Slovakia could become a European hub for ESG reporting

Environmental, social, and governance (ESG), an approach to business that seeks to incorporate best practice in these areas, has become increasingly important for companies in recent years, especially those global concerns whose operations span markets in which such reporting is becoming mandatory.

But while ESG reporting can pose challenges for firms, in Slovakia, business service centres see the rising importance of ESG as an opportunity.

“For business centres in Slovakia, it’s a great opportunity to get a new service into the country and maybe become a hub for ESG reporting in Europe,” said Wolfgang Fischer, CEO of the Bratislava Competence Center at Zurich Insurance Company Ltd.

The Slovak Spectator spoke with Fischer about the challenges of ESG reporting, the gradual transformation of his centre from just a call centre 17 years ago to what is now a cluster of specialists providing a broad set of services for the insurance company’s corporate centre and business units across the globe, and the potential waiting to be tapped in Slovakia.

How do business service centres regard ESG reporting?

PwC’s branch in Slovakia, as well as AmCham in Slovakia, picked this topic up quite early on and started inviting relevant companies to brainstorm whether we could get more qualified roles into Slovakia and make it a hub for ESG reporting. This is a new service which requires qualified people, not just staff to process transactions, with technical and data science backgrounds – exactly those that already are in Slovakia. The strength of Slovakia as a small country is that all the business service centres know each other and we can work on this together. As more companies focus on this service here, we can create an ecosystem with enough people. There are already two companies – us and Swiss Re – doing this.

Do you not treat each other as competitors?

Not in a negative way. We compete for the same resources, but the idea is to keep people in the country and attract others back to the country. We can only do this jointly. We don’t see each other as competitors, more as part of one ecosystem jointly raising the market upwards and even bringing talent into the country. If just one company’s doing it, there’s always a risk. When there is a cluster of similar companies, you can start here as a junior, become a senior, and grow further. Like in London - there’s one bank close to another, so people can just move around in their career without leaving London. And this is what we want to have here: people staying in the country, but rotating [jobs]. A person leaving our centre for Swiss Re, Uniqua or any other local business centre is better than them leaving our centre for Hungary or Germany.

What qualifications are needed for ESG reporting?

In ESG reporting, there are different types of roles. There is the pure reporting role, which is creating the reports. For the qualified tasks we want to do here, it’s data science and business analysis. A bigger problem than creating final reports is getting the data out of the systems, especially unstructured data. ESG reporting involves requesting a lot of data which doesn’t exist in a real format at that specific time. So you need smart people to understand where the data might be and how to pull that data together and interpret it. But to do this job you not only need the relevant technical qualification, but you have to be interested in environmental issues. I had people who applied for roles in this area who had the hard skills but did not have a passion for the environment and they themselves admitted that if they took the position it wouldn’t work out. It’s important people develop a background in this while they are at university.

Are higher education institutions open to this?

Absolutely. They see the opportunities too. To keep students in Slovakia, because they could easily choose [instead] to study in Brno or Vienna, they have to teach subjects which are of interest to the new generation. Sustainability is one of them. This isn’t something they would have to study as a separate subject, so students studying an existing field, such as data science, could study it as a specialist course alongside. In that way, companies would get employees who already have a certain level of awareness about sustainability and green topics.

How did the idea to create an ESG reporting unit at your centre in Bratislava come about?

I was asked by the group whether I could find people qualified for ESG reporting in Slovakia. I replied that my green team lead was in charge of ecological topics at the centre. He is a data scientist and he wanted to do more in this area. So, by chance, I had the right person and the result is that we are starting to grow our ESG reporting here for Zurich Insurance. The root cause of this success was having a qualified person with the right mindset.

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How many people are now in this team?

We have hired an additional three people and plan to have six people by the end of next year. If everything works out as planned, there will be a maximum of 20 people.

What exactly is the team’s task?

Their task is to get the data out of the systems, understand it, and interpret it for the central ESG in Switzerland. The financial reporting will be done elsewhere. But the highly qualified jobs in data analysis and business analysis will be here, in Slovakia.

So, it would involve automation?

Exactly. Therefore you need the experts – data and business analysts, who understand the systems and know how to automate their extraction. This will be done in Slovakia and then this solution would be used in our group’s other organisations.

Is ESG reporting something that would be done just in the European Union or also in other countries?

That’s a very interesting question. At the moment, there is a different level of reporting requirements across the globe in several countries. Currently in the European Union there is now a quite concise framework in place - and I am confident there will be more harmonisation with other jurisdictions in the future. But there is an idea to spread it beyond that. A lot of companies do business everywhere: even American companies do business in Europe. So European law impacts them. But there are still a lot of unknowns. But we need to be prepared, because if we’re not, some global consulting companies could come along and take [this opportunity]. That’s why we think that if we start now, in Slovakia, we could be the right place to provide this service.

Do you see similar activities being undertaken elsewhere in Europe?

Not yet. ESG reporting is a topic to a certain extent, but not in all European countries. I don’t know of any other country where the business service centres have such a close relationship as they do in Slovakia, where every centre knows the other and they meet regularly. This is one of the major benefits of small countries. We work closely together and have a joint interest in elevating ESG to the next level.

What is the value of ESG reporting?

It helps in providing a common understanding and identifying where companies could reduce CO2 consumption, for example. Generally, I view it positively as it is very important to increase awareness that we, as human beings, can’t continue doing what we are doing in the same way. But I can see that there are ways to circumvent it. If we fail to do it properly, ESG reporting will become just another annoying administrative burden without any effective impact, simply a paper tiger.

In our centre, where we have a quite green community, opinion is split. We have people who are highly interested in the subject and we have people who say it’s a governance nightmare, like a lot of other reporting. In other words, they like sustainability, but dislike the ESG reporting, this governance.

Can you see new roles being created in Slovakia in any other fields?

Certainly, qualified roles in automation and digitisation. I don’t see Slovakia as a good place for introducing new transactional services because people are highly skilled, but they are too expensive, in part due to high social insurance contributions. You can get accounting services cheaper in Poland, and even cheaper in Romania or Bulgaria. Due to high wage costs we should focus on highly qualified jobs. I think Slovakia’s history as a tech country, and people’s affinity for maths and engineering, will help create the right roles because IT and automation is the future. This is especially true as Slovakia does not have a lot of resources, other than its people’s brains and beautiful nature.

How many people does your centre employ?

We started in Bratislava in 2007 as a call centre with transactional jobs, and in 2009 we changed towards being an actuarial centre. When I joined in 2016, we expanded to risk management and to endurance network services, so value added services, not only for Zurich’s headquarters but globally. We now have 400 people providing different types of services in actuarial services, business analytics, risk management, insurance network services, business analysis and IT services.

How many such centres does Zurich Insurance have?

Five in total, of which four are in Europe. Our centre in Bratislava is the second oldest and the second largest. The largest is in Barcelona, but it focuses just on IT. We are the only centre which has IT and non-IT. Moreover, we have full value chain roles in several areas, while other centres focus on just some parts of them.

Is the call centre still here?

No. We moved all transactional jobs away from here. We currently focus on highly qualified jobs. This is reflected in our name – Competence Center – and the structure of our staff, of whom 93 percent have a university education, either bachelor’s, master’s, or PhD. Repetitive tasks can be done cheaper elsewhere, and they are anyway subject to automation. We would like to focus on jobs which really use automation and artificial intelligence (AI). And we like to focus on the whole value chain, i.e. from the business point across business analytics to IT.

Two years ago, you established a branch in Košice. Why did you choose Košice?

Even before the Covid-19 pandemic, we had people who had left the centre and built homes there because they wanted to be with their families. But our official policy didn’t, to any great level, allow remote working. Then I realised there were a lot of talented people in Košice, so the idea came about to give people who during the pandemic were allowed to work remotely anyway, a place where they could meet and do teamwork. We started with eight desks on December 9, 2021. Now, we have16 desks and around 25 people in the region. We are growing there – slowly and sustainably. Whenever we find someone talented there, we hire him or her. We are already part of the local business community and have some big plans there.

What work is done at the branch?

The same as we do here in Bratislava. For the majority of roles, our people can work either from Bratislava or Košice, or work remotely. Only a few jobs have to be done specifically in the office, for example IT support. But for the rest of the jobs, we are relatively flexible.

What do you think of Volvo’s plans to build a brand new plant for electric cars in Košice?

The Košice region is a region of opportunities and Volvo is a big gift to it. We see it as an opportunity for us, too. It could attract talent to Slovakia and spread the word about Košice among the community of highly qualified people. If an engineer comes to Volvo, maybe his wife will get a job with us. Volvo may attract Slovaks back to the country as they would see now is the right time to return – for example, they want to come back to take care of their ageing parents and that there are proper job opportunities for them.

Coming from Germany, I am a big fan of decentralisation and I dislike it when everything is in one place. I like when people remain in a region, keep it alive. The money stays there, the better paid people can create jobs for the lower paid people, the whole ecosystem remains attractive. You don’t need just experienced people, you need young, engaged people to stay in these regions, and they need good jobs.

Volvo and its suppliers will also bring more money into the city to make some necessary improvements to the local infrastructure. Maybe there will be more students there, perhaps from Ukraine and Moldova, because with Slovakia’s population alone we would soon run into problems filling [demand] for qualified positions.

Is this something your company has already experienced?

Yes, this is why we are very creative and open in our hiring. We cooperate with an agency to actively approach Slovaks working abroad to get them to come back to the country. We have already been successful in a few cases. But these were people who were already considering returning. Now we are trying to attract people who haven’t even thought about returning yet.

Your centre has undergone a major transformation over the years. Do you have any idea how it will develop over the next five to seven years, for example?

Our plan is to have 500 to 550 people by 2027, to get more end-to-end services into the country, to grow the people and the services we provide. Our goal is to be more efficient, bring greater value to the group and to acquire greater ownership of the things we do. We want to move from doing this for others, to being on the same level as partners.

Also, our people realise AI presents an opportunity. It’s only a threat for people who are not willing to work with it. AI is a great help and can help us be even better, if used correctly. There will be some victims in our sector, for sure. But not in centres like ours, more in the transactional field.