Ομιλία: “ESG in Corporate Governance and public enterprises (SOEs)” Χριστίνα Κολιάτση, Chief Legal Counsel, Ελληνική εταιρεία Συμμετοχών και Περιουσίας ΑΕ (ΕΕΣΥΠ)

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ESG in Corporate Governance and
State-Owned Enterprises (SOEs)
17 Sep 2020
Christina Koliatsi, Chief Legal Counsel
Hellenic Corporation of Assets and Participations SA
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2
Hellenic Corporations of Assets and Participations – Structure today
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Subsidiaries (SOEs) of HCAP by capital structure
Central Markets and
Fisheries Organization S.A.
(100 %)
Listed CompaniesNon-listed Companies
Public Power
Corporation S.A.
(34.123 %)
Athens Water Supply
and Sewerage
Company S.A.
(50 %+1 share)
Thessaloniki Water
Supply and Sewerage
Company S.A.
(50 %+1 share)
Thessaloniki
Central Market S.A.
(100 %)
Thessaloniki International
Fair – HELEXPO S.A.
(100 %)
Note regarding Athens Water Supply and Sewerage
Company S.A. & Thessaloniki Water Supply and
Sewerage Company S.A.: As provided in Appendix E
of L. 4389/2016, "subject to the constitutional
restrictions and the obligation to comply with judicial
decisions"
Hellenic Saltworks S.A.
(55.19 %)
OAKA will be transferred to the HCAP portfolio
following its transformation into a
corporation
Olympic Athletic Centre of
Athens “Spyros Louis”
Athens Urban Transportation
Organization S.A.
(100 %)
and its 100 % subsidiaries
Road Transport S.A.
Urban Rail Transport S.A.
Corinth Canal Co. S.A.
(100 %)
Hellenic Post S.A.
(90 %)
Since 01.07.2018
GAIAOSE S.A.
(100%)
Minority shareholder
ETVA - Industrial
Areas S.A.
(35 %)
Folli – Follie S.A.
(0,9 %)
Athens International
Airport S.A.
(25 %)
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Corporate Governance in SOEs
is high on the HCAP agenda
4
SOEs account for 20% of investment, 5% of employment, and
up to 40% of domestic output in countries around the world.
They deliver critical services in key economic sectors, including
utilities, finance, and natural resources.
Today, SOEs around the world face strong pressure on multiple
fronts to improve their performance and are being pushed to:
 Enhance their competitiveness as a way to boost the
economy as a whole, particularly in nations where they
play a dominant role
 Increase their operational efficiency and cost
effectiveness in the delivery of essential infrastructure,
financial, and other services to businesses and consumers
 Reduce their fiscal risks and burdens
 Demonstrate better transparency and accountability in
the use of scarce public funds
source IFC Corporate Governance of SOEs 2018
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Good corporate governance promotes investor confidence
5
Investors recognize that ESG factors can influence long-term business
performance.
As such, many investors now expect ESG factors to be integrated into a
company’s strategy and disclosed in public reports. Investors,
depending on their strategy, are reviewing this disclosure as an
indicator of governance quality and/or are focusing on sustainability
issues and variables beyond the financial statements.
Behind investors’ increasing focus on ESG is an evolving market
perspective on materiality. A host of corporate and market
sustainability factors, historically seen to be non-financial, are now
viewed as material drivers of business performance.
https://corpgov.law.harvard.edu/2020/03/09/the-age-of-esg/
Best practices in the Age of ESG published in
Harvard Law School Forum on Corporate Governance
Proactive
shareholder
engagement
Embrace
sustainability—
integrate ESG into
corporate strategy
.
1
2
3
4
5
The purpose of a company is to engage all its stakeholders in shared and sustained value creation. In creating such value, a company serves not
only its shareholders, but all its stakeholders – employees, customers, suppliers, local communities and society at large.
World Economic Forum, Davos Manifesto 2020: The Universal Purpose of a Company in the Fourth Industrial Revolution.
E - Environment S - Social G – Governance
Build a
‘fit for ESG’
board
Tell your
sustainability
story
Enhance your
internal ESG
governance
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Investors’ community expectations with regards to Corporate
Governance enhancement
BOARD QUALITY AND
COMPOSITION
LIMITING SHAREHOLDER PRIMACY &
EMPHASIZING ON LONG-TERMISM
ESG CONTINUES TO BE
A CRITICAL ISSUE GLOBALLY
ACTIVIST INVESTORS CONTINUE
TO IMPACT BOARDS
DEEPER FOCUS ON OVERSIGHT
OF CORPORATE CULTURE
BA EC D
Source: Russel Reynolds 2019 Global & Regional Corporate Governance Trends
Investors are seeking to understand:
 If the board is truly independent
 if its composition is deliberate and
under regular review
 If the board competencies align with
and support the company’s forward
looking strategy
Key take away #1
Companies can expect increased
pressure to disclose their prioritization
of board competencies, succession
plans & how they are building diverse
pipelines of candidates
Human capital, organizational
culture and reputation are
important aspects of enterprise
value, as they directly impact the
ability to attract and retain top
talent
Key take away #2
Culture risk exist when there is
misalignment between the
values a company seeks to
embody and the behaviors it
demonstrates
Global investors are increasingly
discussing:
1. Social value
2. Long-termism
3. ESG changes that are shifting
corporations from pure
shareholder primacy model
Key take away #3
Institutional investors are more
actively focusing on long
termism and partnering with
groups to increase the emphasis
on long term sustainable results
Investors will prioritize linking
sustainability to long-term value
creation and balancing ESG risks
with opportunities. ESG oversight,
improved disclosure, performance
benchmarking and relevant
strategy will be in focus
Key take away #4
Investors want to understand how
boards are providing adequate
oversight of technology disruption
and cyber risk.
The characterization of activists as
hostile is fading as some activists
are becoming constructive with
management. Institutional
investors are increasingly open to
activists’ perspectives and are
deploying activist tactics to bring
desired change
Key take away #5
Institutional investors are more
actively focusing on long
termism and partnering with
groups to increase the emphasis
on long term sustainable results
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Considerations and challenges relating to Corporate Governance in the
times of the COVID-19 crisis
7
https://corpgov.law.harvard.edu/2020/04/29/covid-19-and-corporate-governance-key-issues-for-public-company-directors/
https://www.pwc.com/mt/en/publications/tax-legal/covid-19-some-considerations.html
. .
.
Corporations had to
adapt and follow up in a
very fast pace given the
strong impact the
pandemic has on
everyday business and
working environment.
Quick and strong decision
making is required, whilst
changes need to be
examined both in the
short and the long run as
well as for all levels
Assessing key
areas where there
is additional risk
and probabilities
for their
occurrence
Reviewing board
and management
succession plans
Reassessing long-
term corporate
strategy
Examine business
model and
relevant available
strategic options
Business Continuity
and Disaster
Recovery
Evaluating potential
disruptions to
operations and
business
relationships
Enhance
communication
& Public Relations
Ensure appropriate
and valid
information is
available (i.e. in the
corporate website)
Enhancing the
company’s existing
reporting and
information systems
that are used by the
board to provide
oversight.
new HR policies –
extended WORK
FROM HOME
Need to develop
increased trust among
employees and
working teams,
enhancing maximum
transparency
All operations were
transferred online –
increased
cybersecurity issues
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HCAP priorities relating to ESG monitoring
HCAP defines its ESG related priorities both in its Strategic Plan and its Business Plan, whereas the progress of specific metrics relating to
the subsidiaries operation is being monitored and evaluated. Such metrics indicatively include:
 Environment: Improving wastewater treatment plants’ operation, water reuse - cyclical economy, safeguarding the natural resource of
water – informative campaigns, measuring technical losses, environmental footprint improvement, efficient use of resources and
energy efficiency management, etc
 Social reward: ease of access secured for all passengers using the metro stations, actions to boost local economies, quantities of food
being distributed to vulnerable social groups by the Athens and the Thessaloniki markets, etc.
 Corporate Governance: well functioning boards, strengthen audit committees, introduction and implementation of corporate policies
such as “Code of Conduct” and “Bribery & Corruption”, better risk management, compliance trainings for all personnel, etc.
The tone needs to be set from the top management in each SOE which must conduct business while being an ethical example, with
strong values and transparency, in line with a new corporate culture and by enhancing its image of trustworthiness towards the
investors’ community and the society.
At HCAP, this is a top priority and as such the new BoDs appointed to its subsidiaries have been selected, among others, with the aim to
enhance the Boards’ compositions with appropriate professionals, which collectively possess complementary skills and experience.
Such knowledge is important in order to drive change, i.e. when it comes to digital transformation, it is vital to have people that
understand new technologies and innovation priorities at a BoD level. Respectively, enhancing transparency assumes improved
financial reportings, which requires for qualified Audit Committees etc.
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Corporate Governance trends – Key considerations for SOEs (1/3)
Technology & Big Data
How can SOEs benefit from the appropriate management and use of
big data generated by their activity? And what kind of concerns, but
also opportunities, can there be at a decision making board level
with regards to adhering to Corporate Governance best practices?
How should an SOE cooperate based on best practices with its
ecosystem of business partners, customers, regulatory authorities etc
in relation to collecting and processing such data?
Climate Change
What should be the approach of an SOE Board on risk management in
relation to operational issues emerging due to climate change when
the company’s activity has a significant footprint in the environment
but it also has substantial impact on society?
How can such risks be mitigated and what part does Corporate
Governance have in it?
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Corporate Governance trends – Key considerations for SOEs (2/3)
Change Management
For example, during the COVID-19 pandemic, how does Corporate
Governance mechanisms respond to the fast changes imposed by
such a crisis (ie. priorities reassessment, strategic planning revisions,
operating model transformation etc) and how can business continuity
be ensured while also adhering to the corporate policies and
procedures in place?
What part does corporate Governance play as a business function in
relation to coordination and cooperation with Human Resources on
matters related to staff under special circumstances (i.e. extended
work from home)?
Corporate Culture
How can common values and principles be embedded effectively in the
corporate culture for all executives and employees of big corporations,
such as the SOEs included in HCAP which can have thousands of
employees?
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Corporate Governance trends – Key considerations for SOEs (3/3)
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Performance Monitoring
Each corporation must have its own internal metric system in order to monitor
its performance. Such a system needs to have the complexity and analysis
corresponding to the company’s size and also to the areas of strategic
importance for the company.
Which methodologies available can be applied by a Board so that gaps, as well
as achievements, related to Corporate Governance practices can be identified?
How often should the BoD agenda include such items?
HCAP has set to its subsidiaries specific KPIs on Corporate Governance,
Compliance and Internal Audit, so as to monitor their progress on relevant
matters, but also in order to take corrective actions when deemed necessary.
The appointment of compliance officer(s) as well as the well functioning of
internal audit are crucial.

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