Societal Impact
Businesses that help people and the planet thrive will succeed
Due to the unprecedented pace at which our world is changing, the nature of our business is changing rapidly. Businesses need to adjust to the demands of civil society and redefine their purpose.
For more than two decades, the influential Business Roundtable has explicitly put shareholders first. In an atmosphere of widening economic inequality and deepening distrust of business, the powerful group has redefined corporates’ mission—to which nearly 200 CEOs agreed to commit-to lead their companies for the benefit of all stakeholders: customers, employees, suppliers, communities and shareholders (August, 2019). As Unilever CEO, Paul Polman puts it, “We are at a turning point. Only businesses that help people and the planet thrive will succeed.”
Being a strong believer in this quote, we at PwC Luxembourg are convinced that we have a role to play in ensuring a sustainable future for the global economy. However, Societal Impact remains one of our most complex and challenging materiality topics for us. We need to encourage our stakeholders, including our staff and our clients, to follow and adapt to the global sustainability agenda set by the United Nations. As we are optimising the impact we have on our society, we also live up to our purpose “to build trust in Society and to solve important problems”, where sustainability plays a crucial role.
Towards inclusive business models
Our world is changing at an unprecedented pace, challenging the political, economic, societal and business norms we are used to and, as a result, the nature of our business is changing rapidly.
Key Focus Area (KFA): Sustainability Performance and Strategy
We use the Paris Agreement defined at COP21 and the United Nation 2030 Agenda for Sustainable Development based on the 17 Sustainable Development Goals (SDGs) as a framework to guide us with our stakeholders. We also believe that the ecosystem created by Luxembourg, where PwC operates with our stakeholders, is very fundamental.
Despite Luxembourg being one of the smallest countries in the European Union, it is known to be a frontrunner thanks to its well-established international finance centre that combines expertise and knowledge; its willingness to face today’s challenges; and its capability to adapt and identify innovative and successful solutions.
Luxembourg was also one of the first to support the UN global agenda on a voluntary basis and with the Luxembourg Green Exchange (LGX), the Grand Duchy became the world’s first platform exclusively dedicated to green securities. Today, Luxembourg is the primary centre in the world for listing green bonds and the European leader in responsible investment fund assets.
This special ecosystem, next to the regulatory drivers and the current market developments, bring us to focus our efforts in the following four key areas. These are areas where we see a clear momentum and we drive immediate actions:
SDG assessment and non-financial reporting
At PwC Luxembourg, we are convinced that the value of businesses can be expressed beyond financial reports, namely through the lens of non-financial reporting. We are exploring this realm year on year, and it is a practice that we apply to our own business through our Annual Review. This view is shared by the European Union, who have issued a non-financial reporting directive in that respect. Next to the regulatory aspect, there is also a clear demand from stakeholders to understand their societal impacts, how they are able to contribute towards the 17 SDGs and how they can respond to emerging risks and opportunities generated by climate change. One of our partners at PwC is also one of the 32 members of the Task Force on Climate-related Financial Disclosures (TCFD), and supports us greatly in this time of transition. Climate change presents transition risks, including emerging regulations, new technologies, shifting supply and demand, and finally, damage to brand value and loss of customer base due to shifting public sentiment. Consequently, with sufficient disclosure, capital market players can make well-informed asset allocations and risk- pricing decisions, and could pose a financial stability problem.
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Environmental, Social and Governance factors (ESG)
Entities that manage wealth have an important impact in the way they allocate money in the economy via the businesses they invest in. Embedding environmental, social and governance criteria in their investment decisions has the potential to generate massive societal change and will push businesses to contribute to the global agenda if they wish to receive capital.
From ESG to Sustainable Finance : will the EU Action Plan on Sustainable Finance reshape the integration of ESG factors within Asset Management? Watch the video
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Sustainable Finance
United Nations estimated that $5 to $7 trillion have to be invested to achieve the SDGs. If we look at the size of markets today, there is a general consensus that private sector investments need to move from millions to trillions. Private capital is becoming an increasingly important tool for global development as well as one of the biggest business opportunities.
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Climate Change
The signing of the Paris Agreement in December 2015, and the speed at which it was ratified, signals a change in the way governments are addressing climate change and national policies are put in place to accelerate the transition to a low carbon economy.
Explore moreThese key topics do not limit us to also look into other areas that are growing in strength and importance such as circular economy, human rights, Fourth Industrial Revolution (4IR) and the environment and other pressing subjects which we are driving together with our global team.
Following our mission statement: “Embed sustainability in everything we do…”
Successful partnering with our clients only works if we ‘Walk the Talk’ and live up to our mission statement to embed sustainability in everything we do. Thus, our Societal Impact material topic covers all three dimensions: our firm, our people and our clients:
Firm
This year we took a first step in aligning our sustainability strategy with the 17 SDGs (see ‘How we deliver on our purpose’). The SDGs are going to be around for a long time, and businesses can plan and invest around this certainty. However, adopting the label alone will never be enough; we need to demonstrate a deeper understanding and engagement of the SDGs. Our aim is to belong to that growing group of companies who educate themselves thoroughly on the topics, and who are taking action on sustainability with a clear long-term sustainability vision, strategy and action plan. This will empower us to be transparent beyond financial performance, which is something that we want, and that stakeholders in Luxembourg and around the world demand more and more.
People
Our people are our main capital (see ‘Continuous learning’). We need to upskill our people (with new tools and new sets of knowledge) to support our clients in anticipating the important problems they are facing or will be potentially facing in the near future. Even more than this, upskilling people is good for the sake of our people, as we unlock opportunity by working together to raise the quality of their talent. It boosts morale, employee satisfaction, and eases succession planning. This allows all of us to play a continuing vital and relevant role in our turbulent digital economy. To actively participate in this transition together with our clients we regularly organise internal as well as external awareness raising/ trainings, events (such as 2nd Green Finance day and TCFD event) and develop thought leadership (such as SDG Challenge).
Market
We remain forward looking and are working together with our network on the key sustainability topics (see above under Key Focus Area). By tailoring the relevant service offerings in sustainability for our clients, we are thinking more broadly and strategically about their needs and expectations for the future. Consequently, we are also promoting investment and a long-term mindset instead of a short-term profit driven way of business.
This material references Disclosures 102-44, 102-46, 102-47, 103-1, 103-2, 103-3 and 203-1.