Deloitte: with our government’s and the EU’s resolute support given to European integration efforts even from before the war, Ukrainian business remains focused on sustainable development and is ready to do the work in this field for the long run

As part of its second annual expert study—Sustainable Development Index—the European Business Association spoke with representatives of socially responsible EBA member companies and asked them to share their views on how priorities in the area of sustainable development changed in wartime and to identify factors that stand in the way or can contribute to sustainable post-war recovery of business and the state.

We present our upcoming speakers, representatives of Deloitte Ukraine: Yegor Grygorenko, Partner and Head of Consulting and Risk Advisory, and Kateryna Iurchenko, CR&S Leader.

Are ESG projects still in demand from Ukrainian business? Did the war change the attitude of business towards ESG activities?

The war has significantly impacted the plans of the Ukrainians and made them rethink their priorities.

In view of the full-scale Russian invasion, ESG-active Ukrainian companies had to slow down their activities, although did not cease them altogether. The majority of requests we receive come mostly from large business, while medium- or small-sized enterprises have to scale back their activities. However, even they remain interested largely due to the robust support given to European integration efforts by both our government and the EU. Ukrainian business understands the requirements related to this domain and the need to prepare for a long-distance race.

At the same time, ESG components are not just a regulatory trend but also a response to social demands. A simple look at the research, such as 2022 Deloitte Global Gen Z and Millennial covering attitudes of young generations, will tell that they give first consideration to both employers and manufacturers with certain ESG strategies. In other words, they are employees and consumers who knowingly choose responsible business.

If well integrated into the business processes, ESG elements can equip companies with a competitive edge and even provide financial advantages. For example, Europe already has quite a developed green financing market; moreover, green debt securities may contribute to a significant reduction in the cost of borrowing – up to 50–70 basis points, which may be quite a large amount for medium and even large companies.

Which component of sustainable development is the most impactful today? What should Ukrainian business consider in the first place?

Ukrainian business is already doing a lot in the context of the social component of ESG. Needless to say that their actions are now primarily related to the challenges of war as protection and safety of people come first, and also include helping local governments and self-organized communities sustain their integrity and maintain the important infrastructures, in particular education and health.

At the same time, Ukrainian business has a wide variety of tasks on its corporate management agenda ranging from clear distribution of roles between owners and the management to gaining insight into how to prevent any potential conflict of interest between different stakeholders or, if such conflicts occur, how to handle the situation; these issues require significant effort from all market players in the Ukrainian market. It is worth noting that the Ukrainian laws are improving, and the improvements pave the way for progress in this area. Just think of the new law “On joint-stock companies”, which will enter into force in January 2023.

Another crucial issue is the climate change. Reducing the carbon footprint, waste management, smart nature management and other aspects have already become an integral part of conscious business that cares about its reputation. The practice not only to report on the sustainability progress but also to disclose the entire value chain, including suppliers, which is adopted by large companies, is gaining popularity around the world – this is forcing smaller companies to get on the ESG track.

How can Deloitte facilitate the advancement of ESG in Ukraine?

At Deloitte, we are very serious about this matter as we find it important to incorporate best practices into the Ukrainian cultural environment, both at the legislative level and at the level of interaction with business.

We are also trying to promote various ESG components in Ukraine. Among our initiatives is Chapter Zero Ukraine & Caucasus, a project dedicated to managing climate change and raising awareness among company leaders about issues of sustainable development. It is a voluntary association of business owners and leaders where they can share their experience and discuss initiatives to implement in their companies and advance the climate agenda.

With our extensive experience in implementation of ESG projects both in Ukraine and abroad, we cooperate with Ukrainian business and offer our clients a wide range of support options. We help prepare non-financial reports disclosing certain ESG indicators, offer various tools for internal ESG progress monitoring, including management dashboards, automated collection of environmental and labor-related data, in addition to developing complex strategies.

We already have experience of cooperation with the government. For example, we helped the Ministry of Agrarian Policy develop a draft law intended to kick-start an irrigation reform in Ukraine. The draft law aims to govern the attraction of investments in reconstruction of outdated irrigation systems, which will contribute to increasing the productivity of agricultural activities and rational water use. Also, we are conducting multiple projects at the community level in different regions of Ukraine, from defining a comprehensive development strategy, which includes ESG priorities, among other things, to implementation of projects in such areas as water supply, modernization of communal services, etc., taking into account ESG standards.

We are willing to join the post-war reconstruction of cities as we have relevant experience obtained outside of Ukraine, which, in my view, may be of interest to local self-government bodies and the state in whole.

The recovery is a chance to make a step forward and create whole localities of sustainable development in some cities, which will actually symbolize a new more progressive Ukraine.

How did the war affect sustainability programs at Deloitte?

The war has radically changed our reality, but at the same time it hardened us and forced to show resilience and determination every day. Deloitte’s many-year course on sustainable development and a solid foundation of its values have proven that this is what helps businesses to stand in the most difficult times. We have rethought our projects and focused on the most urgent issues of assistance to Ukraine.

Since the beginning of the full-scale Russian invasion, one of the first Deloitte’s decisions was to transfer USD 100 thousand from the company’s funds as humanitarian support to Ukraine. In addition, in the first week of the war, partners and employees of Deloitte’s Ukrainian office collected and transferred more than UAH 1.5 million of their own funds to help the Armed Forces. Such fund raising have become a regular practice since then. The Deloitte global network and employees from its offices in different countries also show their solidarity with the Ukrainians – more than USD 7 million have been transferred to the accounts of various official initiatives that help Ukraine.

With our massive expertise and knowledge, Deloitte Ukraine joins initiatives aimed to help the state and organizations to ensure effective process management during the war. In 2022 fiscal year, the company invested 6,200 hours in employee volunteering, which is almost triple the amount of time compared to 2021. This is precisely due to the increasing number of our social and pro bono projects initiated in response to the onset of full-scale war.

For example, Deloitte provides audit services as part of our support to UNITED24, a fundraising initiative of the President of Ukraine, on a free basis. Our specialists quarterly check consolidated financial statements of the ministries that are responsible for the effective use of donations.

At the same time, from the first days of the full-scale invasion, Deloitte people made all efforts to disseminate relevant, verified information that was useful both to individuals and to the business community. For example, in response to an extremely popular request for information on how the Ukrainians who ended up abroad should pay taxes, Tax&Legal Team held open webinars where the most frequently asked questions on this topic were discussed.

Also, even though we are amid the war, we try not to ignore cultural projects and continue to support Ukrainian cinema. As part of our partnership with the Association of Ukraine Cinema Development & Support – Watch Ukrainian!, we joined the support of the national tour of Cinema for Victory. This is a series of film screenings in support of our defenders, internally displaced persons, and local communities.

How does Deloitte support its employees in wartime?

We focus our efforts on physical safety and psychological well-being of Deloittees. Since the beginning of the full-scale invasion, we have afforded our employees the opportunity to produce work commensurate with their ability and in a comfortable amount, given their personal situation.

In addition, the company has made an additional financial aid payment to all employees and provided one-time accommodation allowance to junior employees who were forced to move within Ukraine.

We have colleagues who joined our Armed Forces to defend Ukraine at the front. We are very proud of them and support them in all possible ways. Although employers’ obligation to pay wages to such employees was removed, Deloitte continues these payments and plans to do so in the future, including an annual salary review.

We also helped our employees to joint Deloitte network offices in other countries. It should be added that in these unprecedented circumstances, Deloitte Ukraine office and the global network acted as a single mechanism, which ensured smooth implementation of the relocation plan and prompt help to those who needed it.

Caring about mental health of our employees remains among our priorities. Deloittees have access to group sessions with psychologists. Our company regularly hosts webinars with experts to raise awareness of how to take care of oneself and support others during war.

Is Deloitte planning to issue a Sustainability Report this year? What encourages you to proceed with this effort?

We are currently preparing to present Deloitte Ukraine’s Impact Report for the 2021–2022 financial years. In this Report, we will show the results of our activities in the economic and social areas and provide information about our impact on the environment. The Report will also cover Deloitte’s actions in response to the challenges of Russia-Ukraine full-scale war.

The power of Deloitte is underpinned by the principles and values which we have set for ourselves and to which we adhere. We are responsible for the impact we make, that’s why we are in open dialogue with our stakeholders and inform about our specific actions in the Report. We hope this will inspire others to action.

_{This article was prepared for EBA}