Formulation of Sustainable Development and ESG Criteria Strategy and Policy of HRADF
SUBMITTED FROM:
ΤΑΜΕΙΟ ΑΞΙΟΠΟΙΗΣΗΣ ΙΔΙΩΤΙΚΗΣ ΠΕΡΙΟΥΣΙΑΣ ΤΟΥ ΔΗΜΟΣΙΟΥ
The Hellenic Republic Asset Development Fund S.A. (HRADF) was established in 2011 according to its founding Law No. 3986/2011 with an initial mandate to leverage the State’s private property assigned to it by the Hellenic Republic. HRADF operates to serve the public interest, according to the rules of the private economy. The utilization development and utilization of public property are implemented in accordance with the prevailing market conditions and with guarantees of full transparency. HRADF adopts and implements the Asset Development Plan (ADP), which is reviewed every six months and is authorized by the Government Council for Economic Policy (KYSOIP).
HRADF’s philosophy is to act as a strategic partner for the Greek State to attract investments, enhance the Greek economy’s growth potential, strengthen its international credibility, and produce national wealth.
The Fund is a growth multiplier. Its mission is to maximize Hellenic Republic’s revenues by developing public assets and creating added value for the Greek economy, the people, investors, the local communities, the labor market, and the environment.
Objective Action
As sustainability issues top the agenda of governments, companies and the investment community around the world, it is important for HRADF to have a consistent, modern and firmly established ESG/Sustainable Development Strategy and Policy fully aligned with its remit. The Fund’s overarching goal is to be a driver of sustainable growth for Greece, not only through its initial mandate, which is to develop the Hellenic Republic’s assets, but also through its expanded role as a Port Planning Authority for the entire country, as well as through the Project Preparation Facility (PPF).
Target Audience
The Sustainable Development and ESG Criteria Strategy and Policy of HRADF includes guidelines that govern its entire value chain (portfolio companies, investment community, HRADF asset concessionaires, business partners, consultants, green technology start-ups, society at large, etc.). Therefore, implementing it has multiplier effects for Greek society, the economy and environmental protection, especially considering that HRADF’s portfolio attracts 20% of foreign direct investment in Greece, while the PPF is currently preparing projects corresponding to 2.5% of the domestic GDP.
Duration
The collaboration to formulate HRADF's Sustainable Development/ESG Strategy and Policy began in 2022 and was completed in July 2023, with their approval by the HRADF BoD. HRADF’s Sustainable Development/ESG Policy shall remain in effect from the date it is approved by the BoD until it is revised, which is expected to take place at least every two years in order to take into account socio-economic conditions and environmental challenges, in the context of the materiality analysis of the Sustainable Development issues facing the Fund and the targets set as part of its strategy.
Description
Having acknowledged the need to respond to the climate crisis and move towards a sustainable development economic model, HRADF has formulated and has been developing strategic guidelines to integrate the principles of sustainability and adopt ESG (Environmental, Social and Corporate Governance) criteria into its operations since 2019, which are included in both the Fund’s annual management reports and the activity reports of its parent company (HCAP). Moreover, since April 2021, the foregoing have been horizontally incorporated in HRADF's Asset Development Programme (ADP), aiming at attracting responsible investments to Greece, and are approved by the Governmental Economic Policy Council (KYSOIP). Additionally, the Fund has now incorporated provisions to enhance sustainability into its corporate identity, as its revised founding law (Article 1 of Law 3986, as amended) expressly states that: “[i]n pursuing the Fund’s objects, care is taken to ensure that it can contribute to achieving the objectives of the European Green Deal and the 17 United Nations’ Sustainable Development Goals (SDGs)”.
The creation of a comprehensive framework around the ESG issues enables the Fund and its portfolio companies to seamlessly adapt to the new conditions and shields them against any upcoming changes related to non-financial disclosure requirements, especially at a time when international and European ESG/Sustainability commitments and initiatives (such as the UN SDGs, the Paris Agreement, the EU Sustainable Finance Framework, the EU Green Deal) have been undertaken.
In this context, HRADF formulated its Sustainable Development/ESG Strategy and Policy, which sets out the main pillars and the precise steps HRADF can take to integrate ESG and Sustainable Development issues into its operations, taking into account the business strategy in place and ESG issues which stakeholders consider important parts of its value chain.
HRADF’s Sustainable Development/ESG Criteria Strategy is based on globally recognised sustainability standards, such as GRI, PRI, the UN’s SDGs, UN Global Compact, etc. When preparing it, account was also taken of international best practices and the regulatory requirements of the EU Sustainable Finance Framework (Regulations 2019/2088, 2019/2089 and 2020/852). This Strategy is adapted to the Fund's profile and includes proposals to best leverage the HRADF_ESG Rating Tool and lays out the precise steps that HRADF can take to integrate ESG and Sustainable Development issues into its operations.
It is noted that a main stage in formulating this Strategy was recognising and validating the substantial positive and negative effects of HRADF, with the participation of HRADF Management executives through a relevant consultation workshop, which was held taking into account HRADF’s business model as well as the targeted interviews that had been conducted separately with said executives.
After all the above stages were implemented and the stakeholders were identified, the HRADF Materiality Analysis survey was sent via a special online platform and responses were received from 90% of stakeholder groups, a particularly high percentage of representation. As part of its materiality analysis, HRADF conducted a mapping of its stakeholders and consulted with them in order to evaluate its significant effects on the environment, society, and the economy.
The materiality analysis identified the substantive issues for each strategic pillar arose on which HRADF focuses its actions, while also contributing towards achieving the UN’s global sustainable development goals (UN SDGs).
The Sustainable Development/ESG Strategy/Policy focuses on three pillars (Environment, Society and Economy), framed by a responsible Corporate Governance system.
Environment
HRADF aims at ensuring environmentally friendly practices for all its operating assets, its ongoing and impending projects, with the following key focus areas:
• Climate change
• Water resources
• Circular economy
The Fund is committed to promoting environmentally sustainable economic activities, with emphasis on achieving climate neutrality across the entirety of its activities and portfolio by 2050, protecting aquatic ecosystems and promoting the circular economy, with the European Green Deal as its frame of reference.
Society
HRADF's activities have a number of social effects vis-à-vis stakeholders and Greece at larger, with the following key focus areas:
• Employment and human rights
• Healthy and sustainable societies
The Fund is committed to promoting socially sustainable economic activities, with an emphasis on creating jobs, protecting human rights, enhancing diversity and upgrading quality of life in its areas of activity.
Economy
HRADF aims to attract sustainable/responsible investments with a positive environmental and social impact, the main focus area being:
• Economy and Sustainable Investments
In this context, the Fund is committed to promoting the creation of direct and indirect economic value for its stakeholders and to promoting sustainable finances by attracting sustainable investments, incorporating ESG criteria into its processes.
Furthermore, promoting innovation is a key component of the themes of its Strategy. HRADF is committed to utilising applicable innovative solutions, modern methods and tools, and to developing business relationships with organisations and agencies that promote innovation, with a view to achieving its strategic goals in each focus area.
Implementing all the specific objectives included in the focus areas of each strategic pillar (Environment, Society and Economy) and maximising the creation of long-term value for HRADF and its stakeholders necessitate the existence of a strong corporate governance system. HRADF has adopted and applies a number of policies and regulations that ensure the fitness of the members of the Board of Directors, the proper functioning of its Committees, transparency and establishment of relations of trust with investors, as well as strengthening the Internal Audit System and all the internal audit mechanisms and procedures it comprises, including risk management, internal audit and regulatory compliance, with a view to continuously cover all Company activities and contribute to its safe and efficient operation. Moreover, through its revised Code of Conduct, the Company aims to create a business culture founded on the values of business ethics.
Initiative Location
HRADF’s Sustainable Development/ESG Strategy and Policy is being widely implemented, as the Fund’s activities extend throughout Greece.
Working with Organization
In formulating this Strategy, HRADF worked together with Ernst & Young Certified Public Accountants S.A.
Workers Participation
When formulating HRADF's Sustainability/ESG Criteria Strategy and before it was finalised, internal presentations and consultations with an exchange of views were held with its executives, while both the substantive issues and the final text of the Strategy in question were ratified by HRADF's BoD. An important part of this process was the Materiality Analysis, which was based on engagement with stakeholders invested in HRADF’s activities, calling on them to assess the significance of the positive and negative effects that HRADF's activities cause or may cause to the environment, people and the economy.
The actions required to achieve corporate sustainability have been outlined in HRADF’s ‘Sustainable Development/ESG Action Plan’. This Plan includes quantitative and qualitative indicators of actions to easily monitor the progress of its implementation through effective mapping and adjustment, where required, to ensure the success of HRADF’s Sustainable Development/ESG Strategy, which will result in multiple benefits, such as attracting sustainable investments to Greece, enhancing risk management, augmenting the resilience of the Fund’s portfolio, strengthening the “social license” of the scheduled investment plans, etc.
