarily plan to address and focus on in the future?

These areas will be clearly visible in our latest ESG report published at the end of May. Our plans stem from the objectives set on the basis of a dual materiality analysis. Undoubtedly, the main area is decarbonisation, endorsed through the Science Based Targets initiative, including ambitious emission reduction targets of 38% in our own operations. We want to transform our business in ways that are not always visible to the customer, but are internally relevant, relating to renewable energy, fleet and the circular economy. Packaging and circularity is another important aspect of our environmental responsibility that we also pay attention to. In the report, we have

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Interview with Allegro What do you as a company think about the changes in EU regulations and what do you expect from potential industry standards under the ESRS? Indeed, regulations are changing and the whole industry, as I hear today, is very focused on the number of indicators to report. There is a lot of excitement around this topic, especially when the number of indicators is mentioned, which goes as high as 1,400 or 1,800. However, we are taking a very pragmatic approach. We are not starting from scratch because we have been reporting for several years. We have done a dual materiality analysis and we know what is a priority for us. anticipating the regulations, we are preparing to report according to the ESRS. By reviewing the list of areas that are relevant to our business, we are aligning ourselves with the requirements of the directive. Our previous experience facilitates this process.

In general, how do you assess the level of knowledge and preparation of the people who will now be responsible for reporting, not only in your company, but also how it looks in Polish business in general?

Today, the CSRD guidelines, as well as the ESRS with their specific indicators and definitions, are now readily available to anyone interested. The speed at which this information is absorbed by business depends mainly on the companies themselves and the people managing the process. It seems to me that the level of knowledge on the subject is already quite high, given the presence of CSRD topics at many conferences and panel discussions. However, it is now time to see how theoretical knowledge translates into practice.

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Interview with Allegro From a theoretical point of view, I believe we are well prepared, but practical challenges still lie ahead. These mainly concern the quality and reliability of the data collected and auditing, which is becoming more and more restrictive when it comes to non-financial reports.

This is a big change in the approach and responsibility of companies, which may not yet be fully realised. At Allegro, we have already started to ask ourselves questions about the source and reliability of the data and the processes for collecting it, but many in the industry may still be unaware of the full extent of the changes that mandatory auditing and greater accountability for non-financial reporting brings.

I hope that these changes will lead to more reliable and transparent reporting, which will be appreciated by the business community as a whole.

How do you think ESG will develop in the coming years in Poland?

In order to understand this transformation well, we need to go back a few steps to the time when the CSR (Corporate Social Responsibility) revolution began. In Poland, this process started a few or a dozen years ago through various initiatives that focused mainly on social activities, but also on responsibility towards the environment. These programmes to promote social engagement were very important, but they did not cover the broad spectrum that ESG now defines. The transformation from CSR to ESG is about embedding ESG principles firmly into business processes. This approach focuses more strongly on transforming thinking, also integrating aspects of CSR, such as acting for social good. However, ESG goes further, focusing on measurement and not limiting itself to the social responsibility aspect alone. Looking to the future, I expect ESG to evolve towards value creation. This approach involves the full integration of the financial and non-financial aspects of a company, meaning that the company creates value that investors are prepared to value and customers

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Interview with Allegro are willing to support through their purchases. I believe we are just in the middle of this transformation from CSR to ESG, and further towards value creation. This approach emphasises that a company that incorporates ESG aspects is more resilient to crises, and has greater market value. I see this transformation as building the value of a company based on the full integration of financial and nonfinancial aspects.

How do you think communication between stakeholders and decision-makers in ESG implementation should be developed?

From my point of view, the key issue in communication is to be attentive, and to look for common areas of cooperation, looking not only at short-term goals but also at long-term scenarios for change.

In the context of stakeholder communication and cooperation, it is worth emphasising long-term cooperation, taking into account a wide range of aspects and diverse stakeholders. Stakeholders can be not only customers, but also communities affected by the company's activities or the ecosystem as a whole. It is also worth remembering that a stakeholder is also our planet, which can be seen as a silent stakeholder, not always expressing its thoughts verbally. Mindfulness in communication is key, involving listening to each other and looking positively to the future. This is important for building long-term value, which is not just limited to financial value, but also includes social value and well-being. Building this value is based on considering the long-term outlook and actively listening to the needs of stakeholders.

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Interview with Materiality Author: Klaudia Światek I Editor: Zofia Szajner

Interview Materiality - questions answered by Piotr Biernacki - ESG Managing Partner

In relation to your many functions at EU level, what do you think of the direction EU regulation is taking?

I have been following the creation of regulations at EU level for several decades, since I was still studying at the Warsaw School of Economics and at foreign universities, including French universities. On the other hand, I have been participating in the creation of these regulations for a good few years, including within EFRAG. Let me summarize it this way: the last few years have given us a lot of regulations on sustainable development, above all linked to the main development strategy of the European Union. When Ursula von der Leyen took over the presidency of the European Commission, the European Green Deal was developed and announced. This actually resulted in numerous directives and regulations, including on sustainable development. I observed and participated in the creation of regulations for the financial sector of banks, insurance companies and investment firms in the context of sustainable finance and the associated obligations for companies. There have been many such regulations, some of which are already in force, such as the EU's taxonomy of environmentally sustainable activities, while others will not come into force until this year or next year, such as the sustainability reporting obligations for large companies.

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Interview with Materiality In my opinion, these regulations did not necessarily come about in the order in which they should have, but today, when we have passed most of them, I think that they are forming a certain whole and that a well-thought-out system is being created. We will only see the real effects of these regulations in at least two years, but the regulatory changes are clearly moving in the right direction. Unfortunately, with so many regulations, there is a fear that either the Union will stop halfway and they will not be completed or they will not enter into force in the ambitious form in which they were planned.

How many companies wanted to report prior to the introduction of the obligation by the European Union and which measures did they care most about?

The sustainability reporting obligation, introduced by the CSRD (Corporate Sustainability Reporting Directive), comes into effect from 2024 and will gradually cover more groups of companies in 2025 and 2026. Historically, on the other hand, we have already had one obligation to report so-called non-financial information. The directive that introduced it covered only the largest listed companies and financial institutions. In Poland there were about 150 of these, which is relatively few compared to the number of all companies in the country. In the European Union, it was about 11,000 of the largest listed companies, and in principle only these companies reported. In addition to the companies obliged to report, there were perhaps a few dozen other companies that voluntarily reported on sustainability issues. Unfortunately, prior to the introduction of mandatory reporting for large listed companies, these reports were of a communication and PR nature, meaning that companies basically chose what they wanted to include in them and described their various positive initiatives. There was relatively little reliable reporting on climate issues, the environment, people or human rights, because no one supervised what companies published in their reports. Reports were

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Interview with Materiality not audited by auditors. Those reports that the largest listed companies were showing were already under some supervision. The Office of the Financial Supervision Authority (UKNF) checked that the reports were published, while they were not yet subject to audit - this was voluntary. For this reason, many companies today are in for a shock, as it turns out that the report is not only to show the positive aspects, but the actual state of affairs, both positive and negative.

Opportunities and risks, the negative impact on people or the environment must be described, as well as how this negative impact is reduced and what positive measures are taken. All these changes and the obligation to audit are only introduced by the CSRD.

In your opinion, what industry is facing the biggest changes and challenges with regard to reporting and the increasingly new EU directives?

Probably for all industries the transition to mandatory reporting is just as big a challenge, because these are new obligations and completely new standards. It is worth noting, for example, that the international financial reporting standards, according to which large companies report, were created over several decades and companies gradually learned them. Training was needed so that all chief accountants, finance directors, financial controlling and other employees learned it. Here we are talking about a one-off imposition of 12 standards on companies, for all of them at once, and in a short while sectoral standards will be added, and there will in turn be around 40 of them. I would not divide these challenges by sector, but rather in the context of listed and non-listed companies.

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Interview with Materiality or all of them at once, and in a short while sectoral standards will be added, and there will in turn be around 40 of them. I would not divide these challenges by sector, but rather in the context of listed and non-listed companies. Listed companies already have some experience, perhaps not as detailed reporting, but nevertheless they are not starting from scratch. By contrast, for many private, unlisted companies, this comes as a complete surprise. I fear that some of the large private companies do not yet know that these obligations are coming, even though it is already being written about in the specialist media. A major challenge for all large companies will be to find experts to help them implement these responsibilities, because the competence within the companies is mostly not there. I say this perhaps not only in terms of reporting itself, but even more broadly.

The management of sustainability issues is a broad area in which one can specialise in topics such as greenhouse gas emissions and decarbonisation, circular economy, management of raw materials, materials and waste, as well as labour rights, human rights, among others. For the time being, there are really few experts in this field. The field of sustainability and reporting is, in my opinion, an area where there will clearly be a need for specialists, while at the same time it is difficult to find courses or postgraduate studies at universities to train the necessary staff.

For all industries the transition to mandatory reporting is a big challenge Do you think ESG work is and is becoming a new potential career path for students?

Definitely yes. This is exemplified at MATERIALITY by people who came to us when they were still in their fourth or fifth year of university

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Interview with Materiality By the time they graduated from university, they had already started working for us, then progressed all the way, and some have even been with us for more than five years and have managed to advance to managerial level. They are already consultants who advise various companies and, in fact, a very large part of this education (or even all of it) in sustainability they have already received while working for us, because they are people from very different faculties - from economics and a more strict area (e.g. finance, data management), to environmental (e.g. environmental protection, waste management), to architecture, civil engineering or psychology. Not all of them came to us at the end of their studies or right after, some only after an initial career pursued in other companies. In my opinion, it is not necessary to have a specific field of study to deal with sustainability, because today it is difficult to find such full bachelor's and master's degrees that only deal with sustainability. It is important to get people who specialise in different areas and have a general understanding of sustainability.

It is important to get people who specialise in different areas and have a general understanding of sustainability.

Do you think Polish companies will cope with the upcoming obligations related to the new reporting standards?

I think they will eventually cope, only I am afraid that this does not yet mean reports for 2025. The timing of the start of the regulations in 2025 for 3,500 companies may be tough and it is the lack of specialists that will become a key problem. As in many other areas, it is possible to take a minimalist approach to this reporting, i.e. simply doing the obligation minimally, or it is possible to take a more ambitious approach. Unfortunately, however, I think that the

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Interview with Materiality number of companies that take a more ambitious approach will be rather small at the beginning, and there are two other factors at play here. The first is that I have noticed that different companies are much more willing to start looking at sustainability when they feel pressure from their customers or from financial institutions. The second factor, on the other hand, is that when we carry out studies of materiality, risks and opportunities regarding sustainability, it is at the initial stage of defining them that CEOs notice the need to confront the risks identified, because they are serious and they did not see such a threat before.Active management decisions are made to counteract negative impacts, as well as to stand out from the competition on a ‘we must be better’ basis in terms of regulatory compliance. The process of collecting information for reports triggers many other processes within companies that make sustainability not something beside the business, some additional cost or side activity, but a topic that permeates every element of the company's operations.

In which area of ESG do you think Polish companies have made the most progress?

I think the biggest progress is noticeable in the most structured area, which is climate change, specifically the calculation of greenhouse gas emissions. A few years ago, hardly any companies knew how to count greenhouse gas emissions, and if they did, they only took into account their direct emissions (the so-called scope one). Then they learnt to count scope two, and now a great many of these major companies already know how to count the entire emissions from all three scopes. Of course, numerically this is still probably rather fewer companies than the sum of those that already report regularly, but here I see progress. A few years ago, together with Michal Stalmach, we developed a study to analyse the climate awareness of companies, and in this study we analysed the reports of the 150

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Interview with Materiality largest listed companies and assessed whether they report emissions, to what extent, how accurately, whether this data is audited, and so on. This is a very precise study conducted by the Association of Listed Companies and the Reporting Standards Foundation, and we as MATERIALITY participate in it. Looking at the results from 2017 to 2023, there is clear progress, but the current highest level is still the minimum required by the new regulations.

Furthermore, the question of whether companies are reducing their negative environmental impact and how, is a topic for a completely different study.

How do you assess the readiness of Polish regulators to adapt EU regulations to Polish law?

Firstly, these are the EU regulations, more precisely the directive, so it has to be implemented into our regulations and here we have fresh information. At the end of April, the Ministry of Finance presented a draft law implementing the directive for public consultation and the whole legislative process has started. Theoretically, we should implement this directive by the middle of the year, but I am afraid this is not realistic in the case of Poland. However, I think that probably most of the EU Member States will have some delays. Moreover, many of the regulations on sustainable development at EU level are issued in the form of regulations. They are directly applicable, i.e. they do not need to be implemented in Poland into our legislation, they simply become effective on a specific date. However, the role of the PFSA, for example, with its supervision of listed companies that historically report non-financial information, and in a short while will be reporting on sustainable development, is important here. The FSA is indeed starting to do more and more over time. At the moment, officials are waiting for companies' reports and sending letters to companies indicating non-compliance with regulations, while also asking questions as to why this is the case. I think we will gradually adjust to this, as Poland is generally quite efficient in implementing most of the EU directives. In my opinion, compared to other EU countries, we are not the best, but we are not at the bottom either.

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partners

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acknowledgements Wiktoria Kulesza Zuzanna Bielska Alex Beaumont Maksymilian Puścian Piotr Szumski Klaudia Świątek Klaudia Urbaniak Dominika Machul Lidia Surgiel

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