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Every third consumer identifies themselves as a person who values the planet above everything else, 12% more than the global average, EY research shows. This is a major shift of focus within Poland, a leading emitter of carbon in the region. Polish companies, especially in the energy sector, are much less advanced on the path to a sustainable future. Innovative solutions will be the key to development in this area, and Poland has a long way to go: a world leader in manufacturing electric car batteries, Poland has attracted only 0.003% of venture capital funding for the sector. Companies need to abandon the idea of constant growth in favour of sustainable development if the idea is ever to be implemented. Author: Łukasz Zalicki, Managing Partner, EY Poland.
Few people were speaking about sustainable development just a few years ago in Poland, a country which is a leading emitter of carbon in the region. However, in the last few years, Polish society has focused its attention on issues related to sustainable development in a trend that accelerated rapidly during the pandemic.
Every third consumer identifies themselves as someone who above all values the planet, the 4th wave of the Polish edition of the EY Future Consumer Index research shows. The number of people who say the environment is their first priority has even surpassed the number of respondents who first and foremost value price, an unusual phenomenon for such a price-sensitive society that aspires to Western European standards of living while lagging behind Western European incomes. A comparison of Polish attitudes to the global average also reveals an unusual disparity: globally, 31% of respondents value affordability most, while only 18% identify the environment as their number one priority. The shift towards sustainability in Polish society is expected to surge in the future - 35% of respondents in the EY Future Consumer Index have declared an intention to purchase more sustainable products.
The most recent edition of the EY Future Consumer Index shows that Polish consumers are ready to take action and make changes in everyday life on behalf of the environment by choosing sustainable products and services. Poles responded in line with the global average - both 41% of Poles and globally surveyed consumers said that sustainability is an important factor in their purchasing decisions.
There’s just one issue: price. Only 19% of consumers in Poland are willing to pay more for sustainable products, 8 percentage points less than the global average. Declarations about protecting the planet don’t always align with the real-world decisions that Poles make while actually choosing products and services.
Polish companies urgently need to offer customers sustainable alternatives to traditional products at attractive prices, in line with their authentic engagement in sustainable development, because customers are sensitive to such mixed messages sent by companies to the market.
Offshore wind farms and the implementation of EU funds should fuel the sustainable transformation
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Polish companies and the government are also moving towards a sustainable future, but at a much slower pace than customers. Poland’s energy mix is based on coal, with a share that is diminishing relatively slowly, having declined to 70% in 2020 from 74% in 2019. The expected transfer of European Union funds should speed up this transformation. Poland is set to be the largest recipient of the Just Transition Fund, with a proposed allocation of €3.5 billion (USD 4.1 billion), which should support economic diversification in the carbon-intensive regions most affected by decarbonisation, and help retrain a workforce whose main industry is falling rapidly into obsolescence.
Poland’s shift to renewable energy is largely dependent on the development of offshore wind power along the Baltic coastline, which has the potential to generate a quarter of Poland’s energy needs by 2040. Nuclear fuel is one option being examined, but the lead-in is long and costly, and it comes with its own environmental issues. As a result of these developments, institutional investors are increasing their interest in Poland, the biggest energy market for renewable energy in Central and Eastern Europe. We need a transfer of resources and know-how from countries more advanced in their transformation towards a sustainable future. The World Economic Forum’s latest Energy Transition Index (ETI) ranks Poland at a distant 62nd place.
Innovation will be the key to decarbonisation, as mature, market-ready technologies will only account for 25% of the total emission reductions required to reach net-zero worldwide. The International Energy Agency (IEA) predicts that almost half of the reductions needed to reach the existing 2050 goals will need to come from technologies that are still immature. This is challenging for Poland, which lags behind in its efforts to stimulate domestic innovation. The gap between Poland and sustainability leaders is huge. Polish companies have attracted USD 110 million in venture capital funding for green energy projects since 2011, which represents 0.07% of all VC financing for that purpose, as shown in an EY analysis based on Crunchbase data. Poland, a leader in the production of batteries for electric cars, has attracted USD 1.9 million in venture capital funding for both electric vehicles (EV) and advanced battery technology since 2011, which is only 0.003% of the global total for VC investment in these domains, as indicated by another EY analysis of Crunchbase data.
Long-term vision supports sustainable profit
Sustainability is at the heart of EY’s strategy both on the Polish market and globally. As we eagerly share our global knowledge, we’re able to help entrepreneurs with decarbonisation, the proper introduction of non-financial reporting or general transformation of their businesses into sustainable ones. All these actions need to translate into real, long-term value for business. This aspect is especially important, and if we want to succeed, we need to abandon the paradigm of short-term profit as the only goal of an enterprise. Business leaders, advisers and auditors need to work hand in hand on this issue if it is ever to be implemented. Producing equipment that lasts only two years drives sales and increases company profit, but does not help us move towards a sustainable future. Fuelling consumption in this way brings short-term profit but doesn’t build long-term value and during a deteriorating business cycle this can hit companies that are not sustainable hard. EY follows a sustainable path; environmental, social and governance issues (ESG) mean more for us than reaching carbon negative goals, limiting paper consumption or getting rid of diesel. We perceive it mainly as an investment in people, technologies and, in the end, our concern about the environment. We are implementing these three goals at the expense of short-term profits and we believe that this approach is helping us to build a better working world. ©℗
