Five Questions about SRI – Weekly Expert Interview with Andreja Pavlovic, Senior Consultant, Hauska & Partner Group CSR Director, Zagreb, Croatia – July 8, 2011

Each week Emerging Markets ESG publishes an interview entitled, “Five Questions about SRI.”  The interview features a practitioner’s insights about SRI in emerging markets and through Emerging Markets ESG shares this expertise with a wide global audience.  The goals of Five Questions about SRI are fourfold:

  • To reflect on what SRI in emerging markets means to practitioners;
  • To collect a catalogue of examples of SRI in practice in emerging markets;
  • To raise awareness about SRI in emerging markets; and
  • To enable SRI practitioners in emerging markets to network with peers around the world.

This week’s interview is with Andreja Pavlovic, Senior Consultant, Hauska & Partner Group CSR Director, Zagreb, Croatia.


Hauska & Partner Group is one of the leading corporate relations consultancies in Central and Eastern Europe.  It has been operating in Croatia since 2000 with a current team of 15 experts with different profiles. Clients include Croatian and international companies from different sectors – construction, energy, finance, infrastructure, telecommunications and trade; it is also engaged in projects with state institutions.  Andreja Pavlovic is Senior Consultant, Hauska & Partner Group CSR Director.  She created the CSR Strategy for the group in 2004 and since then she is responsible for its implementation.  She is also responsible for sustainability reporting and implementation of ethical standards within the Group.  She was appointed to the position of Hauska & Partner Group CSR Director in 2008.  In 2010 she was reelected to the position of Deputy President of the CSR Association at the Croatian Chamber of Economy for a four-year term.  She holds a B.Sc. in Political Science and is currently completing her Master’s degree in European Studies at the Faculty of Political Science in Zagreb.

Emerging Markets ESG:  How would you define socially responsible investment (SRI)?

Andreja Pavlovic: It is an investment driven by financial and extra-financial criteria. If consistently applied by investors and corporations, they have strong potential to generate long-term business, social and environmental value.


Emerging Markets ESG:  What distinguishes SRI from mainstream investment?

Andreja Pavlovic: Before answering, let me come back to the question you recently asked at an event in Belgrade: “If SRI is socially responsible what about mainstream investment? Is it socially irresponsible, anti-social or unsocial investment?” You were right to ask, because to a certain extent, it reveals the irony of the situation. Mainstream investors should have and cultivate a sound understanding of how investment will function over time in increasingly complex and unpredictable environments. Consequently, they have to take into account social and environmental criteria in order to be able to evaluate their possible impact on financial performance, seen both as a risk or an opportunity. So, I believe that the borderline that distinguishes SRI and mainstream investment becomes thinner, but that we still have a way to go to see financial and extra-financial criteria blended together into one standard. The latest Ceres Proxy Season Report also indicates that sustainable investment must be closely linked to business practices and decision-making, in order to make business sustainable and profitable.

Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for companies in Croatia to manage?


Andreja Pavlovic: Companies in Croatia face many challenges these days. As the IMF indicated last month, Croatia is yet to see signs of a sustained economic recovery, although the worst of recession is over.  And, recently Croatia was given the go-ahead to become an EU member state, most likely in 2013.  The current situation is a framework in which the companies work hard to preserve financial stability and reorganize internal procedures as well as management systems in order to overcome difficulties and secure competitiveness. On top of that, there are some general as well as some industry specific extra-financial themes that influence Croatian companies and should be managed, such as:  corruption, a negative investment climate, the impact of the costs of carbon credits on utilities when Croatia enters the EU Emissions Trading Scheme in 2013, etc.


Emerging Markets ESG:  Which extra-financial theme – environmental, social or governance – is the most challenging for investors in Croatia to analyze?

Andreja Pavlovic: Potential investors would encounter difficulties in analyzing general information related to the legal and the political framework, which are among the primary criteria for investment decisions.  It is not easy to provide robust and credible analysis, which would ‘lead’, rather than ‘mislead’.  Unlike in other countries, there are almost no standardized surveys which would help investors in analyzing extra-financial themes. Nevertheless, governance should be the least challenge, while social and environmental themes would impose quite a challenge.

Emerging Markets ESG:  What is the relationship between CSR, ESG and SRI in Croatia?


Andreja Pavlovic: There is still no clear link between CSR and ESG, although it is quite obvious that CSR and ESG criteria very much overlap. Many companies still get by with the term CSR and its ‘convenient’ application in the practice, mainly through philanthropy and charity.  A CSR Index and Award, which was introduced in 2006, was a positive step forward to facilitate better understanding of CSR and its various drivers among Croatian companies. A small number of companies report on GRI and UN Global Compact. On the other hand, SRI as a concept and practice is rather unknown and is not yet discussed in the public domain. It really is a pity, since Croatia lacks investments in general, and with smart strategy it could attract investors interested in long-term returns.