Interview: Petra Zítková | Photo: magazine Travel Fever
In recent months, there has been a lot of talk in business circles about ESG. I dare say most of us have no idea what that means. So, I have no choice but to begin by asking - just what is it?
The key here is the term “sustainability” – simply the effort to have a place to live in 50 years’ time or more, so that there is still a habitable planet and everything that depends on it, including business. And we will not achieve that without the commitment of everyone, including companies. ESG then adds a specific set of environmental, social and corporate governance criteria to our rather virtual vision of sustainability, to show how companies specifically embrace sustainability in their operations.
And what’s behind the letters ESG: These are environmental aspects – how the company addresses its impact on the environment and the condition of the planet, social aspects – how the company works with its employees, how it evaluates them and how it rewards them, but also how it deals with the environment in which it does business (for example, by supporting non-profit organizations, cultural and community life, etc.), how it contributes to the cultivation of society as a whole, and governance – how the company ensures transparency, communicates with the authorities, complies with regulations, and sets up its internal control system, management and decision-making tools.
What does this mean for business relations? We are talking practically about the collective responsibility of the company in the area of social and environmental factors. Can we say that it determines the credit of the given company?
Yes. Various surveys indicate that the topic of sustainability and corporate responsibility in this area is of increasing interest to people – financial institutions, customers, investors and other groups, which are vital for long-term success and for the economic sustainability of the company. For example, they help investors identify potential risks and potential returns.
The aim of the ESG is to improve the collection and monitoring of metrics. Accurate measurement and transparent publication of timely, complete, adequate and auditable data. Analyses are now available indicating that environmental, social and corporate governance data correlate with the financial performance of firms and investors. And that is the reason for collecting and evaluating such data. The trend is clear. It is clear that companies with good ESG are more attractive to investors and more resilient in general. They record lower risks, higher returns and are able to function even in times of crisis. The proverbial question arises as to what came first, the chicken or the egg: whether companies understand the importance of sustainability with wise leadership, and therefore focus on ESG, or whether ESG metrics monitoring helps to improve company performance. Either way, this coherence of satisfactory results with a focus on sustainability is clear.
Is it right to say that this is how companies build up a kind of score, according to which potential business partners or investors can judge them?
Yes, that is right. The attention of companies, governments and consumers paid to the functioning and influence of companies is growing significantly. Many major banks and investment firms already include ESG criteria in their portfolio. According to KPMG surveys, 71% of CEOs consider that it is their personal responsibility to ensure that the company’s ESG policy reflects the values of their customers.
Starting in 2024, large companies will be required to include key ESG data in their annual reports. Thanks to this interconnectivity, they will subsequently also require this data from their suppliers. How is Crestyl preparing for this?
Very intensely. Certainly, one great advantage is that we have something to build on. Crestyl has long embraced respect for the environment and the community, as well as transparency and effective management. We are finalizing our ESG strategy, preparing the non-financial report for 2022, and we are resolving many of the other important steps we want and need to take to remain competitive, and to absorb all the trends that will increase more rapidly. This especially concerns our industry and its deep footprint in emissions as we get closer to the breakthrough year of 2050. Although no legal obligations will be imposed on us in this area until at least 2024, we do so not because we have to, but because we believe in it. In this area, too, we in Crestyl want to be trendsetters, the trailblazers, and not the ones catching up and creating something just to comply with some legal requirement.
Will this be a major problem for some smaller companies? For example, with regard to finance or experts in this area?
Certainly, at first. Fortunately, there are a lot of good examples from practice and opportunities to be inspired by those already somewhere down the road on the ESG journey. Banks and other financial institutions are an interesting source of professional support especially to smaller enterprises, as are various professional platforms. I am sure a great deal of work awaits everyone. We are also ready to help our smaller suppliers set up their ESG strategy so that we can continue to work together the best we can. They can, for example, subscribe to our existing documents.
Sustainability is one of the most used words of recent years, in many sectors. It is easy to inscribe it as one of the company’s values, but how hard is it to be serious about it?
I cannot say, because Crestyl was born embracing the principles of sustainability, although no one has ever dramatically emphasized that. We make sure that people live well in our projects, as well as everyone around them. We do not forget enough greenery and quality of life – both private and professional. We place these qualities on the level of design and comfort.
What are the major steps that Crestyl is going to take?
We are completing the overall ESG strategy this autumn. We are preparing a specific plan to reduce our carbon footprint, where we will measure it in 2022 for the Crestyl platform (employees, papers, our vehicle fleet), in 2023, we will measure the footprint for our entire investment portfolio (including leased buildings that we own), and from 2024 for residential and commercial development. We want to reduce our carbon footprint by 50% by 2030 and achieve overall carbon neutrality by 2050. All our new commercial projects are already LEED Gold certified, and recently even LEED Platinum certified. We are already preparing new residential projects for BREEAM Very Good certification. For example, we will also measure the gender pay gap in Crestyl, and based on the results, we will prepare a strategy for its elimination.
That sounds ambitious. Does Crestyl have a specific notion for achieving the mentioned carbon neutrality?
We openly acknowledge that we aspire to honor the commitments of the Paris Climate Accords and all the measures taken by the European Commission, but the work on a decarbonization strategy that outlines our plan and anchors it in time is yet to come next year. As it is with other real estate development companies, we face a crucial task: to follow trends and apply the best in our projects in order to be as “green” as possible, and as open and friendly to people and the environment as possible, in accordance with the new rules, while remaining economically viable. We consider it essential to work with suppliers, designers and architects sharing the same vision and values – if our ESG projects are to be, we all need to be on the same page, so to speak. Fortunately, our partners are progressive and come to us with concepts that are ahead of the times. We get help from our clients who require sustainable solutions, buildings and lower energy consumption. We want to draw funding from institutions that offer us better conditions because our business is green.
The path to carbon neutrality is through the certification of buildings such as LEED Gold, LEED Optimum for commercial projects or BREEAM Very Good for residential projects, as well as through the implementation of EU taxonomy, i.e., EU rules mandatory from 2024.
Other factors considered include employee relations or remuneration of employees and management. Do you think that transparency is the main objective of the introduction of the ESG?
In a way, yes, but not transparency as a value in and of itself. The main objective is to actively contribute to sustainability in the areas concerned, and the ESG criteria show how well this is done. They allow comparisons between different companies and improvement of each over time. Companies considerate of their surroundings, employees, neighbors, customers, business partners and other stakeholders are more successful, have a larger fan base, are positively rated by others on the market and are perceived as a benchmark. In relation to the transparency of remuneration, for example, we are focusing on measuring the gender pay gap as I mentioned.
This is a new global reality that companies can exploit for new business opportunities. Is it possible to gain a competitive advantage here?
Surely. For financial institutions and investors, the ESG factor and its reflection in the company’s strategy is already crucial today before the law even requires it. In particular, global companies are strongly considering ESG criteria for the buildings they rent, as are our tenants.
Perhaps it is logical and also a reflection of the time that we will also judge companies according to non-financial indicators, specifically according to environmental factors. But isn’t it a little late?
It is certainly not too late to reverse negative environmental trends. That is our responsibility, and we must do our utmost. We only have one planet Earth, and it is up to us to treat it well. Wicked stepmother-like behavior towards it has been around long enough, now it is time to be caring and considerate.
If I may ask you something personal. After years in advocacy, you practically changed your career by coming to Crestyl, what was your motive?
I was in advocacy for almost 20 years, and this job stopped filling me up. It is meritorious, important and interesting, I enjoyed its intellectual challenge for a long time, but my personal journey led elsewhere. I did not have any plans when I left the business. At the time, I did not think I was coming back. And after two years off, I realized I wanted to return to the business world. A company today is an essential organizational unit of society, whether I like it or not, and therefore the possibility of influencing the world and having a positive impact on it here is paramount.
You started at a time when meetings and negotiations were held only through the computer screen. It must have been difficult to build up working relationships and trust in this way. Did you succeed?
Yes, but my home office did not last long, so I easily established relationships with colleagues that were not disrupted by Covid-19. Maybe quite the contrary. It was like a time of war, when we were constantly exposed to new situations that made our narrowest team, i.e., the board, bond tightly together. So, from my point of view, the ideal timing, the whole Covid period, functioned like intense teambuilding. (laughs)
You are the Chief Corporate Officer at Crestyl. You started this post at a time when the company was undergoing changes in its internal structure and expanding into other European markets. Wasn’t that a big bite to start with?
That was quite a big bite. (laughs) We set up new corporate governance, the method of decision-making at all levels, from our holding companies in Malta to the team on a specific development project. We also bought a developer undertaking in Poland, Spravia, our first foreign acquisition. Meanwhile, we also issued project bonds to finance the Savarin project in the center of Prague, our very first bonds and publicly traded too. Although I came to Crestyl after a two-year hiatus, I still remembered the pace of international law firms. But most importantly, I was not alone. I had the support of the other members of Crestyl’s innermost leadership and of my team.
Crestyl has become a corporation. What are the benefits of this structure?
We try to make the corporate aspect only positive, we stick to the best market practices: consistency in the implementation of our business plans, transparency, increasing efficiency through standardization of processes where sensible, and so on. The goal is to have such a corporate structure and processes that will give our shareholders and investors a sense of security that they are in good hands, while not losing the ability to make decisions quickly, flexibly, and remaining cognizant of the risk we are taking.
In addition to ecological sustainability, the position of women in companies and in high managerial positions is another much-discussed topic. When I look at your study and work experience, you are undoubtedly qualified for your post. In fact, I do not even want to ask you if women belong in top-level business. Let me rephrase the question – why do you think this is still a topic?
Sometimes we women lack the courage to seek a position that requires further growth. We think that we are not yet good enough and ready – I am speaking from my own experience. Instead of saying to ourselves: “This role appeals to me, I have what it takes, and I am aware that I will have to learn something new or hire people into the team who do possess this expertise. But it couldn’t hurt trying, so I’ll go for it,” we underestimate ourselves. Whereas men simply say yes to the challenge and only then do they decide how to meet it. It makes them grow faster. We grow with challenges when we are outside the comfort zone. But I realize that this is still a topic for practical reasons – for example, the inability of society to offer a parent who primarily cares for the child – and this is still often the woman – such opportunities to be able to handle more roles. Examples include proper availability of childcare, openness to flexible working hours, or the possibility of working from home.
Have you ever had to defend your position?
I have and still do, but not because I am a woman. My position is visible, responsible and well paid. You can only hold this post in the long term if you bring shareholders the expected value. And if those shareholders are enlightened, which is my case, they also recognize value in the impact that Crestyl has on society in a broader sense. That makes me enjoy the work all the more.
We often hear that emotions do not belong in business. Men often attribute them to us women. When you think about it honestly, do you find your business judgment has ever been influenced by emotions?
I hope so, because without emotions, I do not think you will make the right decision very often. It is one of the tools of leadership provided they are authentic. Emotions are essential in order for the leader to build trust, strengthen relationships, set a vision and excite others to share it, focus the team’s energy to be able to make tough decisions, and learn from our mistakes. You always make decisions based on a value base that you cannot enumerate and that is not purely rational. Every decision has elements of rationality and emotion, and wisdom lies in mixing these aspects properly.
Have your emotions ever been detrimental at a given moment? Would you change anything?
Emotions themselves are never bad, but you have to learn to work with them. They are a useful tool, like your inner compass, but not the steering wheel. The problem is that if we are unable to perceive and understand our emotions, i.e., understand ourselves, they can drag us down. If I were to change anything, it would be to have more courage to let my emotions into business decisions and admit it. I am trying to.
As you mentioned, you took two years off work before joining Crestyl. That is a dream for many. How did you spend this time?
Beautifully. It was a very contemplative time for me, a wonderful opportunity to be with myself. I did yoga in Bali, traveling not in the spirit of ticking off tourist attractions from the list, but for instance I was in Canada for a month by the turbulent ocean or alone in the mountains. I tried weekly meditation without contact with people, and I focused on my own development and education. It was time after an extended period to simply stop and find out who I was. What I enjoy, what motivates me, what gives me meaning, what I want in life.
Many people cannot afford this for various reasons. Do you have advice for them on how to relax mentally while working?
I realize I have been fortunate, but I also have to set my own life “sustainability”. I ask myself how to live in such a way that in a few years, I need no fundamental reset. I am still learning. I cannot do things halfway. For me, it is important to live a life that amuses and pleases me. That gives me energy, so I rest. I need time with my loved ones, movement –for me that means yoga, jogging, travel, adventure, meditation and surrounding myself with beauty – which I look for in art (opera, ballet, classical music), and in nature. It is different for everyone. But I do not think anyone can be happy from work alone.
In addition to yoga as you mentioned, your hobbies also include salsa dancing. Two completely different energies to me. How do they complement each other in your case?
I agree. Yoga to me means inner peace, contemplation, immersion, I find it has a spiritual context. Salsa is a joy, a feeling of femininity, attuned to a partner and fleeting, but all the more beautiful moments of harmony of two energies. And I need both of these worlds.
They say you know a person best by what he or she reads. What do you like to read? If I were to read one book, what do you think it should be?
I can’t just pick one book. If I were to mention a few that fundamentally influenced my view of myself or the world, they would include the following: Women Who Run With Wolves (Clarissa Pinkola Estes), Reading Lolita in Tehran (Azar Nafisi), Daring Greatly (Brené Brown), The Great Work of Your Life (Stephen Cope) or Man’s Search for Meaning (Viktor Frankl).
Thanks for the interview.