Joanna Zakrzewska EN

12 questions to: Joanna Zakrzewska, ACCA, CIA, CFE Joanna, thank you very much for agreeing to participate in 12on12. Let’s start with competence. Co-chairing the 30% Club Poland social campaign, I often hear that positions should be awarded based on competence, not gender. I fully agree. The current situation contradicts this completely. In 2021/22, women accounted for 58% of students and 64% of university graduates. Despite this, at the end of 2021, they held only 16.6% of positions in management and supervisory boards combined of 140 largest listed companies. What do you think causes this disparity? Research indicates that the main reason for lower activity of women on the labour market is their greater involvement in family life, as well as stereotypes regarding the roles of women and men in society. As a result, we are dealing with awareness barriers limiting women’s access to managerial positions. We both have three prestigious international certificates, including the common to both of us ACCA/FCCA title. What inspired you to do this certificate and how have you benefited from it? My adventure with ACCA began when I started working after graduation. I started my first job in an audit company, where the natural path of professional development was to obtain the certification of an international statutory auditor. ACCA certification provided an opportunity to gain practical business skills, take up employment abroad, and was also a confirmation of knowledge in the field of financial management. Going through the certification process, I not only consolidated and expanded my knowledge in the field of finance, but also shaped my mind-set and tools so useful in my professional life, such as: values and ethics that guide me in business, a practical manager’s workshop that allows you to effectively learn about business from numbers, international work standards that make it easier to find oneself in any work environment, the need for continuous development, thanks to which I constantly enrich my competences, broaden my perspectives and derive satisfaction from what I do. The term „Accountant” in Polish is often translated simply as person responsible for bookeeping. In my opinion, the profile of a person who has passed all ACCA exams and received the ACCA certificate, and then obtained the FCCA diploma, means much more – a person with extensive competences in the area of finance, able to comprehensively manage financial aspects of a company. What is your stance on this? Definitely yes. In my opinion, today’s financiers need to be versatile, flexible, open-minded and digitally agile in order to be able to anticipate and react to the ever-changing environment. The times when the work of a person responsible for finance in a company was defined accounting are long gone. Today’s financial leaders have a lot more on their plate. They are expected to both work with the managing director on critical strategic projects and to deal with changing commercial patterns, regulatory environment and increasing investor scrutiny over sustainability and ESG issues. I believe that by the end of this decade, the financial function itself will change significantly. Requirements for financial managers will also change. The expectation to lead a rapidly modernizing function, changing environment of investors and stakeholders and growing importance of working closely with the company’s key decision makers point to the fact that financial managers of the future will not only need to have leadership skills or vision, but even more actively engage in creation and implementation of the company’s strategy. ACCA is not indifferent to these challenges. The organisation notices changes and supports both its students by updating the knowledge and curriculum, but also the entire financial community by getting involved and speaking out loud about important issues such as sustainable development. At meetings, congresses or conferences, in addition to discussing the problems faced by accountants around the world, we have the opportunity to exchange thoughts and ideas on how to shape the profession of „accountant of the future”. If you are interested, I refer you to last year’s ACCA research report „Professional accountants at the heart of sustainable organizations”, which analyses the future of the accounting profession. It’s a must-read for professionals who want to lead their organizations towards a more sustainable future. https://lnkd.in/e96rcPyT „Every accountant has an important role to play in creating a better world” – this is the guiding principle of the activities currently undertaken by ACCA and it is hard to disagree with it. The world is facing ground-breaking changes, compounded by economic, political, social and environmental challenges. The global nature of accounting and the critical role of accountants working in and for organizations mean that the profession is unique in its ability to drive change and help build a better world. ACCA is not only a title, it is also a community. You are the head of the ACCA Council in Poland. How diverse is the group of our members in Poland in terms of professions, location or gender. How many people in Poland already possess the title? Number of members in Poland came in at 2,178 as of November 30, 2022, of which 53% were women and 47% men. Some 70% of the community are employed in business, 13% are employed in public practices and financial services, respectively, and 3% are employed in the public sector. Most of our members live in voivodeship agglomerations: Mazowieckie, Małopolskie, Śląskie, Dolnośląskie and Wielkopolskie. However, the diversity in terms of professions is really wide: among us there are many CFOs, financial and internal auditors, CEOs, controllers, reporting and analysis directors, accountants, business and strategic advisors, heads of regulatory authorities, members of supervisory boards, directors for risk, forensic auditors, compliance managers, persons employed in managerial and managerial positions in departments related to financial and accounting services, including in shared services centers. This is of course not a complete list. The breadth of the professions mentioned by you, performed by ACCA members, is impressive. Among them there are persons working in internal audit or detecting irregularities. You hold both the title of CIA (Certified Internal

Zeeshan Naeem EN

12 questions to: Zeeshan Naeem Zeeshan, thank you very much for agreeing to take part in the ESG 12on12 project. It’s my pleasure, Milena. It’s always nice to have fruitful discussions with you. We are both part of the Chapter Zero Poland initiative. Tell our readers more about the initiative and why you decided to join it as an Ambassador? Firstly, it’s an honour for me to join such amazing people in making ripples that one day will create the waves. Secondly, Chapter Zero Poland is an imperative initiative with a mission of raising awareness and tackling climate change in cooperation with industry stakeholders. Furthermore, as we are already experiencing debilitating natural disasters globally, therefore, I’m advocating measures against climate change and taking sustainable steps to achieve carbon neutrality. Today Humanity is using nature 1.8 times faster than our planet’s bio capacity can regenerate. That’s equivalent to using the resources of 1.8 Earths. Hence, globally shaping a circular economy can bring our consumption and extraction within sustainable levels because most industrial processes release greenhouse gases to have a finished product. You are also part of the Climate Leadership initiative of UN Environment. Please explain us for whom this initiative is created? Climate Leadership is a program with a mission to build a community of leaders of real change in business for sustainable development. The program aims to inspire companies operating in Poland to undertake specific and bold challenges. To support activities undertaken by companies to achieve climate neutrality. Looking at the IPCC AR6 reports one can draw a conclusion that as humanity we have very little time to take actions against the global warming. What actions do you think are the most critical and who the main stakeholders that should be engaged are? We as citizens or rather countries or corporates? Just to shed some light for our audience heatwaves brought on by human-caused climate breakdown have cost the global economy about $16tn since the 1990s. The research calculates the financial impact of extreme heat on infrastructure, agriculture, productivity, human health and other areas. “We have been under-estimating the true economic costs we’ve suffered because of global warming so far, and we are likely underestimating the costs going out into the future.”  We could have used that money to make society better, for education, hospitals, better renewable energy infrastructure and so on. This is unnecessary waste caused by us and corporate greed. These risks are why countries, corporates and then we as citizens as well must invest in adaptation as well as mitigation. Nevertheless, I’m glad to see the interests and steps taken by countries, and corporates in tackling the climate crisis. I’d say for now the steps that we can influence faster than others are the implementation of a circular economy, renewable energy and greener transport. One of the ways that we can help climate is by inventing so called green swans. Electric cars that you specialise in, are treated as such a solution. Please tell us the difference between electric cars, hybrid ones and these on diesel and petrol. What natural resources are needed to create an electric car? The main difference between a hybrid and an electric vehicle is how each is powered; a hybrid switches seamlessly between electric energy and a blend of petrol/diesel and electric power, whereas an electric vehicle runs on battery power alone. Electric vehicle traction batteries are lithium-ion batteries, but they are not all the same. The three main cathode types in most EVs and Hybrids/PHEVs: nickel-cobalt-aluminium (NCA) nickel-cobalt-manganese (NCM) lithium iron phosphate (LFP) THE CATHODE IS a marvel of molecular choreography. How much power a battery holds, and how long it lasts, depends on its lattice of metallic atoms—how well it can catch and release lithium ions. After some testing, it’s been found that it’s possible to reuse atoms inside of the cathode. A metal atom is a metal atom, that element doesn’t know if it was previously in a battery or if it was in a mine. This is potentially a good thing, because many of those atoms, including metals like cobalt and nickel, are in short supply and only found in major volumes in places where mining them entails major ecological and human costs. Large-scale recycling of the batteries will significantly reduce the prices and the pressure on the extraction of natural resources for the batteries. Ironically, all the ICE(Internal Combustion Engine) may well go the same way as the horse; no longer an everyday means of transport, instead of a plaything, paraded at special events and raced. In just a few decades, children will look at them, wonder at the smell of oils and fuels, and jump back when open-piped V12 bark into life. Then we will remind them that back in 2022, in the UK, US, EU and many other parts of the world, in most regions ICE transport was responsible for more #greenhouse gases than any other sector, accounting for a quarter of global CO2 emissions. What’s more, nearly three-quarters of those emissions came from ICE road vehicles – cars, trucks, buses and motorbikes. Thank God things changed. This is a short, yet fascinating history of the ICE. There are some who are enthusiast of electric cars and there are some that are against them. In Poland we mostly use coal based electricity that later on fuels the electric cars. What is your take on this?  With all the anxiety around electric and driverless cars lately, it’s worth remembering there was a time people worried about cars because they had human drivers. Therefore, it’s no different. Currently, in Poland majority of electricity is generated by Coal power plants but there are initiatives in place e.g. 17% of our electricity comes from renewable energy sources, the recent plan of building three nuclear power plants. Of course, the higher the dependence on renewable energy the better. Nevertheless, I’m very hopeful and as we humans are tool builders for sure with time we will be much better equipped. Do

Sylwia Pałgan EN

12 questions to: Sylwia Pałgan Sylwia, sustainable supply chain has no secrets for you – you have been working with this topic for several years. I’m glad to see that with the integration of ESG (environmental, social and governance) elements into decision-making, the topic is gaining traction. So let’s start at the beginning – what is a traditional supply chain? What elements does it consist of? Thank you for the invitation. I am happy to share my knowledge, opinions and observations. When talking about the supply chain, the first thing that comes to our mind is the transportation of products, raw materials and components from producer to recipient, i.e., the company, warehouse or store. And this is of course the case, but we have many elements that make up this process. The most important is the aforementioned flow of goods and logistics, extraction of the raw materials and its transport or production. According to the OECD Guidelines (on Due Diligence for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas) – the term 'supply chain’ refers to a system encompassing all activities, organisations, actors, technologies, information, resources and services related to the extraction of raw materials, production and distribution of products into the hands of the final consumer. Thus, we have a whole network of producers, consumers and services that all share the same goal – to produce and sell a product – and a series of events that make this possible. So how would you define a sustainable supply chain? How it differs from the traditional one? While a sustainable supply chain includes all the elements discussed above, it requires action at each of these stages with the knowledge that there is a risk of environmental and social impact. Each stage of the supply chain has an impact on stakeholders: greenhouse gas emissions, soil exploitation when extracting raw materials, pollution during extraction and production, transportation, energy consumption, water consumption. At each stage there are risks regarding human rights violations, e.g., child labour, illegal labour, unpaid labour, without safety measures or with risks to life. These challenges are so numerous because supply chains often span continents. Companies looking for cheaper production options choose raw materials or factories with lower costs. As it happens, the cheaper labour and raw materials are most often from countries where environmental or worker rights/regulations are lacking or not fully respected. Thus, a sustainable supply chain is first and foremost one in which (1) all producers and customers are aware of these risks, (2) it is an accurately described supply chain – how many suppliers there are, where they are located, what they deliver (3) it complies with legal requirements, global standards, guidelines, (4) in which potential risks are identified and countermeasures and mitigation are described for them. Finally, a sustainable supply chain is also one where we have a dialogue with suppliers, our organisation’s policies on the subject, clearly communicated requirements for suppliers, and the support we give our suppliers so that they can meet these requirements. Then there is the monitoring of the supply chain, whether new risks have emerged and whether our existing methods are simply working. The pressure to introduce sustainable supply chains is growing, but the amount of work to be done can be overpowering. So how do we get started? The pressure is increasing, but so are global guidelines, legal requirements, consumer awareness, I can say that – finally! When we talk about ESG (i.e., environmental, social and corporate governance elements), various measures are introduced. Unfortunately, supplier issues are often left to the end or kept to a minimum – for example, the only requirement for suppliers is to sign our policy or code of conduct is introduced. This is a bit weak, especially in the case of complex supply chains, where there are many risks of environmental or social impact on the way our product reaches the end customer. I have also observed that it is not uncommon for companies to declare that they have a sustainable supply chain because they also count their carbon footprint in terms of 3. This is important, but is it enough? I am throwing out a rhetorical question here. How do we implement a sustainable supply chain? I don’t think there is one specific answer, as it depends on our business. But certainly, the first steps are to evaluate our business, products, stakeholders, whether we have our own factories and, if so, where they are located, in which regions, whether there is political unrest, conflicts, climate risks, whether there have been scandals related to production in the area before. Similarly, with regard to our suppliers’ factories. This is very important and will certainly allow us to answer – what my business (including suppliers) is most influenced by and what has the greatest impact on it. The next stage is to describe our supply chain in detail – how many suppliers we have, what we buy from them, where they are located and where the raw materials come from.  The next stage is the aforementioned risk assessment with an emphasis on industry risk assessment. What product or material is the core of our business, whether it is timber, clothing, electronics, food and going further – what raw material is key here and at the same time, is it coming precisely from regions of e.g., conflict or otherwise at risk. The next step is to have a company policy clearly stating in which direction we want to go and guidelines/code of conduct for suppliers. We need to define what we want from them and how we will verify this. It is also very important to appoint people responsible for these activities, either internally or, of course, when the organisation is not ready to hire new people and does not have the knowledge internally – to seek support from external consultants. Let us now go into detail. What environmental and climate issues should we be paying attention to in the supply chain? What are

Ewa Sowińska EN

12 questions to: Ewa Sowińska Ewa, thank you very much for agreeing to take part in ESG 12on12. Your CV is impressive and the list of roles you have held is enormous. Let’s start with the topics related to your 25+ year career as a statutory auditor, i.e. issues related to the letter G – corporate governance. It is best to start at the beginning – why do capital market participants need a statutory auditor? What is his or her role? The statutory auditor is primarily there to give the Financial Statements (FS) the credibility that is necessary and particularly important in the process of deciding whether to cooperate, invest in a particular company. We verify that the FS present a true and fair view of the company’s assets and financial position, as well as its financial result and cash flows for the financial year, in accordance with the provisions of the Accounting Act and the adopted accounting principles (policy). We verify compliance in form and content with the company’s applicable laws and its articles of association and whether it has been prepared on the basis of properly maintained books. As experts, we share responsibility with management and supervisory boards. We also share our knowledge and experience. We increase confidence in companies and enhance the security of business transactions. What is creative accounting to you? Do you see it in the reports of listed companies? My perception is that there is a lot of it and that its scale is increasing. The word CREATIVITY has a positive ring to it, but when we add the word ACCOUNTING to it, we often do not see it in a positive light. Unfortunately, there are still management boards who do not have the courage to face reality and try to show the effect of the company’s performance in a given year by force, so that people, corporate bodies or institutions assessing them think that it is better than in reality and that the objectives that were the basis for receiving additional remunerations have been achieved. However, there are also such companies which, in a so-called 'fat’ year – when profits are very high – create provisions for the following years, in order – when the situation is more difficult – to release these and show an increase in results year on year. There are still some investors who see profit maximisation as the sole objective of the company, sometimes at the expense of employees, climate and social aspects. In my opinion, short-sightedness is responsible for this – evaluating the work of the management board through the prism of financial result in the short term, instead of an evaluation that depends on the growth of the company’s value in the long term. In my opinion, ESG criteria need to be added to the evaluation of management board performance. One activity is creative accounting and the other is fraud in financial statements, from which we all lose. Why do you think they happen all the time? Can you point to one culprit? Is it a more complicated problem? This is a difficult question. There are many guilty and responsible parties as well as causes. One of them is the lack of strategies implemented based on ESG criteria. They are the short-sightedness already mentioned and greed. The causes can also be found in limited engagement of the business environment. Supervisory board members are also often responsible, especially those who do not exercise adequate control over the FS preparation process. And yet, according to Article 4a of the Accounting Act, they are obliged to ensure that the separate financial statements, the consolidated financial statements, the management report on operations and the management report on group operations meet the requirements of the Act. In addition, the members of the company’s supervisory board are jointly and severally liable with the management to the company for damage caused by an act or omission. Negligence is often due to a lack of courage in thinking and acting, a lack of competence and independence of the board. In my opinion, lack of women on corporate management and supervisory boards is also not insignificant. As a statutory auditor, what advice would you give to those reading the financial statements of listed companies? First of all, I encourage to read and ask questions. What should be important to the reader is the audit report and the key audit areas identified by the auditor. Particular attention should be paid to what the auditor’s opinion is – unqualified or modified and those areas that were the basis for a disclaimer or emphasis of opinion. The whole FS should be read – the balance sheet and income statement are only part of the report, just numbers. The meaning of these figures should be described in the other parts of the FS. Particularly important is the note on going concern assumptions, contingent liabilities, related party transactions, events after the balance sheet date. I believe that today the non-financial statements – either in the form of as a separate report or as part of the management report on operations – are extremely important. And I particularly encourage you to read this section. For the outside world, the auditor creates an audit report for the annual reports in which he or she expresses an opinion. It may be unqualified or qualified. Please explain to us the difference? In the audit report, we express an opinion on the Financial Statements. We verify that it presents a true and fair view of the company’s assets, financial position, financial result and cash flows for the financial year. We verify that it complies in form and content with the applicable legal regulations and the company’s articles of association and that it has been prepared on the basis of properly kept accounts. A clean opinion, i.e. an unmodified opinion, is issued when we can say YES to all the criteria listed. However, if there are areas where the auditor and the company’s management board

Hedwige Nuyens EN

12 questions to: Hedwige Nuyens, CEO of the International Banking Federation and Chair of European Women on Boards Hedwige, thank you very much for accepting the invitation to ESG 12on12 interview! It is an honour to speak to you. Recently, you have achieved an enormous success – you have helped to bring the Women on Boards Directive into life. The Directive requires the EU member countries to establish quotas for a set percentage of women in top positions. Why in the XXI century we need law that guarantees equality between men and women in the corporate world? Thank you so much for inviting me. I am so pleased to be able to share my views with you. As President Ursula von der Leyen said in her speech in January, when change does not come naturally, regulation is needed. We see that the number of Women on Boards varies hugely between countries. In France we have over 45% now, in Estonia a little over 8%. With this directive we will see change across Europe, in all industries. In 2012 a Board Directive setting targets for a minimum 40% of men and women on boards for stock listed companies was proposed. The Directive was approved by the European Commission and the European Parliament. But it was blocked by the European Council. What was the reason behind silencing such an important Directive? It is a good question, and the answer might surprise you. Some countries like Sweden were opposed, not because they are against women. On the contrary, they have one of the highest representation of women in Corporate Boards. For them it was a matter of principle, corporates should have the right to decide themselves who to appoint, regulation should not interfere. Other countries like the Netherlands were long convinced that change would come automatically, over time, that no regulation was needed. In Germany, there was strong opposition from the corporate world to quota. So many reasons, but we were able to convince countries to change their mind. And the Directive got the support from all countries, with only 2 against (Poland and Sweden). How has the situation changed over the decade? Have we lost so many years or maybe diversity on boards has increased over the years? Yes, luckily diversity has increased, from nearly 20 to 30% Women on Boards now on average. And we have 4,5 years now to move from 30 to 40%. This objective needs to be met by 30 June 2026. What arguments have persuaded the EU to return to discussion on fixed quotas? What are the key points of the Women in Boards Directive? What aspects of C-level and board level the Directive touches? One of the main arguments was precisely that the Directive does no longer speak about quotas but about objectives. Each company will have to put a target for the number of women and will have to put an action plan in place and publish on the progress made. The other argument that helped is the obvious progress that was seen in countries that took measures (hard quota help most, but even softer quota can make a difference). With the Directive, we will have a strong framework in 27 countries. We are very proud, as European Women on Boards, to have contributed to the agreement on this text. We worked incredibly hard, day and night, for months. The Directors requires the EU countries to choose between 40% of women as non-executive directive (supervisory board members) or 33% of women at boards of boards of directors (management and supervisory board members). Why was this choice given? The role of NEDs is different than EDs. Is one choice better than the other? What aspects should politicians take into account while making the choice? That was the result of a long debate. Situations can vary between countries. Corporate governance is not the same everywhere. In the Anglo-Saxon world, it is common to have only one Board, with Executive and non-Executive Directors. On the continent, you often have a Board of Directors and an Executive Committee. In the Netherlands and Germany, you can even have 3 decision layers. So, depending on the country, it can make sense to have an objective for the Board only, or for the Board and the Executive Committee combined. Both systems can work and be meaningful. Is the Directive certain to come into force or is there still risk that it will be shelved like a decade ago? No, we have a political agreement, the text has received the blessing from all parties. The text is rubber stamped with final legal checks, but we expect that it will be published soon. The EU consists of countries with a varied level of women in top positions. E.g. France is one of the leaders in board gender diversity with quotas in place for years. Poland is on the opposite side of the road with limited support for diversity – we have Best Practice for Listed Companies 2021 with two principles defining a gender diverse management and supervisory board as one with underrepresented gender having at least 30% of the seats. How do you see the Directive being implemented in so many countries with different diversity background? It is not the first time that a Directive is voted. So, countries are used to that. There is a strict procedure and timetable foreseen in the Directive that will help countries implement the principles. The big advantage of working with a Directive, is that countries can customise the regulation, so that it better fits with the legal framework and corporate governance in place in their country. We have promised the European Commission that we, as European Women on Boards, would help implementing the Directive. Running diversity campaigns at 30% Club Poland we often hear that top positions should be achieved based on competence and that there simply are not enough skilled and experienced female management and supervisory board members to fill in the positions. What is

Piotr Rybicki EN

12 questions to: Piotr Rybicki Piotr, thank you very much for agreeing to take part in ESG 12on12. The season of general meetings is behind us. Many public companies have elected supervisory boards, some supervisory boards have elected management boards. Both these bodies will soon be working in a different reality – on October 13, 2022, the much-discussed amendment to the Code of Commercial Companies in Poland will come into force. You have been an active supervisory board member for 20 years and, since 2020, you have been a member of the Expert Team for Improving the Efficiency of Supervisory Boards of the Committee for Corporate Governance Reform under the Ministry of State Assets, which worked on the aforementioned amendment. You are therefore the ideal person to explain to us all what the changes in  law are all about. Milena, thank you very much for this invitation. It will be an honour for me to talk about the changes to the Code of Commercial Companies, which will come into force in October, and also, I hope very much to share a little about my professional experience in promoting professional supervisory boards and corporate governance in Poland. As you mentioned, I have been an active supervisory board member for more than 20 years and I would like to share some thoughts here as well. Thank you very much for the invitation, too. Thank You! Let us start by distinguishing the meaning of the words 'term of office’ and 'mandate’ in relation to members of bodies of commercial companies. Reviewing the current reports of listed companies, one may notice, for example, sudden resignations of elected members of supervisory boards due to different end dates of the term of office and mandate. Please explain to us how these words differ and whether the new law will alter the situation? To put it simply, a 'term of office’ is the length of time for which a body (supervisory or management board) has been appointed to execute its functions, while a 'mandate’ is the authority of an individual member of a body (supervisory or management board) to perform his/her functions. In current practice, there has been considerable doubt about how to count terms of office, i.e. how long, for example, a 3-year term of office lasts. One approach took as the first year of operation of the body, the year in which it was appointed, while the other approach assumed that we start counting the term of office only from the first day of the new financial year. This is best illustrated by an example. A supervisory board member appointed, for example, on July 20, 2022 – in the first option, 2022 is counted as the first year of the term, while in the second version, the first year is 2023. To reduce these doubts, the legislator opted for the second solution, which means that a supervisory board member appointed for a three-year term, for example on July 20, 2022, will start his/her term from January 1, 2023, assuming that the financial year coincides with the calendar year. An important element of supervisory boards operations is decision-making in the form of resolutions. What changes does the new law introduce in this respect, in particular with regard to the openness of voting? Is the new law symmetrical with regard to management and supervisory boards? It can be said that it is in principle the legislator’s solution that voting will be public. Until now we had the practice that some votes had to be kept secret, some could be kept secret e.g. at the request of a supervisory board member. After the amendment, as a rule, votes will be open. Minutes are taken of supervisory and management board resolutions. How does the new law consider minutes? Does it introduce new requirements? In terms of minutes of supervisory board meetings, the amendments to the Code of Commercial Companies do not introduce new solutions. Also in the case of the boards of joint stock companies, we have no changes. What is new is the introduction of compulsory minutes of board meetings of limited liability companies. Above, we have mentioned above the formal issues related to corporate bodies. Let us now turn to issues related to the liability of board members – will this change for management and/or supervisory board members with the entry of the new law into force? The idea of the amendments to the Code of Commercial Companies is to increase the competence and scope of actions of supervisory boards. It is aimed at exercising stronger supervision over the activities of companies, in particular joint-stock companies. Obviously, this entails greater responsibility, both on the side of the management board (in terms of properly informing the supervisory board about its activities) and for the supervisory board (in terms of proactive activity of the board). You have mentioned the responsibilities of members of the bodies. Let us now discuss them in turn. Is there a duty of loyalty to the company? How is the company understood? How is this duty linked to confidentiality? Does it only apply to the length of the term of office or does it also apply to members of corporate bodies after cooperation with the company has ended? Let us start with loyalty. I very often hear the statement that a supervisory board member is expected to be loyal. These words are most often uttered by the majority shareholder and, as if by implication, he/she wants to convey that he/she expects board members to be loyal to himself/herself. This is fundamentally flawed thinking – a 'loyal’ supervisory board member is loyal to his or her principal and is not in a position to pass on potential criminal liability to his or her principal 'loyally’. Loyalty to the company, as indicated by law, therefore means such conduct by a supervisory board member that no one, including himself/herself, has any doubt that the actions he/she takes, including the resolutions he/she adopts, are not contrary to the

Michał Wnorowski EN

12 questions to: Michał Wnorowski Michał, thank you very much for accepting the invitation to ESG 12on12! You are a corporate governance practitioner, you have looked at our Polish capital market from the perspective of an institutional investor nominating independent supervisory board members. Over the last years, you have been sitting on supervisory boards as a professional independent board member, often also a member of audit committees. Also our discussion will revolve around corporate governance. Milena, I am very pleased that you invited me to join your series. In the field of ESG, that last letter, „G for governance”, is often treated a little lightly and definitely overshadowed by environmental issues. And the truth is that corporate culture, which relates to the quality of governance and control, is fundamental to long-term value of companies. I firmly believe that only companies with high standards of corporate governance can achieve real long-term success. The Warsaw Stock Exchange recently celebrated its 30th birthday. How do you look back on those three decades? What has changed? For a Polish investor, these 30 years seem like a very long time to develop the capital market, but from the perspective of mature stock exchanges that have been in existence for over hundred years, we are still in the early stages of development, with all the childhood diseases that accompany it. Nevertheless, our market should definitely be praised for its legal and technical infrastructure, increase in market accessibility for retail investors and development of the range of instruments on offer. There is certainly still a lack of ETF or REIT-type instruments, which would help encourage a wider range of Poles to invest. Creation of best practices remains open as unfortunately, like the tail-coat, do not fit well with the first generation. It would seem to me that 30 is such a mature age, when the mistakes of youth are no longer made. And yet, in September 2020, in a survey on corporate governance, which I prepared for CFA Society Poland, no one out of 101 respondents answered that the level of corporate governance in Poland is high, and the vast majority answered that it is low. What is the reason for this in your opinion? We are making definite progress in improving the quality of corporate governance, for example through systematic implementation of the Best Practices for Listed Companies and the grass-roots work of independent supervisory board members. However, it is precisely the youth of the Polish market and listed companies, which is inextricably linked to ownership structure, that makes this a very laborious process. The Polish stock market is definitely dominated by two types of companies: state-controlled and „family-owned”. The former dominate the WIG20 index and the finance, energy and raw materials sectors, i.e. those crucial for the economy and for the development of the capital market. The latter are mostly small and medium-sized growth companies, offering the market a chance for dynamic growth of results and valuations. According to the WSE, out of 422 listed companies, as many as 172 have a family status, i.e. are controlled by founders, often entire families who sit on company boards. Very few companies are controlled by institutional investors, which is standard for mature corporations listed on mature markets. Corporate governance in a company is always imposed by the leading owners. Without their goodwill, no amount of legislation or best practice will improve the situation. Is there a chance for our capital market? What changes/reforms would have to be made to improve it? Considering how important Poland is, how dynamic its economy is, how well educated and hard-working Poles are, definitely our capital market has a good time ahead of it. Of course, I am talking here about long-term horizon. In the current difficult geopolitical reality, I remain optimistic and believe that Poland can be the West’s gateway to rebuild the East, both materially after the war and institutionally towards democratisation and a market economy. And in a strong economy there must be a strong capital market that allows companies to raise capital and price it optimally, and shares and bonds of these companies should be a natural part of the portfolios of wealthy citizens. Certainly the authorities should be expected to build confidence in the capital market, which should lead to an increase in the scale of savings and private investment, primarily in long-term savings and pension plans, which should be a natural source of capital for Polish companies. Efforts should be made to support development of institutional investors, such as mutual funds and pension funds, which manage the savings of Poles. These institutions, if they grow to an appropriate size, will have a positive impact on long-term development of companies and on improving the standards of the capital market. Ideally, it would be possible to reform the way state-controlled companies are supervised, so as to maximally exclude the influence of short-term decisions of those currently in power on the composition of company boards and their strategies. There is much discussion on the capital market about the „passivity” of institutional investors, i.e. institutions professionally engaged in investing savings entrusted to them by their clients. Do you think this is the case or are institutional investors’ hands often tied? It is true that the structure of the market forces a focus on short-term performance rather than on corporate actions. This is also what clients, especially of mutual funds, expect. There are literally only a few institutional investors that are large enough to care systematically about the quality of corporate governance in Polish companies. A vast majority of Polish mutual and pension funds prefer to take a position under 5% of equity in a company in order to be more flexible with the generally low liquidity of the shares. As a rule, managers make a conscious decision to remain passive in corporate matters; they do not want to influence the shape of the company’s governing bodies and strategy, as this generates the inevitable conflict with the largest shareholders I

Anna Potocka-Domin EN

12 questions to: Anna Potocka-Domin Ania, thank you so much for participating in the ESG 12on12 project! It is a great honour for me. You work for the United National Global Compact Network Poland – let’s explain to our readers what the UN is and what its corporate arm Global Compact is. The United Nations was established after World War II to maintain peace and security in the world and to develop friendly relations between member states. Poland signed the UN Charter on 15 October 1945. The UN Global Compact is the world’s largest initiative bringing together sustainable business. Since its establishment in 2000 by the UN Secretary-General it now has over 14,000 members from all over the world. The UN Global Compact Network Poland is the secretariat of the Polish UNGC members and an accelerator of local programmes and activities. The mission of the United Nations Global Compact is to mobilize a global movement of sustainable companies and stakeholders to create safe, just and humane world we all aspire to. To make this happen, the United Nations Global Compact supports companies to operate responsibly by aligning strategies with the Global Compact’s Ten Principles on human rights, labour, environment and anti-corruption and to take strategic action to achieve broader societal goals, such as the UN Sustainable Development Goals, with a focus on collaboration and innovation. In 2015, the UN adopted 17 Sustainable Development Goals with targets for 2030. We have half the time left as humanity to achieve them – how are we doing? Are we doing better at any of them, and should we speed up at any of them? It is not without reason that we talk about „ambitious goals” in this context. Responsible business all over the world, including Poland, has taken the implementation of SDGs (sustainable development goals) very seriously. Governments of many UN member states and their societies are also actively trying to implement the 2030 Agenda. The trouble is that while the responsible are becoming even more responsible, the world’s whiners, cynics and hypocrites are standing still and even opposing the sustainable development of the world. And the implementation of the Agenda will only be fully possible through the efforts of the whole world, which is the biggest challenge. However, „there are more people of good will…” and it is always worthwhile to be on that good side. In recent years, more and more strategic actions in the field of climate protection, environment, green energy, clean water, sustainable agriculture, etc. implemented in partnerships: business – NGO – government, can be seen, also from the Polish perspective. Unfortunately, pandemics and wars slow down the pace of change, and even – as in the case of SDG 5 – gender equality – set us back by many years. We must therefore accelerate in each of the 17 goals, and even if only some of them are achieved by 2030, we cannot deviate from the path of sustainable development, or we will… die. Out of these 17 goals, I wanted to focus on SDG5 i.e. gender equality. What is gender equality? How broad is this concept? Gender equality is best explained by pointing out inequalities. Women, making up half of humanity, experience physical and economic violence and discrimination in all areas of life – from education, through workplace, wages, health, access to resources and to leadership, etc. There are still countries in the world that sanction economic and physical violence against girls and women. Under the law and customs, women experience unimaginable suffering and harm. The UN, in its Agenda (SDG5), called for the rights of women and girls, for them to be treated equally (with men) in all aspects of life, and for us to be guaranteed „participation in decision-making processes at all levels in political, economic and public life, and equal opportunities in leadership positions”. One aspect of equality is equal pay – UN Global Compact Network Poland has engaged in the #nieczekam107 (I do not wait 107 years) campaign to close the pay gap. What actions can companies that now have a high double-digit gender pay gap take? In theory, simply eliminating the gender pay gap at company level does not seem difficult, but the key is to understand why it has arisen and what its consequences are. And in this aspect, the situation is much worse. I have heard many times how challenging it is for companies to eliminate the gender pay gap. Transparent remuneration policies, promotion and recruitment procedures are being created, but the process of eliminating the gender pay gap is extremely slow. And yet, if we have to, we can introduce such revolutionary changes overnight as during the pandemics. So you can, you just have to really want to. To end the hypocrisy of companies that, while supporting gender equality, at the same time maintain gender pay gap, regulation is needed, i.e. transparency of salaries (soon to be followed by the EU „equality” directive), pressure from responsible competition, contractors and other stakeholders, or initiatives such as the 30% Club and the UN GCNP. Another aspect is creation of an inclusive work environment – the UN has created WEPs (Women’s Empowerment Principles) – what are they and how can they support companies? WEPs, are a set of principles that offer guidance to companies on how to promote gender equality and women’s empowerment in the workplace, marketplace and community. Established by the UN Global Compact and UN Women, the principles are based on international labour and human rights standards. As part of the UNGC, we run a global programme called Target Gender Equality (TGE), which aims to support companies on their journey to achieve gender equality. As part of TGE, companies have access to the latest knowledge in the area of gender equality, delivered at dedicated events and workshops. A very interesting tool for self-evaluation and evaluation of companies in terms of implementation of gender equality policies is the Gender Gap Analysis Tool offered within the TGE Women’s Empowerment Principles programme.

Iwona Gębusia EN

12 questions to: Iwona Gębusia, PhD, Habil. Iwona, thank you so much for accepting the invitation to #ESG 12on12. You are a lawyer specialising, among other, in capital markets law. It’s a tough field, you have to understand not only the law but also best practices that make up corporate governance. This is what we will talk about today, focusing on audit committees. Let us first explain to our readers what an audit committee is and how it is empowered in the supervisory board? Should every company listed on the Stock Exchange have one? The audit committee in principle should be an internal body of the supervisory board. As an exception, however, it is permissible to entrust the audit committee with the supervisory board acting in corpore with regard to, inter alia, so-called small PIEs (public interest entities). As far as public companies are concerned, the status of a PIE applies only to corporations whose shares are admitted to trading on a regulated market. However, public companies whose shares are admitted to an alternative trading system are exempt from the obligation to establish an audit committee. The supervisory board autonomously determines the composition of the audit committee. This body should be composed of a minimum of three members. However, legal regulations do not specify the maximum number of audit committee members. Yet, the number of members of the audit committee should take into account the size of the supervisory board, the need to ensure efficient functioning of the audit committee, the effectiveness of the control functions and the obligation to comply with statutory requirements, especially the condition of independence. In addition, the provisions of the Act on Statutory Auditors provide for the function of chairman of the audit committee, who is appointed by the members of the audit committee or by the supervisory board. Why were audit committees created in our law and why are they so important? What tasks are they to perform? The institution of audit committees is standardised at the EU level in Directive 2006/43/EC of the European Parliament and of the Council of May 17, 2006 and in Regulation No 537/2014 of the European Parliament and of the Council of April 16, 2014. In turn, the regulation of the audit committee in Polish law is contained in the Act of May 11, 2017 on Statutory Auditors, Audit Firms and Public Supervision. Pursuant to these regulations, the entities obliged to establish an audit committee are PIE, which results from their special systemic and economic importance in the economy. The audit committee is, in principle, a professional body, independent from the main decision-makers of the company, whose task is to identify irregularities that may occur e.g. in relations with a related party (watchdog). The primary responsibility of the audit committee of a PIE that is a public limited liability company is to prepare and advise the supervisory board on the necessity for the supervisory board to assess the annual management reports. The catalogue of tasks under the responsibility of the audit committee includes in particular: 1) monitoring: the financial reporting process, the effectiveness of internal control systems and risk management systems and internal audit with regard to financial reporting, as well as the performance of financial audit activities, in particular the performance of audit by an audit firm; 2) controlling and monitoring the independence of the statutory auditor and the audit firm, in particular if services other than audit are provided to the PIE by the audit firm; 3) informing the supervisory board on the results of the audit; 4) assessing the auditor’s independence and approving the auditor’s provision of permitted non-audit services to the PIE; 5) developing a policy for the selection of the audit firm to perform the audit; 6) developing a policy for the provision of permitted non-audit services by the audit firm performing the audit, by entities affiliated with the audit firm and by a member of the audit firm’s network; 7) determining the procedure for the selection of the audit firm by PIE; 8) presenting the recommendation to the supervisory board or the general meeting referred to in Art. 16(2) of Regulation 537/2014, in accordance with the policy for the selection of the audit firm to carry out the audit and the policy for the provision of permitted non-audit services by the audit firm carrying out the audit; 9) making recommendations aimed at ensuring the integrity of the financial reporting process in the PIE. Due to the importance of audit committees, the legislator has prescribed the required composition of these committees. Please explain these requirements to us. According to the legislator’s instruction, the members of the committee should collectively meet the requirements of competence, independence and industry experience (Article 129 of the Act on Statutory Auditors). First, according to statutory requirements, at least one member of the audit committee must have knowledge and skills in accounting or auditing. These competence requirements should be fulfilled by, among others: a certified auditor, an accountant or a person with significant professional experience gained as a financial director, director of internal audit or director of internal control department, preferably held in an entity of a similar size and profile to the PIE in which he is to act as a member of the audit committee. As regards the required industry experience, members of the audit committee should have knowledge and skills in the industry in which the PIE operates. This condition shall be deemed to be fulfilled if at least one member of the audit committee has knowledge and skills in this industry, or individual members within specific scopes have knowledge and skills in this industry. It is worth noting that the articles of association, the supervisory board bylaws or the audit committee bylaws may specify the above mentioned statutory requirements or provide for additional criteria to be met by candidates for audit committee members. In particular, internal corporate documents may specify how knowledge and skills in accounting or auditing or competencies relating to industry in

Mirella Panek-Owsiańska EN

12 questions to: Mirella Panek-Owsiańska Mirella, thank you very much for accepting the invitation to ESG 12on12! We meet at a very difficult time, when a terrifying war is taking place just across our eastern border, and you are very much involved in helping Ukrainians, the war refugees. This is exactly what I wanted to talk to you about, namely helping people in a wise manner. Let us start with the support that is offered to our neighbours by corporates. Do they pass the test of corporate social responsibility and acting according to the values they preach? The situation has taken us all by surprise and business has done really well. Many companies rightly started any actions with their own Ukrainian employees coming. Faster payment of wages, extra paid leave, covering the costs of family arrivals were just some of the forms of assistance that caught my eye during the first week of the war. Many companies also made significant donations to humanitarian and other non-profit organisations, organised employee collections of money and items, donated their products or offered free services to those fleeing Ukraine. It is worth emphasising that the best aid is one that is agreed, coordinated, adequate and comes at the right time and to the right place. It is also important not to forget the need for systemic assistance once the first phase of spontaneous support is over. Here, too, there will be a major role for business-NGO partnerships capable of preparing and implementing systemic and long-term support projects. What is your approach to communicating this support. Should companies show it on social media? What about the 2021 non-financial reports – is there room in them for ongoing 2022 activities? Reliable information on aid is highly recommended, it can encourage other companies to take action, and it can show employees and clients the consistency of the company’s declarations and actions. It is of course important to maintain ethical principles, for example in the use of photographs of children and to find the boundary between credible marketing communication and advertising. Information about assistance will certainly be included in non-financial reports; depending on the reporting cycle of a given company, these will probably be reports for 2021 (as a commentary on the current situation) or for 2022 (as reporting on specific company activities). Unfortunately, there is no separate GRI indicator for humanitarian assistance in times of war, but this information can be included as part of reporting on activities for local communities. How do you think companies should approach their activities in Russia? We see examples of companies that abandon it and some that stay. The role of management by law is to build shareholder value. Is it possible to justify an exit from this market by following this paradigm or should boards of directors, when justifying their decisions, be guided by stakeholder value? Companies that want to act in accordance with the principles of corporate social responsibility are guided by the creation of long-term value for stakeholders; the primacy of shareholders’ interests has long been forgotten in modern thinking about sustainable business. Among the online comments, it was evident how much even symbolic withdrawal of businesses from Russia is important to consumers. When Coca-Cola did not give a clear answer about its decision for one day, the web was flooded with graphics, memes and calls to boycott the company. No company can afford such reputational damage, so withdrawing from Russia was the only right decision. I believe that, despite the risk of short-term financial losses, this will bring a long-term bonus for the company in terms of consistency of values and actions. In addition to corporate support, there is the wonderful attitude of Poles volunteering their time and resources to support refugees. What advice would you give to those who have been helping since the beginning of the conflict and are already on the verge of exhaustion, and what tips would you give to those who just want to start their adventure with volunteering? While, in my opinion, the government failed the test, local authorities, non-governmental organisations and Poles have been performing heroic acts since February 24. The crisis situation has shown that we can act spontaneously, and without the actions of thousands of volunteers it would not have been possible to respond to the need of the moment in such a short time. But the initial energy and adrenaline is starting to fade, and we now need systemic assistance and long-term thinking. People who have been helping since the beginning of the war are often burnt out; in humanitarian work, taking care of yourself is especially important, but unfortunately there is often no time for that. For those who would like to become volunteers, I encourage them to choose the form of helping that suits them best. Not everyone has to go to the border or help at railway stations, it is just as important to do competence-based volunteering, setting up databases, applications, coordination, social media work, fundraising activities, etc. Many NGOs now need scaling and knowledge management that businesses have. I, for example, don’t know how to cook a soup or play with children, but I know how to connect businesses and NGOs and run Facebook groups, and I try to help in this way. The Help for Ukraine group, of which I am one of the moderators, has over 500 000 members at the moment. There will certainly be plenty of voluntary work and every person will find something for themselves, but it is very important to help wisely.  The ongoing war is also a field where new leaders are being forged. The whole (almost whole) world looks with admiration at the attitude of the Ukrainian President Volodymyr Zelenskyy. What elements of his attitude could members of corporate boards and C-suite incorporate into their skillsets? Reading the posts on LinkedIn, it is already clear that the President of Ukraine has become a new leadership icon. Courage, a direct style of being, being close