CSR MANAGERS SURVEY 2015 IN CENTRAL EUROPE. Belgrade, December, 2015 Sustainability Consulting CE

CSR MANAGERS SURVEY 2015 IN CENTRAL EUROPE Belgrade, December, 2015 Sustainability Consulting CE

Survey info The CSR Managers is a survey launched by the Responsible Business Forum (RBF), the largest and the oldest non-governmental CSR organization in Poland. The 2015 edition was undertaken for the 15th anniversary of Partnership for CSR in Poland. Deloitte and PBS are partners of the survey. Deloitte realized the Central European chapter of the CSR Managers Survey, except for the Polish edition. 15 years of Partnership for CSR in Poland is the most important CSR jubilee in Poland in 2015. The aim of the celebration is to sum up the achievements and developments during the 15 years of CSR work which were enabled by co-operation between many people, companies and institutions. The celebration of the 15th anniversary of Partnership for CSR in Poland has been initiated and organised by the Responsible Business Forum. The accompanying motto is: Business that changes the world. People that change business (www.responsiblebusiness.pl). Organizer of the Jubilee: Responsible Business Forum Main Partners: Bank Zachodni WBK, Polski Koncern Naftowy ORLEN Partner: Polskie Górnictwo Naftowe i Gazownictwo 2015 Deloitte Central Europe 2

CSR and social problems 1/2 Do you agree that business has contributed to solving social problems in your country in recent years? 2% 11% 48% 36% DK I strongly disagree I somewhat disagree I somewhat agree I strongly agree TOP 2 BOXES 84% What social problems has business contributed to solving in recent years? (most popular answers) supporting local communities promoting transparency in business healthcare subsidising education environmental protection reducing unemployment supporting equal opportunities counteracting poverty combating corruption and nepotism supporting young people on the job market supporting the disabled Which current social problems in your country should business be helping to solve? (most popular answers) combating corruption environmental protection supporting education efficient energy use promoting a healthy lifestyle minority integration counteracting unemployment improving employee competence The overwhelming majority of respondents express a view that business has contributed to solving social problems in their country in recent years. CSR managers mainly emphasise the role of business in solving environmental protection problems, as well as supporting education (through subsidising) and counteracting unemployment (through job creation). According to the majority, these are the most serious problems that business should get involved in looking forward. On the other hand, CSR managers expect stronger commitment to combating corruption. Sample size: All respondents, N=179 2015 Deloitte Central Europe 3

CSR and social problems What current social problems should business contribute to solving in your country in particular? (most popular answers) Bulgaria Czech Republic Hungary Latvia Lithuania Promoting a healthy lifestyle Supporting education Environmental protection Supporting education Combating corruption Environmental protection Promoting a healthy lifestyle Counteracting unemployment/ creating new jobs Minority integration Efficient energy use Improving employee competence Improving employee competence Environmental protection Efficient energy use Environmental protection Supporting education Counteracting unemployment/ creating new jobs Combating corruption Romania Serbia Slovakia Slovenia Supporting education Minority integration Combating corruption Environmental protection Counteracting unemployment/ creating new jobs Environmental protection Combating corruption Supporting education Improving employee competence Environmental protection Counteracting unemployment/ creating new jobs Combating corruption Minority integration Environmental protection Minority integration Counteracting unemployment/ creating new jobs Promoting a healthy lifestyle Supporting education 2015 Deloitte Central Europe 4

Role of business in social and economic growth Do you agree that business can have an influence on social and economic advancement of your country & economy in the following areas DK I strongly disagree I somewhat disagree I somewhat agree I strongly agree Top 2 boxes An increase in the competitiveness of the economy 2% 2% 32% 63% 96% Improvement in employee engagement and adjustment of resources to actual needs 1% 3% 59% 94% Development of intellectual capital and knowledge-based economy 1% 6% 56% 91% Energy and climate security 3% 8% 46% 41% 87% Social capital development of your country & economy 2% 9% 43% 39% 82% Infrastructure 1% 18% 43% 36% 79% Prevention of social inequality 4% 16% Sample size: All respondents, N=179 CSR managers see the best chances of social and economic development of their countries in the impact of business on the growth in the competitiveness of the economy, the positive impact of enterprises on employment rates and aligning work availability with actual needs and their impact on the knowledge-based economy and intellectual capital growth. Managers put the least of their hopes in the effect business has on combatting social inequality. 2015 Deloitte Central Europe 5 40% 36% 76%

Role of business in social and economic growth Do you agree that business can have an influence on the social and economic advancement of your country & economy in the following areas TOP 2 BOXES I somehow agree + I strongly agree Slovenia Slovakia Serbia Romania Lithuania Latvia Hungary Czech Republic Bulgaria An increase in the competitiveness of the economy Improvement in employee engagement and adjustment of resources to actual needs Development of intellectual capital and knowledge-based economy 100% 92% 95% 95% 96% 100% 93% 100% 96% 100% 92% 85% 100% 100% 100% 91% 90% 96% 90% 83% 85% 95% 91% 100% 91% 95% 91% Energy and climate security 90% 92% 65% 100% 96% 100% 79% 95% 87% Social capital development of your country & economy 60% 83% 70% 67% 91% 100% 93% 84% 70% Infrastructure 40% 92% 70% 78% 95% 100% 81% 74% 74% Prevention of social inequality 60% 75% 40% 67% 91% 100% 84% 69% 83% Sample size: Respondents from individual countries 2015 Deloitte Central Europe 6

Predicted changes in business over the next years To what extent do you agree with the following statements: DK I strongly disagree I somewhat disagree I somewhat agree I strongly agree Top 2 boxes Companies business models will change within the next several years 2% 8% 65% 21% 86% There will be increasingly strong pressure from consumers on businesses to offer socially responsible products and services 3% 18% 48% 27% 75% EU Directive on non-financial reporting will positively impact the quality of social reporting in your country 6% 16% 41% 21% 63% Operating expenses will go up sharply as companies will have to take better care of the environment/society 5% 41% 13% Sample size: All respondents, N=179 54% The vast majority of managers claim that business models are likely to change in the coming years and to a great extent, the change will be the result of pressure from customers who are increasingly expecting to see socially responsible products and service on the market. 2015 Deloitte Central Europe 7

Predicted changes in business over the next years To what extent do you agree with the following statements: TOP 2 BOXES I somehow agree + I strongly agree Slovenia Slovakia Serbia Romania Lithuania Latvia Hungary Czech Republic Bulgaria Companies business models will change within the next several years There will be increasingly strong pressure from consumers on businesses to offer socially responsible products and services EU "Directive on non-financial reporting will positively impact the quality of social reporting in your country Operating expenses will go up sharply as companies will have to take better care of the environment/society 80% 83% 60% 94% 95% 100% 93% 74% 87% 60% 83% 80% 72% 77% 92% 79% 37% 87% 60% 17% 70% 78% 64% 83% 84% 26% 48% 40% 17% 45% 72% 86% 50% 61% 37% 48% Sample size: Respondents from individual countries 2015 Deloitte Central Europe 8

Position of CSR in the coming years What do you think the position of corporate social responsibility will be in the coming years? TOP 2 BOXES 76% 90% 78% 55% 84% 100% 75% 79% 69% 70% It will become more mature whereby it will include social and environmental issues in the business model 32% 30% 33% 30% 28% 41% 50% 11% It will flourish; more and more businesses will be joining in the CSR network It will be in the same position as today It will be in decline; no-one will care about CSR 44% 18% 1% 25% 60% 42% 10% 0% 0% 25% 0% 56% 11% 6% 59% 0% 58% 44% 25% 17% 12% 32% 0% 2% 0% 22% 0% DK Total Bulgaria Czech Republic Hungary Latvia Lithuania Romania Serbia Slovakia Slovenia Sample size: All respondents, N=179 and respondents from individual countries Most of the managers polled are optimistic about the future of CSR almost half of them believe that CSR will flourish and there will be a continued growth in the number of socially responsible businesses. One third of respondents claim that CSR will reach maturity as social and environmental issues become a part of business models. Managers from the the Visegrád Group States (Czech Republic, Hungary, Slovakia) are less optimistic in this respect one third or more of the respondents from these countries foresee stagnation in CSR. 2015 Deloitte Central Europe 9

Obstacles to CSR implementation in the future What do you think will be the main problems or obstacles to CSR implementation in your country in the next 15 years? SOUTHEAST EUROPE Perception of CSR as sponsoring initiatives 59% 50% 75% 61% 57% Lack of government incentives 52% 30% 42% 63% 48% Companies' reluctance to invest 46% 30% 25% 37% 52% Conviction that CSR "doesn't pay" and no benefits can be derived 40% 30% 17% 42% 57% Misunderstanding of the idea by companies' management teams 39% 30% 25% 42% Economic crisis 36% 20% 25% 39% 58% Absence in the media and public debate 20% 17% 17% 47% Inadequate education of management team 27% 30% 25% 37% Lack of consumer pressure 24% 20% 12% Bulgaria Serbia 17% 9% Romania Slovenia Sample size: All respondents, N=179 and respondents from individual countries The government s indifference to CSR implementation is mostly visible in Hungary, Slovakia and Serbia. The reluctance of enterprises to invest in CSR is mostly felt by managers from the Visegrád Group States, especially Czech Republic where it has felt strongly that such investments are unprofitable. 2015 Deloitte Central Europe 10

Measurement of effectiveness of CSR actions Do you measure the results of your CSR initiatives? How do you measure the effects of CSR actions? Yes Media monitoring 52% No DK Analysys of our own CSR/ sustainable development strategy realisation metrics 37% 24% 54% Opinion polls 34% If you were to summarise your involvement in CSR/ sustainability initiatives, what would you consider your biggest success so far? (most popular answers) Educational programmes Supporting and promoting local communities initiatives Supporting the disabled Organising or helping organise charitable initiatives Creating new jobs Promoting pro-environmental initiatives Result sustainability monitoring Evaluation of results of respondents' actions Impact evaluation Cost and benefits analysis Ratio analysis for social and environmental purposes Industry benchmarking Other 27% 23% 22% 18% 16% 11% 8% Sample size: All respondents, N=179 Just over half of the respondents measure the effectiveness of their CSR initiatives. Media monitoring is the most popular method for evaluating the respondents own initiatives. To a lesser extent managers use their own CSR metrics or opinion polls. As their greatest accomplishments the managers name educational programmes, initiatives on the job market, involvement with and support for local communities and promotion of pro-environmental initiatives. 2015 Deloitte Central Europe 11

Best CSR implementation methods and tools Which of the methods, tools and management techniques listed below do you consider the most useful in the work of a person involved in CSR/sustainability implementation? SOUTHEAST EUROPE Corporate volunteering Dialogue with stakeholders Social Campaigns Ethics programmes for employees Environmental programmes Socially responsible investing (SRI) Charitable and/ or philantropic actions Management systems (e.g. ISO 9000; ISO Cause-related marketing (CRM) Sustainable supply chain management Intersectional cooperation Social reports Workplace diversity management 8% 6% 17% 16% 16% 15% 22% 29% 29% 29% 27% 36% 0% 0% 0% 10% 10% 0% 8% 0% 8% 17% 17% 20% 20% 10% 17% 8% 20% 30% 33% 33% 42% 42% 40% 50% 50% Bulgaria Romania 80% 14% 12% 40% 30% 30% 40% 30% 26% 28% 22% 21% 17% 12% 17% 14% 4% 5% 9% 2% 9% 33% 30% 26% 39% Serbia Slovenia Sample size: All respondents, N=179 and respondents from individual countries Action Impact Please note the low ratings of social campaigns from Latvian and Slovak managers, as well as the low ratings of ethical programmes for employees from Hungarian, Romanian and Serbian managers. 2015 Deloitte Central Europe 12

CSR implementation methods and tools Which of the methods, tools and management techniques listed below do you consider the most useful in the work of a person involved in CSR/ sustainability implementation? Which of the aforesaid are under used in your country and deserve to be popularised? Corporate volunteering Dialogue with stakeholders 36% 26% 25% Social Campaigns 29% 16% Ethics programmes for employees 29% 23% Environmental programmes 29% 17% Socially responsible investing (SRI) 27% 40% Charitable and/ or philantropic actions 22% 7% Management systems (e.g. ISO 9000; ISO Cause-related marketing (CRM) Sustainable supply chain management Intersectional cooperation Social reports 8% 17% 16% 16% 15% 6% 16% 19% 28% 32% Enhancement Workplace diversity management 6% 15% Sample size: All respondents, N=179 In the opinion of the managers polled, the most useful in CSR implementation are tools and methods enabling employee involvement such as corporate volunteering, ethical programmes for employees and a dialogue with stakeholders. Respondents also named social campaigns and pro-ecological programmes as useful initiatives. Managers pointed to investments in social responsibility and inter-sectoral cooperation as tools that are much underused and worth popularising. 2015 Deloitte Central Europe 13

Benefits and achievements of CSR actions What benefits has your company derived from CSR action implementation over the past two years? An increase in employee involvement 65% Improvement in reputation Improvement in relations with local communities Improvement in recognition of the brand as responsible/ sustainable Improvement in ethics awareness among employees 55% 53% 51% 46% Increase in customer trust 32% Implementation of new innovative solutions (e.g. products, services, Reduction in operating expenses 23% 21% A decrease in the number of workplace accidents A decrease in employee turnover 12% 10% We have not derived any benefits 1% Sample size: All respondents, N=179 and respondents from individual countries Among the biggest benefits of CSR activity in their firms the respondents named mainly positive changes for employees (stronger involvement and better ethical awareness), and changes to the image (improvement in reputation, relations with local communities and recognition of the brand as socially responsible). 2015 Deloitte Central Europe 14

SUMMARY LOCAL PERSPECTIVE 2015 Deloitte Central Europe 15

Serbia summary CSR Past and present IMPACT OF CSR ON THE WAY BUSINESS WORKS 84% BENEFITS OF CSR ACTIONS TO BUSINESS The biggest CSR benefits to their firms according to Serbian managers: 67% Improvement in reputation of managers claim that business has contributed to solving social problems in Serbia 63% Improvement in relations with local communities What has been done? Reducing unemployment Counteracting poverty Supporting local communities Combating corruption and nepotism Supporting young people on the job market Subsidising education Environmental protection What should be done? Counteracting unemployment/ creating new jobs Environmental protection Combating corruption Supporting education Improving employee competence 54% An increase in employee involvement 2015 Deloitte Central Europe 16

Serbia summary CSR Managers CSR MANAGEMENT METHODS AND TOOLS CSR EFFECTIVENESS MEASUREMENT The most useful for CSR managers: 40% Corporate volunteering Worth popularising in Serbia: 42% Cause-related marketing (CRM) 54% 40% Social campaigns 33% Socially responsible investing (SRI) of Serbian managers measure the effectiveness of their CSR initiatives Most popular tools for measurement Dialogue with stakeholders 33% Corporate volunteering 47% Media monitoring 47% Analysis of our own CSR/ sustainable development strategy realisation metrics 30% Evaluation of results of respondents' actions 2015 Deloitte Central Europe 17

Serbia summary CSR Future FUTURE OF CSR FUTURE OF BUSINESS 44% Clients expect socially responsible products and services of Serbian managers predict that CSR will flourish and there will be a continued growth in the number of socially responsible businesses of Serbian managers claim that CSR will become mature with social and environmental issues becoming a part of the business models 79% OBSTACLES TO CSR GROWTH Among the main obstacles to CSR development in the next 15 years, most Serbian managers named the following: 63% Lack of government incentives 61% Perception of CSR as sponsoring initiatives Change in the way business functions as a result of CSR actions 93% 61% Change in business models 84% Increase in enterprise cost 58% Economic crisis Improvement in quality of CSR reporting as a result of EU Directives 47% Absence in the media and public debate 2015 Deloitte Central Europe 18

SUMMARY GLOBAL PERSPECTIVE 2015 Deloitte Central Europe 19

Evolution of business responsibility Impact & innovation Source: W. Visser, the Age of Responsibility, 2011 2015 Deloitte Central Europe 20 20

Sustainable Development Goals: action to be taken by countries 2015 Deloitte Central Europe 21

Social Progress Index 2015 2015 Deloitte Central Europe 22

OUR APPROACH 2015 Deloitte Central Europe 23

Deloitte Sustainability Consulting Central Europe team 1 2 3 4 5 Sustainability Consulting Central Europe helps private and public sector clients expand their perspective from a one-dimensional, profit-oriented one to a multidimensional perspective, taking into account their wider economic, social and environmental impact. We help our clients design, execute and report their sustainability strategies, and support them in their transformation to become more responsible businesses. This fits well with Deloitte s global purpose statement of making impact that matters. As Deloitte in the CE region, we are developing this area and we focus on 4 key dimensions: ECONOMICS, IMPACT, RELATIONS, TRANSFORMATION. Currently we have 20 team members based in Warsaw, Poland and a number of additional consultants across the CE, including amongst others Hungary and Romania. Our team members delivered over 400 CSR-related assignments, focusing on a number of areas from strategy, reporting, risk management, energy efficiency to communication and economic analysis. In the past 15 years, we helped in educating the marketplace on CSR/sustainability matters through our various initatives such as Vision 2050, Carbon Disclosure Project, Green Frog Award for Best CSR Reporting, Respect Index, and more. 2015 Deloitte Central Europe 24

Contacts Irena Pichola Partner, Sustainability Consulting Central Europe Deloitte ipichola@deloittece.com Rafał Rudzki Senior Manager, Sustainability Consulting Central Europe Deloitte rrudzki@deloittece.com Jakub Michałowski Manager, Sustainability Consulting Central Europe Deloitte jmichalowski@deloittece.com Barbara Mitosek Senior Coordinator, Clients&Markets Poland Deloitte bmitosek@deloittece.com Deloitte is the brand under which tens of thousands of dedicated professionals in independent firms throughout the world collaborate to provide audit, consulting, financial advisory, risk management, and tax services to selected clients. These firms are members of Deloitte Touche Tohmatsu Limited (DTTL), a UK private company limited by guarantee. Each member firm provides services in a particular geographic area and is subject to the laws and professional regulations of the particular country or countries in which it operates. DTTL does not itself provide services to clients. DTTL and DTTL member firm are separate and distinct legal entities, which cannot obligate the other entities. DTTL and each DTTL member firm are only liable for their own acts or omissions, and not those of each other. Each of the member firms operates under the names "Deloitte," "Deloitte & Touche," "Deloitte Touche Tohmatsu," or other related names. Each DTTL member firm is structured differently in accordance with national laws, regulations, customary practice, and other factors, and may secure the provision of professional services in their territories through subsidiaries, affiliates, and/or other entities. Deloitte Central Europe is a regional organization of entities organized under the umbrella of Deloitte Central Europe Holdings Limited, the member firm in Central Europe of Deloitte Touche Tohmatsu Limited. Services are provided by the subsidiaries and affiliates of Deloitte Central Europe Holdings Limited, which are separate and independent legal entities. The subsidiaries and affiliates of Deloitte Central Europe Holdings Limited are among the region s leading professional services firms, providing services through more than 3,800 people in 41 offices in 17 countries. Deloitte provides audit, tax, consulting, and financial advisory services to public and private clients spanning multiple industries. With a globally connected network of member firms in more than 150 countries, Deloitte brings world-class capabilities and deep local expertise to help clients succeed wherever they operate. Deloitte's approximately 195,000 professionals are committed to becoming the standard of excellence.