Transforming business for a better world

ESG, sustainability and climate change

Are you ready for ESG legislation and regulation?

Across Europe, existing ESG-related legislation is being overhauled; with a legal and regulatory framework being established to push for and support faster business transformation.

This framework includes the EU Green Deal, the EU Taxonomy Regulation, the EU Corporate Sustainability Reporting Directive (CSRD), among others. There are countless initiatives in place or in the pipeline – covering raw materials, energy, investments, taxation, employment practices, social responsibility, etc. – that can have a profound impact on companies’ governance, operations and reporting.

Many companies struggle to assess where they are and what needs to be done.

Take the CSRD, for example. Few companies are already CSRD-ready. It requires businesses to disclose not only the risks they face from a changing climate, but also the impacts they may cause to the climate and to society. This calls for a deeper analysis of business models.

The EU Taxonomy Regulation calls for comparability, requiring company sustainability data to be submitted in a standardised digital format.

While regulations outline compliance requirements, they also help companies identify the gaps and opportunities to improve their business model and practices.

Companies are striving to do their part to mitigate environmental damage and social inequalities. But we need to do better. We need to work harder and act faster to transform business and society. This means:

creating long-term value through a comprehensive focus on environmental, social and governance (ESG) factors,
ensuring compliance with ESG regulations, and even go beyond compliance,
competing effectively in an ESG-focused market.

What should business leaders do?

It’s time for businesses to answer two key questions:

How can we ensure that our business remains resilient through times of constant change?
How can we build a purpose-led business that creates positive environmental, social and governance impact?

Every business should understand these challenges and engage with both internal and external stakeholders to define its response to each of these questions — and will increasingly be required to do so. In practical terms, this means nailing down a strategy and action plan to achieve these goals.

It’s not just about compliance

The regulatory framework is designed to drive change, but compliance is not the only driver for business transformation. Customers, employees, investors, suppliers and other stakeholders – not just regulators – are all calling for effective ESG policies. The sustainability-related factors which may impact your policies and practices include:

Natural resource scarcity
Energy security
Increasing taxation and regulation around waste, carbon emissions and water consumptionP
Population growth and demographic change
Competitor actions on sustainability
Changes in supplier/value chain relationships
Poverty and public health concerns
Technological innovation

Meeting this demand not only adds value to your business but also helps ensure its long-term resilience. As such, business transformation is an ongoing journey – one that requires embedding ESG considerations into every aspect of your operations.

Partner with PwC on your ESG journey

PwC Croatia is part of the global PwC ESG Platform, a network mobilised to embed sustainability into everything we do. It gives us unique, far-reaching resources to help us help our clients build future-proof businesses.

Wherever you are on the path to a more sustainable and compliant future for your business, PwC can support you every step of the way with our integrated sustainability approach covering strategy, transformation and reporting.

Strategy: helping you make the right choices for a sustainable future.
Transformation: embedding ESG aspects into your daily operations.

Reporting/audit/assurance/tax: helping you define and implement the right sustainable KPIs.