48 (143) 2021


The post-pandemic recovery will be bright green

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Agnieszka Gajewska, partner and CEE leader, Public Sector & Infrastructure / ESG global international development leader at PwC, talks to the BPCC’s Michael Dembinski about the direction and thrust of the EU’s next budget, and what this will mean for business in Poland, for the country and for Europe.

We are moving into a new, post-pandemic business reality which will be shaped by the challenges of halting man-made climate change. The EU's multiannual financial framework for 2021-27 will have a significant impact on the direction of Europe's recovery. Looking back at today from the perspective of, say, 2030 – what will have been the biggest changes that we will see as a direct result of the European Green Deal? We look at Poland today and we can see the massive highway construction projects of recent years that have made such a difference to the look and feel – and efficiency – of the country. Will we be seeing a rebalancing away from roads, towards, for example, high-speed railways?

Let’s start from the beginning, the objective of the European Green Deal is to reduce CO2 emissions by at least 55% by 2030 and achieve climate neutrality by 2050. It is a huge transformation effort led by the European Commission which will impact us all – economies, business and individual citizens. To achieve such an ambitious plan the EC needs to act, support and hold the key stakeholders accountable. That is why both regulations and funding remain will be the key drivers for green transformation.

I would argue that we are facing a new economic paradigm as a result of the European Green Deal driven by the EU based on a classic stick-and-carrot approach. The stick is tightening regulatory requirements contained in the recently agreed European Climate Law. And the carrot is the largest financial package for investments since the creation of the EU.

Now, about infrastructure – it is important, and it will be invested in. But we will a push towards minimising climate impact and new technologies and digital solutions. It is important to understand that the status quo on how we go about spending EU funds is no longer possible. All beneficiaries will have to be more innovative to ensure that projects support the twin transformation (green and technology).

How will the EU reshape the regions? Will the New Generation EU be able to smooth out the differences between Europe's richer and poorer parts? Will eastern Poland continue to receive more EU funding per head of population than the rest of Poland? Will funds targeted specifically at regional transformation be supportive of 'green' projects, or is 'green' less of a priority here than simply catching up with richer regions?

I do not think that catching up with richer regions and going green are contradictory or mutually exclusive. Today, ‘catching up’ means using innovative solutions and clean technologies to enable sustainable development of entrepreneurship and investments.

Obviously less-developed regions will still be benefiting from sustainable support through grants and financial instruments. They should be wisely spent on more innovative and comprehensive projects to make sure that the regions become more sustainable and can attract new investment. EU financing for recovery after the pandemic will be there to support the small businesses, employment, public services such as education or healthcare. As its top priority the Commission has put the Just Transition rules and financial support for the transformative action.

One of the key tools of the European Commission in this regard is the Just Transition mechanism, which aims to ensure that the transition towards a climate-neutral economy happens in a fair way. Just transition brings targeted support to mobilise at least €150 billion over the period 2021-2027 in the most affected regions, including those in Poland, to alleviate the socio-economic impact of the transition. As PwC, we are working with six Polish regions and numerous other regions in Europe on their Just Transition plans as we speak, and these multi-stakeholder conversations are focusing on a real transformation of regions – their business, economies and talents to benefit from the green revolution and minimise negative social impact.

Tell me about what PwC is doing in terms of going green – how committed is the firm to net-zero targets – and how does this fit into your overall ESG strategy? In terms of your client work, do you see your role as a 'green policeman' or merely an advocate of a better way of doing business?

At PwC we believe that there is not time to waste to accelerate the pace of change and that concrete and real steps need to be implemented. This is why we want to lead by example and we made a worldwide, science-based commitment to achieve net-zero greenhouse gas emissions by 2030. This covers a comprehensive programme to decarbonise our operations and supply chain, which includes reshaping how we serve clients, sustained reductions in travel and the increased use of zero-carbon energy.

With a global reach across 157 countries, broad industry coverage, and 284,000 people who support our clients – from reshaping strategy and transformation, to deals, reporting, audit, and tax – we have a huge opportunity to accelerate the transition to a net-zero future together. We want to work hand in hand with our clients to bring that real change and envision ourselves more as a partner in ensuring sustained outcomes for our clients.

I'm always interested in your CEO survey – in particular, looking for differences in outlook and approach between CEOs globally, and those in Poland and across the CEE region. Is there still a perception gap in terms of how local CEOs assess climate risk? How do Polish business leaders respond to ever-higher environmental standards and increased reporting demands?

Yes, the perception gap still exists when it comes to climate-related issues; 44% CEOs in CEE (and only 35% in Poland) say they plan to increase investments in sustainability and ESG initiatives over the next three years as a result of the Covid-19 crisis, which is well below the global figure of 60%. Only 27% of CEOs in CEE (22% in Poland) have factored climate change into their strategic risk management activities compared to 40% globally. The results indicate a perception gap in CEE which may result in a slower actions and investment dynamics. On the other hand, 44% of CEO say they will invest in sustainability in the nearest future – to me, such a declaration in a year of pandemic – which put incredible pressure on companies and their boards – is a clear sign of an upcoming revolution. This internal drive amplified by regulatory requirements will create very different business and investment ecosystem in the next years.

Since 1990, Poland has consistently shown itself to be a good learner, but not so much an innovator. The EU Green Deal holds out the promise of new funding for R&D projects – but are Polish firms sufficiently innovative to be able to devise and bring to market new environmentally friendly technologies? How will the new financial perspective affect the quality of cooperation between Polish universities and Polish businesses?

Polish entrepreneurs, farmers, regions, cities, civil-society organisations and researchers (academia) have been in general very successful in accessing EU funds. But as you rightfully noted, the rules of the game have changed – whilst EU funding is still significant, it will come with more conditions attached.  Also, more EU funding is centrally managed through pan-European programmes such as Horizon Europe, Digital Europe, Connecting Europe Facility, where Polish players will have to compete for funds with their colleagues from other EU countries. National envelopes are narrowing down. Such a competitive landscape will shift eventually the perception in Poland. Research must begin to take part in collaborative European projects and cooperate with private sector

What outcomes – globally and for Europe – do you expect to come from the next UN environmental summit (COP 26) that takes place in Glasgow in November?

COP 26 will be a critical event in the global effort towards climate change globally. Five years after the adoption of the Paris Agreement, the parties (countries) are expected to renew and improve their Nationally Determined Contributions (NDCs). The conference will be to some extent a test of the effectiveness of the envisaged mechanisms.

By the end of 2020 just over 25% of the parties submitted their new targets, showing lower levels of GHG reduction commitments than expected. Out of the higher-emitter nations, just the UK and the EU submitted NDCs indicating significantly more ambitious targets, while other developed and developing countries expressed just marginal increases. Therefore, the next months and the negotiations during the COP26 will be crucial to enhance global commitments and to reach more ambitious consensus to tackle climate change.

But the climate challenge is not only about the governments – COP26 will also be a chance for businesses to showcase their voluntary commitments. Announcements of new pledges and initiatives for delivering climate action are expected from the private sector this year. Examples of multi-stakeholder initiatives include the RE100 Initiative that asks companies to commit to use 100% renewable energy by 2050, and the EV100 campaign which aims for businesses to commit to operate zero-emissions vehicles by 2030.

I hope that COP26 will bring comprehensive, collaborative and meaningful commitments across sectors, nations and citizens to reduce emissions and achieve the Paris Agreement targets.


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