The growing focus on sustainability-driven by the regulatory environment, increasingly discerning investors, and more conscious consumers-is transforming the way businesses operate and communicate their impact on the world.
The regulatory framework on sustainability reporting has evolved rapidly to meet companies’ needs for transparency and accountability. Here are the main milestones:
- 2014: introduction of the Non-Financial Reporting Directive(NFRD), which required banks, insurance companies, and large European listed companies to report on their ESG performance.
- 2020: adoption of the European Taxonomy, which defines which economic activities can be considered environmentally sustainable.
- 2021: Entry into force of the Sustainable Finance Disclosure Regulation(SFDR), which imposes transparency obligations on financial market participants regarding policies for integrating ESG factors (at the organizational and portfolio level) and the sustainability features of the financial products they offer.
- 2024:
- implementation of the Corporate Sustainability Reporting Directive(CSRD), which introduces mandatory reporting according to the European Sustainability Reporting Standards(ESRS) for other types of companies;
- Introduction of the Voluntary Sustainability Reporting Standard for SMEs(VSME), to enable unlisted SMEs to voluntarily adhere to simplified ESG reporting standards;
- entry into force of the Corporate Sustainability Due Diligence Directive(CSDD), which requires companies to identify, map and mitigate environmental and social impacts throughout the entire value chain.
At the same time, institutional investors favor more sustainable business models to reduce financial risks associated with noncompliant practices and intercept new growth opportunities. However, uncertainty is emerging about simplifying ESG reporting, which could weaken corporate commitment and undermine the credibility of the process.
Consumers are also showing increasing attention to ESG practices, especially in their purchasing habits. Confindustria research, conducted between October and November 2023, revealed that 80 percent of Italian consumers surveyed attach some importance to sustainability, focusing mainly on environmental and social aspects: 46 percent of respondents consider worker protection the main criterion for evaluating a company as sustainable, followed by respect for equal opportunities (41 percent). The research also shows that 57 percent of Italians are willing to opt for sustainable products, even at a slightly higher price.
In the face of this changing scenario, integrating ESG policies is no longer an option, but a strategic choice to ensure competitiveness, resilience, and long-term sustainable growth.
What does it mean to integrate ESG strategies?
To prevent ESG initiatives from being reduced to mere declarations of intent, it is essential to integrate them concretely into business decision-making processes.
Leadership and governance: clear and structured commitment must start with top management, which must define measurable ESG goals and align them with the company’s overall strategy. Key tools in this journey are performance indicators (KPIs), which make it possible to monitor progress and assess the impact of ESG initiatives on business operations.
Operational and strategic decisions: ESG principles must be an integral part of day-to-day decision-making processes. This means considering sustainability in every strategic and operational area, such as investment decisions, supplier selection, and human resource management. A concrete example is choosing a partner company along the supply chain that integrates environmental sustainability into its supply chain to ensure consistency and credibility of ESG policies. This is an often underestimated step, which involves the cultural approach of the organization, and can pose great difficulties in implementation: the risk of greenwashing is strongly present, so active stakeholder involvement is essential.
Stakeholder involvement: employees, investors, customers and local communities must be “engaged” in decision-making processes. In the European CSRD (Corporate Sustainability Reporting Directive) this issue is garrisoned through the implementation of the so-called Matrix of Double Materiality, which requires co-participation of all stakeholders in the definition of environmental, social and strategic sustainability objectives, in accordance with the economic-financial sustainability of the company itself, thus transforming ESG governance into a participatory and shared process.
Human resources: structured and shared actions for internal growth such as training paths, reward systems for sustainable behavior, and internal figures to serve as Ambassadors in spreading sustainable culture.
Marketing and communication: branding strategies should reflect sustainability values, raising customer awareness of responsible consumption choices and enhancing corporate reputation.
Concrete competitive advantages
Reducing energy consumption and optimizing resources means improvingoperational efficiency and increasing profits. For example, a company that invests in renewable energy can reduce its utility bills and protect itself from fluctuations in energy prices.
Then obtaining environmental and social certifications (e.g., ISO 14001, ISO 14064, UNI/PDR 125) strengthens corporate credibility, increasing attractiveness to customers, partners and investors who care about corporate social responsibility.
Then there is an issue of business opportunities and access to capital. More and more large companies, as part of their sustainability performance reporting, are choosing suppliers that can provide transparency on their environmental impact and energy consumption. Demonstrating a concrete commitment to ESG thus becomes a determining factor for entering new supply chains, strengthening one’s competitiveness, and gaining access to markets where sustainability is a prerequisite.
In addition, in an economic environment characterized by increasing uncertainty, companies that invest in the ecological transition can benefit from more advantageous financing terms. Banks and asset management companies (SGRs) are rewarding virtuous companies by offering low-cost capital and dedicated instruments for those adopting sustainable growth models, thus fostering long-term development.
A company that takes care of the environment, its workers and the community strengthens its Brand Reputation, positioning itself in the market as a responsible and innovative reality. This additional benefit is particularly relevant for the new generation of talent, which is increasingly oriented toward choosing companies that demonstrate a concrete commitment to sustainability.
Finally, the EC maintains a high focus on improving governance and reducing emissions. Adapting early enables companies to reduce the risk of penalties and legal issues, as well as accessing public financing more easily and positioning themselves better in calls for subsidized finance.
Tools for sustainable transition
Implementing ESG strategies requires adequate resources. Indeed, the path to sustainability can be complex without the right support, especially for companies facing upfront costs and investments.
In response to this need, Banca Popolare di Fondi and PRAXI have signed a partnership that provides subsidized financial solutions dedicated to ESG projects implemented with PRAXI. This synergy was created with the aim of facilitating investment in ESG consulting paths, accompanying companies in integrating responsible practices and strengthening their competitiveness in a changing regulatory and market environment. With this integrated support, companies can more easily address the investments needed to initiate concrete change toward more sustainable business models. In addition to the financial aspects, the partnership between BPF and PRAXI offers additional value: a specialized consulting service that accompanies companies in defining their sustainability strategy, drafting Sustainability Reports and Transition Plans.
