“Recent Deloitte data indicates three quarters of companies at a global level have increased their sustainability investments over the last year and almost one fifth of them stress ESG is expensive and difficult to measure in terms of impact. All these are valid concerns, but sustainability is very much about vision and confidence, and there is a psychological threshold to be overpassed when investing in sustainability: it may cause temporary budget tension, but it largely pays off in the medium and long run, especially since all markets are moving on from conventional fuels to new energy models, and consumer industries are increasingly giving preference to “green” products and services,” Sorin Elisei, Director, Deloitte Romania, Leader of Sustainability and Energy Practices told Sustainability Today.
Why do you think more and more companies are accelerating their sustainability investments? How do you see this trend evolve in the following years?
Sustainability has been playing out at the top of the business agenda over the last years, somewhere between a challenge and a slogan, never unequivocal, and indeed not everyone engaged to it on a same level of conviction and ambition. Navigating the last couple of years’ uncertainty and successive shock waves, from the pandemic shutdown and a globally staggered economic restart to energy crisis and resource scarcity, from major supply chain disruptions to rising inflation and operational expenses, every single company in every industry has been taught the lessons of resilience, responsibility and efficiency; in such an intense context, sustainability – regarded full specter, in environmental, social and governance terms – came down as a practical toolkit to not only live on overlapping crises, but to switch to improvement for the long run, to last and to stay relevant.
Numbers speak for themselves in that regard, over 60% of the top executives surveyed by a recent Deloitte study say sustainability and the “green” transition are about to strongly impact their strategy and operations over the next three years, and they admit that pressure from boards, employees and clients to invest in sustainability almost equals the regulatory pressure. That shift is a major one and I believe it is irreversible at this point. The focus has moved from the “why to” embrace sustainability to “how” to make it work, and I expect companies to stay committed to the net-zero target, design “green” plans embedded in their strategy (with expert assistance), and to join forces with market peers and government in a systemic effort to make sustainability work for all, in an effective yet just transition.
What are the current concerns for organizations from a sustainability perspective?
The sustainability progress keeps companies concerned with securing their staff and assets, including infrastructure and supply chain’s resilience and traceability, along the ongoing transformations, all that while keeping an eye on regulatory criteria and targets (assessment, reporting), and constantly benchmarking themselves against market peers. That is already quite a burden, but then there is a major second half – sustainability budget and expectations in terms of return of investment. Recent Deloitte data indicates three quarters of companies at a global level have increased their sustainability investments over the last year and almost one fifth of them stress ESG is expensive and difficult to measure in terms of impact. All these are valid concerns, but sustainability is very much about vision and confidence, and there is a psychological threshold to be overpassed when investing in sustainability: it may cause temporary budget tension, but it largely pays off in the medium and long run, especially since all markets are moving on from conventional fuels to new energy models, and consumer industries are increasingly giving preference to “green” products and services.
How is Deloitte supporting clients to pursue economic growth while also achieving climate goals?
We embark on every client project, be it related to climate change risks, sustainable finance, circular economy, ESG reporting or other, with the clear statement of our mission: make it work more sustainably and in a “greener” way for their specific purpose and targets. Our teams step in as facilitators and optimizers, we learn a lot on every project and share our knowledge with our clients. Our portfolio includes different actors from both the private and the state sectors, and every client has its mindset and strategy for growth and development, and our job is to make the right recommendations for each of them. Hence, since roles are defined and goals aligned from the very start, growth and sustainability indicators progress shoulder to shoulder all throughout the project.
We always stay on the pragmatic side, we perform projection, modeling and anticipation work, in structured models that have proven reliable in years of Deloitte projects across industries and geographies, and that provides our clients with predictability in the medium and long run and a sense of trust that lays at the very base of our relations.
Speaking of trust, the business environment has evolved positively in recent years, and our projects find much more open and confident approaches on our clients’ side. Deloitte research shows that over 80% of the top-level executives worldwide consider that their organizations, local economies and the global economy can continue to grow while transforming business processes to be more sustainable and reaching climate targets.
What should be the priorities for Romanian managers in achieving sustainability goals?
I would say aim, intentionality and expert assistance are top three priorities for managers. Aim refers to a timely and proper understanding of where the companies and their processes feel a need to move on, as well as how much and what they are ready to invest in sustainability; the intentionality comes along – managers are not supposed to deploy the sustainability plans as such, but to get themselves and their staff an idea of what the goals and the milestones are on the way. Once you have these two, experts can help congregate these aims and intentions into a proper plan and then will further assist in implementing it.
Most local companies are already taking action: they care for energy efficiency and go very much towards solar energy, for example, they are using more sustainable materials and replace traditional suppliers, they develop eco-friendly products, and, very importantly, they raise awareness and train employees on climate and sustainability.
But there should be more to it, as Romania enjoys some pretty unique assets in that regard: a very good capacity and increasing appetite for renewables and a business environment that is very well connected and all better aligned to the European benchmark, a valuable human capital, skilled in new technologies and very capable in R&D. Let me also mention geography and our country’s huge potential for participating in or even leading regional projects in the field of renewables or hydrogen, for example.
The economic shape of the net-zero era will be set in place in the coming years, thus promptly making the right choices for the local economy is the chance and duty of our generation.
How do we translate sustainability goals into efficient initiatives for the Romanian economy?
Forging cross-industry awareness and congregate business, government, academia, and NGOs’ initiatives – that should be the starting framework for further moving the needle and seize economic opportunities for Romania in a systemic way. For example, building on our country’s huge renewables potential, take or enroll in the regional lead in renewables and alternative energy projects such as green hydrogen, that emerges as one of the main pillars of the energy architecture of the future; last but not least, we need to inform and train the human capital to properly embrace the transition and to actually benefit from it: “green” education from early school to specific university programs, reconversion of the existing skills, relocation of the valuable professionals to sustainable industries, acknowledging green performance and rewarding it.
Public policy and private action need to perform and account for both growing the GDP and the economy pie (prosperity) and how many people actually benefit from that grow (equity). Success or failure of the transition should be measured by how it delivered on both directions, and that is the essence of the just transition – a central topic in the new EU “Green Deal” Industrial Plan for the Net-Zero Age and a standing preoccupation for most top executives from countries with performant or emergent economies.
How are the Romanian organizations measuring sustainability progress?
Since ESG standardization is still work in progress in Romania, it is difficult to provide a very structured answer. Local organizations look for solutions, that is a fact. They rely more and more on outsourcing and expert input, they try to parallelly develop inhouse expertise by converting CSR specialists into sustainability officers, and they benchmark themselves against industry peers’ performance and try to share best practices.
What are the current sustainability challenges for local organizations?
Challenges experienced by local organizations are generally related to the planning of the transition, regulations dynamics and benchmarking, on one hand, and sustainability spendings and return of investment, on the other hand. These topics are just as relevant for Romanian managers as they are for their foreign counterparts.