ESG criteria are becoming a necessary part of any major business in the Czech Republic. Compliance with the principles of the abbreviation for environment, social, and governance is demanded not only by banks but also largely by young job applicants in the job market. Serge Damian, Chief Sustainability Officer from Czechoslovak Group, believes that the company is already fulfilling its future commitments.
The abbreviation ESG stands for Environmental, Social, and Corporate Governance, which means responsible corporate behavior in relation to the environment, society, and risk management. How does this theme go together with a company that operates largely in the defense industry?
It does. The proof of this is the recently published first-ever sustainability report of our industrial technology holding, which details the various activities of the CZECHOSLOVAK GROUP in the field of sustainability. It presents non-financial data according to respected international standards. ESG is a topic that we address in a truly comprehensive way across individual pillars, and we already have a defined group sustainability strategy, which will significantly influence the functioning of our companies in the future.
Any specific steps?
There are many specific steps. For example, I will mention that we are investing significant resources in the hydrogen Tatra project and are actively addressing other options for alternative propulsion. Our company DAKO-CZ in Třemošnice launched brake units on the market under the name Green Solution, which are considerably more environmentally friendly compared to conventional products. Furthermore, for example, our Italian company Fiocchi is investing in the construction of a unique specialized plant for the production of lead-free primers, which will be the only one of its kind in the world. Last but not least, we are taking all steps to reduce the energy demands of our companies and installing photovoltaic power plants in our facilities.
Do you take these steps as a necessity, or are they also important to you as part of the company's image? For example, towards the younger part of the population.
We take this primarily as a significant challenge that we want to manage as best as possible. ESG as a whole brings a large administrative burden, which companies are simply not prepared for today. We have to devote ourselves to analyzing existing internal processes and optimizing them so that they are in maximum compliance with the upcoming legislation and with the requirements that will be placed on all of us. However, if we also manage to improve the perception of the industry as a significant contributor to solving sustainability issues through our activities in the ESG area, we will consider that a great success. Especially if, through our activities, we increase the attractiveness of our companies among young talents who can bring new ideas, procedures, and know-how to the group.
Taking care of the community should also be a part of the social care agenda. How are you engaged in that?
As a multinational holding that has factories in many European and non-European countries, we approach this with full responsibility. We closely cooperate with universities and high schools. We also support the Czech Head project, where we are the general partner and the name Czechoslovak Group will be carried by the Industry Award this year, which is awarded for the most significant innovative technology or product implemented in the Czech Republic. We also financially support a project of the Institute of Hematology and Blood Transfusion (IHBT) for research on the treatment of acute leukemias. In addition, as a group, we try to help where needed. For example, last year, after the outbreak of extensive forest fires in Bohemian Switzerland, we were able to send a helicopter with a crew almost immediately after an agreement with the Integrated Rescue System, which helped with extinguishing fires in the Hřensko area. This year, in cooperation with the Turkish ambassador, we sent a truck with humanitarian aid to Turkish regions that were hit by a devastating earthquake at the beginning of February.
Let's move on to the letter G – governance. Just by the nature of your business, you have to be very cautious with authorities, regulators, and last but not least, politicians.
This is a pillar that we put first for us. Managing the entire group is the alpha and omega for us. Our absolute priority is full compliance with legislation at the local and international levels, for which we have set up a comprehensive compliance program - combating corruption, educating employees, educating managers, and more. In addition, we place great emphasis on a high level of transparency, where, for example, we have implemented a robust ethical code.
Stacks of newspapers and paper have been written about corruption in government contracts and the defense industry...
In the group, we have clear approval rules set up that our employees must follow, and which prevent any unwanted actions. You probably understand that I cannot talk in detail about these internal processes. As for relations with clients, suppliers, and other stakeholders, our extensive internal security department takes care of all related processes. We also have an anonymous line where any unethical behavior can be reported.
One of the real impacts of ESG is the possibility of obtaining financing or loans from banks. I assume that you communicate often with your financial management. How do financial institutions view you now?
ESG is, of course, primarily about cooperation, both internally and externally. The financial director of the group and individual financial directors of the group's companies, who are in daily contact with representatives of various financial institutions, play an active role in this process. This contact and good relations with banks allow us to mutually share experiences, which are a great inspiration for us, as banks are primarily the drivers of sustainability.
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