ESG Rating 2022: How are Czech companies performing in sustainability?

2/5/2023

The Association of Social Responsibility presents the results of the first independent ESG Rating in cooperation with the internationally renowned study program CEMS / Master in International Management at the Faculty of Business Administration of the University of Economics in Prague.

ESG Rating was created for the purpose of comparing and educating companies in the Czech Republic and measured selected indicators within the individual pillars of ESG. It compared the extent to which domestic companies monitor and communicate their impact on the environment, society and company governance. It thus responds to newly emerging directives and legislation of the European Union, which, under certain conditions, mandate the reporting of non-financial results.

• 87 registered companies
• 1.36 trillion Czech crowns total turnover of companies involved
• 22% share in the GDP of the Czech Republic in 2021

What is ESG?

ESG is understood worldwide as one of the main pillars of sustainability. Corporate governance including environmental and social aspects (ESG) is an approach to evaluate the overall performance of a company, beyond the financial point of view. The ESG criteria consist of activities and standards in three areas:

Environmental – The company’s approach to reducing the negative impact of its activities on nature and the environment.

Social – The company’s responsible approach to society, the community and individual stakeholders.

Governance – A way of responsible and transparent management of the company.

Which indicators did ESG Rating monitor?

(E) – how the company approaches environmental pollution, electricity consumption or waste and water management.

(S) – the company’s approach to diversity, employee rights and supporting the communities in which the company operates.

(G) – how transparently the company communicates its business model, ownership structure, or how effectively it monitors ESG-related risks.

Ranking of the best rated companies

The best-rated companies are those that deal with the largest number of topics and have clearly defined goals, including projects and processes used to achieve them.

Top 10 – large companies

(arranged alphabetically)

Albert Czech Republic

In its ESG reports, Albert has a very detailed calculation of emissions and activities that lead to its reduction. The chain also manages to limit the volume of unsold food, including that which would otherwise end up in waste. It donates unsold food more and more often. It also promotes gender and age diversity among employees, while voluntarily setting quotas for the share of women in the company, including top management. It also enables disabled or socially disadvantaged people to obtain employment.

Coca-Cola HBC Czech and Slovak Republic

Coca-Cola carries out very detailed non-financial reporting and is committed to its further improvement. It uses several independent external agencies for this. In the area of environmental protection, it closely monitors not only the production of greenhouse gas emissions , but also the consumption of water, crucial for the production of their beverages. The company is committed to reducing its negative impact on nature and lists specific goals and achieved results. It also demands compliance with environmental protection standards from its suppliers. The publication of specific data and goals for improving company culture and employee satisfaction also helped the company to reach the top of the ESG Rating.

ČSOB

The company is committed to achieving carbon neutrality and has already taken a number of measurable actions that contribute significantly. Since 2021, it uses electricity from renewable sources for its operation, switched to electromobility and is also very active in the use of geothermal heat or in recycling and limiting water consumption. It also demands compliance from its suppliers and cooperating companies. ČSOB is also managing to increase the proportion of women among employees, including top management, without introducing quotas. Similarly, it takes active steps to ensure that there is equal opportunity and compensation in the company. The bank’s management is bound to fulfill goals in the area of sustainability and responsible behavior. This agenda represents 10% of all KPIs.

DPD

DPD monitors and measures its impact on the environment in detail with the aim of continuously minimizing it and achieving carbon neutrality. It lists specific strategies for reducing greenhouse gas emissions or waste, as well as their results. It invests significantly in a clean vehicle fleet and energy-efficient or completely emission-free methods of transporting parcels. It also pays attention to social responsibility inside and outside the company with the aim of improving the sustainability of its business. Once a year, it carries out a detailed analysis according to international standards, and then prepares a report on a quarterly basis.

Komerční banka

Komeřční banka has set up detailed monitoring in the field of energy consumption and social responsibility. It takes measurable steps to achieve carbon neutrality in the day-to-day operations of the company by 2026. Paying close attention to area S, it successfully strives for a more balanced gender representation in senior management positions, including the board of directors. It also minimizes the differences in pay between men and women. Simultaneously, it monitors and actively increases age diversity and communicates all this data transparently in its annual reports.

MONETA Money Bank

Since 2022, the implementation of ESG is part of the KPIs of all members of the board of directors and selected Material Risk Takers. Goals related to the fulfillment of the ESG strategy are incorporated into the key performance indicators of individual management members, based on the fulfillment of which the variable salary component is paid. As a result, Moneta not only stood up to the demands of ESG measurement, but also managed to fulfill the set goals in a number of areas – from reducing the burden on the environment, to employee policies and responsible company management.

ČEZ Group

ČEZ Group has a long-standing tradition of publishing Reports on Sustainable Development. In 2021, it differed in reflecting the integration of sustainability into their corporate strategy VISION 2030 – Clean Energy Tomorrow, which is in line with ESG principles. It is created in accordance with globally recognized reporting standards to meet the highest standards of transparency. For a substantial part of Scope 1, ČEZ Group reports greenhouse gas (GHG) emissions in accordance with the EU Emissions Trading System (EU ETS). With the recommendation of the Task Force on Climate-related Financial Disclosures, the report included all the fundamental information. For the first time, ČEZ reports key performance indicators defined by the EU Taxonomy of Sustainable Activities, including audits by external companies. It is committed to the highest standards of transparency, accuracy and accountability. ČEZ Group hopes that the new structure of this report and the adoption of other reporting standards demonstrate its efforts and believes that reading the report will be a pleasant experience for you.

ŠKODA AUTO

In its reports, Škoda monitors its ESG performance in great detail and commits to specific goals and measures to maximize its sustainability and social responsibility. In the area of environmental protection, it is worth noting that the company already uses 30% of its electricity from renewable sources, and by 2030 all energy used for the production of cars and components should be CO2-neutral. The percentage representation of women in management is part of the company-wide KPIs linked to the remuneration of managers. It also reports the demographic composition of its staff and focuses on supporting medically and socially disadvantaged people.

TATRA TRUCKS

The company calculates its energy consumption, carbon dioxide emissions and water consumption, as well as the amount of waste produced. It also tracks demographic and other data to improve company culture and the well-being of its employees. It has a policy in place to ensure fair pay, which is overseen by internal auditors and unions. Tatra is committed to fulfilling ESG goals and continuously scores its suppliers and decides on the extension or non-extension of cooperation based on the score.

Vodafone Czech Republic

Vodafone CR is not obliged to issue a non-financial report, however it does so on an annual basis in the form of the Vodafone Group Sustainability Report. It is created according to the ESG requirements of rating agencies and independent auditors. The company also demands a high level of social responsibility from its business partners. In addition to reducing the burden on the environment, it is also very active in the field of corporate culture and the promotion of inclusion, equal treatment and employee development. And last but not least, Vodafone pays great attention to waste reduction and recycling, especially electronics.

TOP 5 – small and medium-sized companies

(arranged alphabetically)

ELCOM

Elcom publishes an ESG report as part of its annual report and also takes steps to reduce its carbon footprint. It is modernizing its vehicle fleet with cars that are more environmentally friendly. It also started installing photovoltaic power plants on company buildings. Data related to employee diversity is a regular part of quarterly HR and ESG reporting for the company’s top management, board of directors and supervisory board.

CHEP CZ

Chep CZ has been monitoring and measuring a number of ESG indicators for a long time. They take and publish steps to meet sustainability and social responsibility goals. The firm also incorporates the principles of the circular economy into its business activities with the aim of saving energy and material resources and making the environment less burdened. In area S, it conducts surveys among employees and audits to prevent the occurrence of inequalities, for example in their evaluation.

Trenyrkarna

The company strives to reduce its negative impact on the environment. Between 2020 and 2030, it intends to reduce greenhouse gas emissions by 30%. Similarly as other conscious companies, it modernized its fleet with ecological vehicles, and recently also invested in LED lighting and more energy-efficient appliances. It also equipped the company premises with better thermal insulation. The business also conducts a dialogue with its suppliers – it selects them with regard to ESG requirements and later also inspects whether they are satisfied with the cooperation. The HR department monitors and pays attention to diversity among employees and their fair remuneration. The company actively includes and shares this data in detailed audited non-financial reports.

USSPA

USSPA continuously carries out authorized measurements of its greenhouse gas emissions. Every year, the company prepares a report that takes into account all ecological aspects of its behavior. It is assessed by an independent auditor, evaluating results in relation to the set goals. It also includes records for individual wastes with the share of usability. The company has a long-term aid strategy, primarily aimed at activities in the region, which lies next to large cities and centers.

VISIBILITY DIGITAL

The company strives to improve area E by promoting cycling and using company electric cars. In their offices, they save electricity with the help of LED lighting and save water with the help of suitable water taps. In area S, it is dedicated to monitoring and screening the demographic diversity of employees. The recruitment of new colleagues takes ethnic, age and gender diversity into account. It provides a whole range of company benefits to everyone, including externals, with the aim of protecting physical and mental health. A fifth of the working time is allocated for personal and professional development.

Selected results

• In the section of large companies, 39% of businesses deal with the difference in remuneration for different genders, some monitor the percentage difference between the average monetary remuneration of women and men. Most of the participating companies stated strategies for how they want to address the gender-pay gap
• the representation of women among executives and board members of companies reached 14%, which is above the Czech average
• Czech companies perceive themselves very positively. Large companies rated themselves with an average of 8 out of 10, small and medium-sized enterprises gave themselves an average of 7 out of 10 points. At the same time, the average score of all companies involved in the Rating reached lower values. It can therefore be assumed that many companies have not had time to respond to the increasing demands of the market and therefore are no longer at the level of leaders in the field of sustainability as they might have been some time ago
• a total of 78% of large companies deal with the calculation and estimation of emissions at various levels. However, companies differ in how closely they monitor emissions. As is the case abroad, most Czech companies are able to measure in detail direct emissions and indirect emissions from the production of purchased energy, they are worse off in monitoring other indirect emissions. In the Czech Republic, at least 36% of large companies involved in our ESG Rating deal with the partial calculation and estimation of other indirect emissions
• a total of 25% of large companies involved in the Rating have their own Chief Sustainability Officer
• in sector E, companies are most active in climate change and air, waste and energy consumption, least in the topic of biodiversity and ecosystem protection
• in the S sector, companies are mostly engaged in employee health and safety, and well-being, but the least number of companies are involved in supporting trade unions and diversity or inclusion. Union-related topics are practically irrelevant to small organizations
• in sector G, companies put the most effort in dialogue with interested parties and protection of personal data and privacy, but least in tax transparency
• rather than branches of multinational corporations, domestic firms were often better at monitoring and communicating their local ESG activities. Multinational companies often deal with the ESG issue globally for the entire group and do not go as in-depth with their local branches as companies that grew up in the Czech Republic