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Contributed by: CT&P.
When we talk about sustainability, with a specific focus on ESG (Environmental Social & Governance) factors, we tend to think that it only relates to large companies and organisations with roles in the public interest. But is this really the case? Can small and medium-sized companies and professional services firms be left out of the equation?
Why does sustainability and ESG matter?
In our opinion, sustainability is an issue that professional services firms also need to address. Taking a distinctive and clear position regarding ESG issues can boost a firm’s positioning and generate financial benefits.
How does this occur?
- A professional services firm that is attentive
to these issues and is committed, first-hand, to pursuing an ESG policy is certain to attract young talents who, for generational reasons, are naturally sensitive to these important themes. Aside from remuneration and prestige, having purpose within a role and attention to social responsibility are critical factors for generations Y and Z when deciding where to work; - Compliance with ESG parameters makes it possible to secure assignments from compa- nies that now also evaluate their partners and suppliers on this basis. Not being compliant from this point of view excludes a firm from the panel of parties that large companies will now consider for tax and/or legal consultancy;
- Relevant, sustainable policies are a source of motivation for the professionals and staff members already in the firm who are mindful of ESG issues, and who can share in the commitment and the satisfaction of working in a conscientious environment;
- A firm’s commitment on this front enhances its reputation and determines its positioning and brand perception as distinctive and valuable. This has a positive impact on existing clients, but also on new clients who may use these parameters as part of their criteria when choosing a firm;
- Many ESG issues also have a direct impact on performance and risk management. An approach that takes these parameters into account will maximise opportunities and minimise risks.
The above points are not exhaustive, but they do represent a significant cross-section of the main advantages of adopting a truly sustainability-oriented policy within a firm.
Add to this the fact that the European Union (along with other bodies) has been moving towards the adoption of sustainable policies for some time now, with significant regulatory activity which has led to the EU Sustainability Reporting Directive and the implementation of related European sustainability reporting standards from July 2023.
These measures will impact the financial statements of public entities, large companies and presumably, from 2027, small and medium-sized companies and specific businesses as well.
But even in those jurisdictions where policies to foster sustainability are not set to become mandatory, they will still end up being adop- ted as best practice.
All of the above indicates that, as consultants, it is highly desirable to be prepared for one of the biggest issues that, in one way or another, will impact all of our lives (and not only professionally) – This is all the more relevant when considering certain specific aspects:
- Providing consultancy to small and medium-sized enterprises, where there are still many areas of uncertainty as to how they will be impacted by regulations;
- Expertise in software designed for reporting or, at the very least, measuring certain parameters that should be monitored to limit business risks;
- Uncertainty as to how and when the regulations will actually be implemented.
In our view, it is worth bearing in mind that this is an issue that goes beyond regulatory interventions and has now become critical. Practices already exist which, consultancy firms can implement in order to embark on a virtuous path towards sustainability. Starting precisely from the three ESG pillars, we can identify some of these behaviours which can provide food for thought.
Sustainable Conduct from an Environmental Point of View
- Reducing the carbon footprint by setting greenhouse gas reduction targets and offsetting CO2 emissions with investments in reforestation projects and renewable energy sources;
- Energy efficiency, implementing systems to increase energy savings in the workplace, such as efficient lighting systems and optimising the use of digital tools;
- Reduce waste and increase recycling by sorting waste for disposal and promoting the reuse of certain items (e.g., water bottles instead of plastic bottles).
Sustainable Conduct from a Social Point of View
- Diversity and inclusion, actively promoting diversity in the workplace, ensuring equal opportunities and fair treatment for all people working within the firm;
- Work-life balance, adopting flexible working hours and arrangements to help achieve an equilibrium between working life and time for one’s self and family;
- Community engagement, including supporting voluntary initiatives that the firm’s personnel can participate in, performing pro-bono activities for the community, and establishing partnerships with local non-profit organisations.
Sustainable Conduct from a Governance Point of View
- Transparent reporting, adopting transparent financial reporting practices to provide all stakeholders with precise and reliable information about the firm’s operations, financial performance and sustainability efforts;
- Commitment to all stakeholders: clients, consultants and employees, suppliers and local communities;
- Ethical leadership, fostering a culture in which ethical behaviour is adopted by leaders at every level in the firm, and in which integrity permeates every aspect of the firm’s activities;
- Anti-corruption measures, implementing policies and procedures that prevent corruption, abuse of office and conflicts of interest in the activities carried out.
Conclusion
While the specific timings and modalities of future regulation remain uncertain, especially with regard to small and medium-sized companies, there are business opportunities to be seized. These are tied to the implementation of sustainable policies, which can enable professional services firms to gain competitive advantages in terms of positioning and attractiveness.
Related reading:
AGN Technical Insights – Sustainability & ESG
AGN Global Business Voice: ESG – Reducing Risks and Identifying Opportunities
Contributed by:
CT&P
Largo Augusto, 8
20122 Milano
Italy
https://www.ctep.it/en/
Email: studio@ctep.it
Tel: +39 02 27 79 111
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