Navigating ESG Challenges: Insights from Katri Koivula, Senior Manager at Position Green

With a diverse background spanning international consulting, executive education, and public administration, Katri's journey into sustainability was inspired by a deep-rooted commitment to justice and sustainable development.

, by Katri Koivula, Charlotte Krog

Katri Koivula is a Senior Manager at Position Green. She holds an MSc in Geography from University of Helsinki and MBA from Aalto University Executive Education.

Could you share a bit about your journey into the field of ESG consulting? What inspired you to pursue this career path?

The choice of career was already clear to me in high school, and my uncle was my greatest inspiration. I did volunteer work at the world store and UNICEF, read about Martin Luther King, wore an Earth Summit T-shirt from Rio -92, and participated in the The European Youth Campaign “All different - All equal” run by the Council of Europe (in 1995).

All of these experiences ignited my passion. I didn’t become a career diplomat as I first thought, but instead, I have worked almost my entire career with themes related to sustainable and inclusive human development, as well as with change management and transformation processes, both in international consulting, executive education, as well as in public administration and NGOs in Finland and abroad. Latin America is my passion, and Peru is one of my homelands.

I am a “calmed down idealist”. Although reality has struck me over the years, I haven’t become cynical; my heart still beats strongly for justice, and I do want to contribute for things to change. Through my journey, I've had the privilege of collaborating with diverse individuals globally, providing me with a comprehensive understanding of business, political, and societal dynamics, including sustainability and ESG. This experience has equipped me to address the diverse change needs of organizations in today's complex world, enabling me to advance the sustainability agenda in my ESG consulting work with clients.

Can you tell us a little on how the European Union’s Corporate Sustainability Reporting Directive (CSRD) will affect listed companies like NRC Group?

What is the goal of the directive?

The CSRD, short for Corporate Sustainability Reporting Directive, represents a revision of the EU’s Non-Financial Reporting Directive (NFRD). Companies falling under the CSRD will be required to adhere to the European Sustainability Reporting Standards (ESRS). This directive, along with ESRS, plays a crucial role in the EU's endeavours to standardize reporting practices, enhance transparency, and prevent greenwashing. These efforts aim to assist various stakeholders, including investors, consumers, policymakers, NGOs, in evaluating the actual performance of large companies, facilitating comparisons, and fostering better decision-making.

The directive sets a high standard and emphasizes the need for enhanced due diligence across the entire value chain. An important aspect is that sustainability reporting will now carry the same weight as financial reporting within organizations. It will be mandatory and based on a double materiality analysis. Limited third-party assurance will be mandated, and sustainability reports must be included in the management report, with reporting on the EU Taxonomy also required.

All companies falling under the CSRD, estimated to be around 50,000 firms, will eventually need to align their sustainability reporting according to ESRS. For major listed companies like NRC Group, this entails the obligation to comply with the new regulations next year and conduct a Double Materiality Analysis as part of the process. Companies are required to assess both the impact on people and nature (impact materiality) and how sustainability risks and opportunities affect enterprise value (financial materiality). This assessment guides the inclusion of ESRS disclosures in their annual reporting.

In your opinion, what are the most significant challenges companies face when implementing ESG strategies, and how can they overcome them?

There still seems to be a lack of understanding, or perhaps belief, in the business case for sustainability, despite its direct link to how and from where the company generates its revenue. Too often, sustainability is viewed merely as a separate exercise in ESG reporting and communication, rather than being customer- and business-oriented, derived from the company's long-term strategy and value creation. However, fortunately, this perspective is rapidly evolving.

Years ago, in every ESG/sustainability training I attended, the key message was: “sustainability starts where the law ends,” implying that compliance with regulations was the bare minimum and did not confer competitive advantage. Today, meeting this minimum level is a challenging task that requires considerable effort. Nevertheless, there is still wisdom in that saying. We need companies to go beyond compliance voluntarily and think ambitiously, revolutionizing the market and customer expectations. There is a significant opportunity for differentiation for both large and small companies. The Double Materiality Analysis serves as an excellent starting point for this endeavor.

Personally, I am somewhat concerned that organizations may be overwhelmed by the new reporting burden for a while, potentially diverting focus and time away from innovative and creative thinking that challenges the current way of doing things.

Can you provide examples of successful ESG initiatives or strategies implemented by companies you've worked with, and what made them successful?

1. Enhanced leadership and ESG governance structures, including expanded role descriptions beyond sustainability managers. This demonstrates increased ownership and delegated authority, crucial for navigating the regulated CSRD reporting environment effectively.

2. Companies that align their products or services more directly with addressing sustainability challenges and generating positive impact for their customers or end-users. Quantifying and credibly demonstrating these benefits can be challenging, especially given EU greenwashing concerns and rising customer expectations.

3. Comprehensive training and development initiatives throughout the organization. Without a solid understanding of the 'why' and 'how' behind the company's sustainability efforts, employees may only focus on the 'what,' merely following instructions without innovation or passion. Training and development efforts are instrumental in fostering understanding and enthusiasm, driving meaningful change and garnering crucial buy-in for sustainability initiatives.

Without a solid understanding of the 'why' and 'how' behind the company's sustainability efforts, employees may only focus on the 'what,' merely following instructions without innovation or passion.

Katri Koivula

Finally, on a more personal note, what aspects of your work in ESG consulting do you find most fulfilling, and what keeps you motivated in this field?

Personally, what I find most fulfilling in ESG consulting is collaborating with diverse clients across sectors. It's motivating to offer insights that help them make better decisions. Seeing the shift towards sustainability embraced by the private sector is remarkable and drives me forward. I appreciate the increased dialogue and partnerships across sectors, fostering innovative solutions for sustainable impact. In essence, the potential to make a meaningful impact together keeps me motivated in this field.