Israel ESG Reporting - Between Regulation and Strategy

The Arison ESG Center at Reichman University held a conference titled "Between Regulation and Strategy".

During the conference, participants discussed the role of ESG reporting as a crucial business lever for Israeli corporations' integration into the global economy. This discussion was based on a position paper by Shlomi Shuv and Shoshi Cohen and served as a platform for professional discussions about implementation challenges, regulatory potential, and opportunities inherent in ESG reporting.

The discussion focused on creating an appropriate reporting framework for Israel, addressing business continuity and environmental, social, and governmental risk management, alongside practical solutions that could help the business sector improve performance and build long-term strategic resilience.

Conference Speakers:

Yair Avidan, Advisory Committee Chairman, Arison ESG Center, former Supervisor of Banks.

Adv. Seffi Zinger, Chairman of the Israel Securities Authority: "The guiding principle is disclosure and investor protection. From our perspective, we consider what risks investors face – as investors demand ESG, so will we. We understand that the world is moving in this direction, and we won't be left behind".

Dr. Ruth Dagan, Head of Environmental and Climate Change Practice, Herzog Fox & Neeman; Head of Climate and International Relations Division, Arison ESG Center: "This presents a phenomenal financial investment opportunity. We need to look at the big picture composed of many parts and understand that mandatory reporting is part of a complete system working together like a well-oiled machine toward a common goal".

CPA Shlomi Shuv, Head of Accounting Program and Vice Dean at the Arison School of Business, Reichman University; leads the Fair Value Forum and author of financial accounting books: "From an investor's perspective, accounting lacks tools to reflect ESG implications early in company acquisition. Investors need information in a format allowing comparison that embodies risk and impact".

CPA Shoshi Cohen, former Team Leader at the Israel Securities Authority Corporate Department: "Every self-respecting organization today has a structured ESG doctrine. Israel must participate and build reliable bodies to avoid falling behind. The question isn't if, but when".

Panel Participants:

CPA Erez Soffer, Chairman & CEO at BDO Israel: "We need to create a roadmap that will help clear the fog. There's no need to create our own standards. ESG implementation in organizations should flow from top to bottom through senior management".

Adv. Hagit Ganish Gil, Group Head of ESG at Bazan Group: "Regulating reporting isn't a regulatory burden but rather provides certainty".

Adv. Michal Arlosoroff, Director in public companies: "We need to proceed step by step, as in school. We should avoid regulation that the public cannot comply with and therefore start with lighter reporting requirements".

CPA Reut Kessler, Corporate Department at the Israel Securities Authority: "Currently, corporations' environmental risk reporting requirements in Israel are verbal and not measurable. The Authority is working on this issue, publishing papers and conducting audits. The assessment is that when we recommend adopting standards, it will be ISSB".

Dr. Shahar Hadar, Partner at Meitar Law Offices: "The Securities Authority's role is to protect investors' interests. We must distinguish between risk-related reporting and reporting that promotes behavioral supervision. Implementation should come through dedicated regulations in relevant fields and enforcement".

Discussion Respondents:

Prof. Eli Bukspan, Academic and General Manager of the Arison ESG Center.

Ivri Verbin, CEO and Founder of Good Vision.

Galit Cohen, Head of Climate Change and National Security Program at the Institute for National Security Studies; outgoing Director General of the Ministry of Environmental Protection.

Noga Nadan, CEO and Founder of GreenEye.

Ilan Gildin, Chief Economist at the Israel Securities Authority.

Shoni Albeck, former Legal Advisor to the Israel Securities Authority.

Itai Zetelny, Partner EY, Innovation and ESG.

Additional Participants:

Cecile Blilious, Head of Impact and Sustainability at Pitango Venture Capital.

Omri Boral, Founder of TechForGood, IMagine Impact.

Dr. Aya Navon, Head of Research at the Israeli Forum for Impact Economy.

Summary:

There was broad agreement that standardizing reporting methods is fundamental to creating a clear, uniform infrastructure enabling effective comparison between companies in measurable terms of risk and impact. This was seen as a shared interest among the business sector, government, and investors alike.

Additionally, 2024 was highlighted as a turning point in awareness and engagement, recognizing the importance of continued advancement in the field to ensure compliance with global standards and avoid gaps with leading countries like Europe and the United States, which serve as impact benchmarks.

It also emerged that the ISSB standard is viewed as ideal for reporting, though there was disagreement about its feasibility. It was argued that due to the significant gap between its requirements and most companies' current status, it might pose a complex implementation challenge.

Chairman Yair Avidan's Closing Remarks:

"We discussed culture – culture is the strategy. Success requires leadership and vision (governments, regulators, organizations, civil society, citizens), long-term thinking, fiduciary duty as environmental and social stewards, adherence to taxonomy, adoption and management of the value chain, focus on educational initiatives, and stakeholder engagement.

We must rise above and integrate ESG worlds into our organizations' core. Meeting minimal reporting requirements isn't enough; we must embed ESG principles deeply into companies' purpose, into our missions, visions, and strategic goals. A company's purpose should clearly express its commitment to environmental responsibility, social responsibility, and proper governance".