"No business exists in a vacuum – you are always part of a bigger whole". Jean-Pascal Duvieusart, PPF Group Shareholder, Member of the Board and CEO Home Credit 

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PPF Group is an international investment group founded in the Czech 
Republic in 1991. It has grown to manage operations in 25 countries around the world.

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PPF Group

<h2>In early March 2022, Jean-Pascal Duvieusart, a PPF Group shareholder, spoke with Andrew MacDowall, a consultant and economic journalist, about sustainability-related topics and how they relate to international business and PPF Group.</h2>
<h4>What do you make of the increased interest in sustainability these days, and how does it affect business?&nbsp;</h4>
<p>I see a difference between ESG reporting, which is much discussed and increasingly demanded nowadays, and a more general underlying need for corporate behaviour and management to be guided by certain values that are shared in society. The latter is nothing new. When I was at McKinsey 20 years ago, I remember being involved in an initiative to eliminate gender inequality and enable women to have greater representation in the boardroom. I don&rsquo;t think anything has radically changed since then. When it comes to the basics of governance, transparency, and the internal organisation of companies, we all want the same things. Now, though, there is a much greater awareness of the external impact of doing business, of social or environmental issues, to a degree that was unthinkable back then.&nbsp;</p>
<p>There is a rising public awareness of global problems in which business plays a significant role, whether in relation to the environment, wealth inequality, or gender discrimination. Parallel to this, sustainability is becoming a natural part of strategy and thinking in corporate management, and is gaining traction in companies&rsquo; ratings and valuations. The second source of interest in this agenda comes from the market itself. Business partners, capital markets, and regulators are increasingly looking at the impact that companies&rsquo; operations have on society with a view to containing the risks that they pose &mdash; for example &mdash; to climate change and social inequalities. On the other hand, companies need to show how they indicate and mitigate relevant risks in their strategic planning, including social and environmental externalities, unsustainable supply chains, and the like. In this regard, these partners are demanding transparent, measurable roadmaps and reporting. This puts a certain pressure on companies to say what role they are playing in tackling these challenges.</p>
<h4>So are ESG considerations good for external pressure, or do they also influence companies internally so that they align their values to sustainability?&nbsp;</h4>
<p>Many very successful companies have long relied on an internally shared ethos, and tried to foresee the consequences of their actions and actively promote their values &mdash; even without ESG. What is new is the need to communicate these values and activities in a more structured way and to weave them into a specific strategy.&nbsp;</p>
<p>At PPF, value-driven thinking is not a new subject area either. Our corporate values &mdash; agility and entrepreneurship, innovative thinking and creative prob&not;lem-solving, and accountability &mdash; have not changed in the more than 30 years since the company was founded. There is no need for us to go on a voyage of rediscovery.&nbsp;</p>
<p>Our role in relation to ESG is to share and realise these values throughout our businesses. Our principles, which for the most part have not been codified because we view them more as a shared team ethos, need to be comprehensible for everyone. If they are readily understood, it is easier to deploy them in our business strategy and to project them in deliverables, such as the non-financial reporting, and CSR activities. It&rsquo;s actually great how the formalisation of reporting is turning otherwise rather subliminal values into something tangible and explicit. This will eventually not only yield better results, but also naturally align the company&rsquo;s values and vision with its business. And it will ultimately lead to better internal team cohesion and external relationships with partners and society.</p>
<h4>But why is it right now that we are seeing the rise of sustainable develop&shy;ment and, consequently, ESG?</h4>
<p>I studied at the University of Chicago, so I view this through the lens of a busi&shy;ness school that believes in the power of the free market and people&rsquo;s freedom of action. Changes in consumer thinking and behaviour and the resulting market trends drive demand. This is also the case with sustainability issues today.</p>
<p>Thanks to access to information, changes in society, and the opportu&shy;nities occasioned by the technologies now available, people are beginning to think about work, consumption, health, education, and resources very differently than they did 15 years ago. Young people have really different expectations and ideas about their lives than my generation had, and they project their values quite naturally into their everyday decisions about study, work, the brands they buy, and so on.</p>
<p>The market &mdash; by which I mean companies and regulators &mdash; have to react. It is not just about sustainabil&shy;ity at the level of risk management, operational procedures, transparency, and employment policy. Rather, this agenda is also changing the way we think about our business propositions, the product itself and its entire lifecycle. This is a good impetus for businesses: offer a fair product that delivers real value to the user and the marketplace, doesn&rsquo;t pollute the environment, and is of a quality that is rooted in the values you believe in as a company. Think long-term and look for opportunities in the context of potential changes and external influences. Cultivate your market and support your customers so you can win their loyalty and continue to grow together. In finance, for instance, growing together means that the more financially literate people are, the more they are able to create and accumulate wealth. Then they can buy, share, or invest &mdash; this creates conditions in the marketplace in which a business can succeed. Again, this is nothing new, it&rsquo;s basically common sense in any business.</p>
<p><img src="https://www.datocms-assets.com/40359/1663685369-jean-pascal-duvieusart.jpeg" /></p>
<h4>So ESG also encourages companies to see things in a wider perspective?</h4>
<p>No business exists in a vacuum &mdash; you&rsquo;re always part of a bigger whole. ESG is actually a way to communicate how you as a company want to participate in the development of the society around you. Unless you are a complete cynic who couldn&rsquo;t care less about the world around you &mdash; and I believe there are very few people like that &mdash; simply accumulating wealth can&rsquo;t make you happy.</p>
<p>Our mission and purpose is to build and develop good and successful businesses and, because we&rsquo;ve been doing this for so long, we&rsquo;ve learnt to look at it in a broader context. If you want a business that is going to be sustainable in the long run, it has to be in harmony with the world around you and the people it affects. A business thrives when you can run it in a stable environment, on markets where there is healthy competition. Similarly, employ&shy;ees need to know that you are fair, that they will be treated equally, and that your values align, because without that you won&rsquo;t attract the best people.</p>
<h4>But isn&rsquo;t there a danger of ESG becoming just another burden on companies, with no real benefit?</h4>
<p>This is a fundamental question. Gen&shy;erally speaking, regulations are meant to be enforceable in a way that is not simply a burden on companies, because otherwise they might start thinking about how to circumvent those rules. There is a real risk that non-financial reporting will become a formality, an empty gesture. We regularly hear about greenwashing, by which I mean delib&shy;erately false or misleading information about sustainability. This isn&rsquo;t helped by the fact that the current landscape of regulations, standards and constant changes to ESG directives is labyrin&shy;thine. Therefore, you need to focus not only on the formal requirements, but on what is actually important, what is etched into your company&rsquo;s day-to-day operations and thinking: what you really do and how you do it. That&rsquo;s where change happens, not in reports. Ultimately, it is the behaviour and actions of each employee and their attitude at work that will best show how much such commitments are real and not just performative.</p>
<p>If you do ESG properly and commu&shy;nicate it appropriately &mdash; which are two different things &mdash; this opens up genuine opportunities. I am convinced that applying the principles of sustain&shy;ability induces growth.&nbsp;</p>
<p></p>

Jean-Pascal Duvieusart

<p>Remember, your approach to business and to the world around you is now integral to the value of the goods and services you are offering.</p>

<h4>What is PPF&rsquo;s approach to ESG?</h4>
<p>It&rsquo;s a responsibility, but also essential for our business &mdash; our banks and certain companies will be required to publish their reports in the near future, and ESG will also affect factors such as our credit rating, financing, and other development opportunities. It is important to see that ESG commitments &mdash; for example, to reduce CO2 production &mdash; may necessitate significant investments. These need to have some business logic, so you look for opportunities to leverage them and identify where they will best strengthen your competitiveness. We are already strong in some areas, such as innova&shy;tion, digitalisation, compliance, and CSR programmes. Elsewhere, we have started to open this agenda up gradual&shy;ly &mdash; decarbonisation, renewables, and other areas.</p>
<p>We have dozens of companies engaging in all sorts of business on three continents, so we need to be able to be flexible and accommodate numerous specificities. We take a core, coordinated approach with common Group objectives and priorities. This determines our main course of action. PPF companies define their own sub-strategies, their own measurable indicators, derived from the Group strategy and informed by their own considerations. This forms a basis for monitoring and reporting on what impact and outcomes their efforts have had. Such an umbrella approach is practised by many similar large holding companies around the world.</p>
<p>There are many ESG considerations, and it is impossible to satisfy all of them in equal measure. The world&rsquo;s top companies are not trying to embrace all the world&rsquo;s problems in their ESG strategies; they are increasingly focus&shy;ing on fewer things and concentrating their efforts. If they do it well, you can see clear logic and consistency: they can make a real impact because they link their approach to what they do as a business &mdash; this is the real core of ESG and CSR strategy. That&rsquo;s why PPF Group companies, in, for example, their charitable activities, have long focused on the issues they understand, where they have experience, and where their involvement and contribution make the most sense.</p>
<h4><strong>Give me an example of how to</strong> imple&shy;ment <strong>such an approach. </strong></h4>
<p>Home Credit, which I run, is a great example. Home Credit&rsquo;s first Sustain&shy;ability Report was a milestone for the Group last year. What is Home Credit? It is a high-profile player in lending, providing financial services which are fair and inclusive. Social responsibility in the provision of credit means respon&shy;sible lending &mdash; and responsible lending underpins good risk management. Sustainability and business, again, are complementary.</p>
<p>But more specifically: imagine living without a bank account or credit &mdash; in some parts of the world these are not available to all, yet people on low incomes need a motorbike to get to work, a phone to do their job or to manage their finances and the family and health agenda, and small businesses need cash temporarily so they can get the necessary supplies. Many of our clients had never had a bank account before crossing paths with Home Credit. We want to accommo&shy;date these people, and we make financial inclusion a reality for millions of people every year. The whole point of the financial inclusion we are advocating is to give people access to financial services that they can afford and understand, and that allow them to build a future. That&rsquo;s why we invest heavily in digital technology and the customer experi&shy;ence. Millions more come to our website to watch videos or find information about responsible lending, personal or family budgeting, and financial planning. This sets us apart &mdash; it is not common for companies to do this.</p>
<p>For me, though, this is just the bare minimum. Natural disasters have a significant impact on millions of lives in the markets in which we do business. At Home Credit, sustainability also includes material support schemes, such as the provision of medical sup&shy;plies, loan moratorium programmes, the waiving of interest or penalties, and deferred payment schemes. It may cost us money, but it&rsquo;s the right thing to do because it shows that you share the same values as your customers and their communities, and that you value a long-term relationship with them.</p>
<h4>What about how your companie&rsquo;s approach to the environment?</h4>
<p>Environmental issues are relevant to all our businesses. I have already mentioned digitalisation, decarboni&shy;sation, and so on. But there is more. PPF companies in the mobility sector, for example, can have quite a profound impact on the environment and quality of life. Indeed, this is their core mission. There are densely populated areas around the world that are still developing, but they cannot continue their current trends in pollution and private transport. For further growth, they need clean, sustainable solutions &mdash; trams, buses, commuter trains. All these can be powered not only by emission-free fuels that harness renew&shy;able resources. More importantly, these modes of transport are much more efficiently managed by interconnecting with each other and communicating with other smart urban infrastructure. Our &Scaron;koda Group is already a techno&shy;logically advanced player in this respect and is testing pilot solutions in real urban conditions.</p>
<p>As for our real estate investments, the focus is on sustainable urban planning based on cooperation with local government and communities. A good example of this is the gradual improve&shy;ment of the area in Prague&rsquo;s Vysočany district where our leisure and confer&shy;ence development is located. We are building energy-efficient, LEED-certified buildings with low impact on the environment and that are designed to allow people to find a balance in leading healthy private and professional lives. Otherwise, we would be unable to succeed in the market.</p>
<p><img src="https://www.datocms-assets.com/40359/1660721285-dsc_3590.jpeg" /></p>
<h4>We are talking not long after Russia invaded Ukraine.</h4>
<p>What is happening in Ukraine is a huge tragedy. It goes far beyond the scope and depth of thinking about our approach to business, about sustainabil&shy;ity. First and foremost, we need to help as best we can. PPF and The Kellner Family Foundation responded quickly to the humanitarian crisis by making a significant financial donation to support the education of refugee children in the Czech Republic. In one of the first pilot programmes under this initiative, we worked with the education ministry to publish over a quarter of a million textbooks, dictionaries and other teaching materials in Ukrainian and distribute them free of charge to schools, community organisations and refugees themselves in less than 10 weeks. Other charitable projects are being implemented by individual PPF companies. We will continue our schemes to help Ukrainians because this is consistent with our values and our commitment to provide targeted, meaningful, and long-term assistance where it is needed.</p>
<h4>How deeply does sustainability reflect your personal values and thinking in your everyday life?</h4>
<p>I have five children, and when the eldest ones became teenagers they started saying things to me like &ldquo;I&rsquo;m not going to do this because it&rsquo;s not good for the environment&rdquo;. It made me think and I found a very simple logic in that line of reasoning: it&rsquo;s right and proper to start with yourself. I can start with the small steps that can be taken immediately. I don&rsquo;t buy takeaway coffee any more. Those cups with the lids. No, thank you. I take public trans&shy;portation. When I came to Prague, they offered me a car and driver. I refused. And whenever I go out, I throw any litter I come across in the bin. You should try it too &mdash; and it&rsquo;s even more effective if you go up to someone who is throwing rubbish on the ground and say, &ldquo;Hello, I&rsquo;ll just throw this in the bin for you&rdquo;. If everyone on the planet did that, billions of pieces of litter would be collected every day. It&rsquo;s not a big deal, but it will make our lives better.</p>

<p><em>Jean-Pascal Duvieusart Jean-Pascal is a member of the PPF Executive Management. He has been a shareholder of PPF Group N.V. since 2010, having been a senior partner at McKinsey and Company previously. Born in 1966, he graduated from the Catholic University of Louvain and holds an MBA from the University of Chicago.&nbsp;</em></p>
<p><em>Andrew MacDowall is a London-based economic journalist and consultant who writes for the Financial Times, The Guardian, Politico Europe, and The Banker.</em></p>

<p>An interview focusing on sustainability agenda in PPF Group.</p>

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