Sustainability Will be Vital to Business Success in 2022

For the past couple of years, Global Compact Network Georgia has been working hard with the business sector and other major stakeholders in the country to transform the market economy by making it more sustainable and responsible and assisting companies to align their strategies and operations with universal principles on human rights, labour, environment, anti-corruption and to take action that advances societal goals.

CBW talked with Executive Director of Global Compact Network Georgia, Salome Zurabishvili about new approaches, tendencies and programs in CR. 

What Do Strong CR Programs Look Like?

Companies with strong sustainability agenda integrate economic, social and governance principles into DNA of the company, its policies, and operations.

What does that mean?

As a first step, company on the highest executive level commits to carrying out its operations in compliance with sustainability standards framework.

Subsequently, company assesses its operations from environmental, social and governance perspective, and identifies risks, opportunities, necessities connected to its staff, investors, customers, consumers, and other stakeholders throughout its value chain.

As a third step, company assesses what is material on the one hand for the company, and on the other hand – for the stakeholders, and selects most salient directions that can bring a shared value, a benefit to the company and to the stakeholders.

Fourth step – based on the defined priorities, company drafts a thorough implementation plan, integrating ESG issues into the business plan. Implementation plan shall entail clear KPIs and shall identify persons responsible for achieving them.

Monitoring and evaluation is a fifth step that company undertakes. Measuring the progress is important to see whether the activities according to the implementation plan contribute to the objectives set by the company.

The sixth step is communicating the progress with the stakeholders and reporting on in. The reports are a useful tool to showcase an operational sustainability of the company with the investors, employees, customers and other interested stakeholders.

The programmes planned through the above-mentioned framework are the most useful, durable, and relevant initiatives, generating benefit for the company and for its target groups.

New Approaches and important decisions in CR in 2021

The major development of 2021 in the field of corporate responsibility, was drafting of a mandatory due diligence directive in the EU, which requires companies to identify, address and remedy their impact on human rights and the environment throughout their value chain.

According to the EU Parliament: “This new law on corporate due diligence will set the standard for responsible business conduct in Europe and beyond… The new rules will give victims a legal right to access support and to seek reparations, and will ensure fairness, a level playing field and legal clarity for all businesses, workers and consumers.”

A draft legislation was supposed to be published in December, 2021 however the date was postponed to early 2022. Meanwhile, mandatory DD laws have already been adopted on a national level in France, Germany and Norway, and this wave continues in other EU member countries as well.

Why should Georgian companies care?

DCFTA provided opportunity to the companies registered in Georgia to export their goods and services to the EU market. While utilizing this opportunity, Georgian companies shall comply with the rules and regulations enforced in the relevant member state. Furthermore, since the EU based companies will be obliged to address their impacts on human rights throughout their value chain, this means addressing impacts not only within EU but also outside the EU jurisdiction, and in their partnership with companies based outside EU, in our case – in Georgia.

Why is CR essential in 2022?

80 per cent of the investment industry has signed up to the Principles for Responsible Investment while 260 banks, representing $70 trillion in assets, have signed onto the Principles for Responsible Banking. According to the 2021 progress report of PRB, 94 per cent of the signatory banks identify sustainability as a strategic priority.

Signatories of the above-mentioned initiatives have already mobilized at least $2.3 trillion in sustainable financing and aim to increase this amount in the upcoming years.

Therefore, compliance with the ESG principles and enshrining sustainability into the operations, can generate investment and contribute to the growth of the company. 

Furthermore, integration of the standards helps the company to comply with existing and upcoming regulations in line with the EU-Georgia Association Agreement requirements.

Corporate sustainability progress in Georgia

One of the ways we measure the progress in the business sector on corporate sustainability, is the Corporate Sustainability Award competition we organize annually in Georgia.

Corporate Responsibility Award was held for the fourth time in October 2021. The award aims to raise awareness among companies on SDGs and encourage business action for implementation of the Goals. 124 applications were received from companies in 2021, which is 125% increase compared to 2020 Award competition. According to the jury comprised of international and local experts, the quality of the applications has also improved compared to the previous years.

This indicates higher awareness of the companies on SDGs and the increase of business activity in the field.

Main focus of 2021

• A sustainable recovery from the pandemic
• Multi-sectoral partnerships for the agenda 2030
• Business ambition for 1.5°C aimed at reducing GHG emissions, addressing the Climate Change and its impacts.