Ms. Marina Schmitz and Prof. Dr. habil. Lisa Fröhlich
The Sustainability Program was successfully launched last year, and the first generation of participants who came from Slovenia, Bosnia and Herzegovina, Croatia and Serbia completed the studies. From the feedback you got from participants, what would you say about the situation in companies in CEE regarding sustainability practices, and where are they on the way to adapting to the EU requirements? Are certain industries ahead of others in this respect? Which ones?
The landscape of sustainability in Central and Eastern Europe (CEE) is evolving, with companies increasingly recognizing its importance. However, the level of adaptation varies significantly across industries and countries. While manufacturing and energy sectors are making substantial progress—driven by stringent regulations and the need to reduce environmental impact—many SMEs and service-based industries lag behind due to limited resources and fewer regulatory pressures. EU directives are undoubtedly pushing companies toward sustainable transformation, but many are still navigating the complexities of integrating sustainability into their core business models. The key challenge remains shifting from compliance-driven efforts to a more strategic, value-creating approach to sustainability.
What are the most common challenges companies face when adapting to the CSRD and EU Supply Chain Act requirements (CSDDD), and how can they overcome them?
Companies across CEE are facing considerable challenges in adapting to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The sheer volume of required data—over 1,000 data points under the CSRD—makes reporting a resource-intensive process, often overwhelming companies, especially SMEs. Additionally, supply chain transparency, a critical component of the CSDDD, presents a significant hurdle as businesses struggle to ensure compliance across complex, global supply networks. A lack of in-house expertise and financial resources further complicates the transition. To overcome these obstacles, companies must invest in technology for data tracking, simplify reporting processes, and seek external guidance. Training employees and embedding sustainability into the company’s DNA will be crucial in navigating this evolving regulatory landscape. Strategic sustainable procurement plays a pivotal role in addressing these challenges, as it not only enhances supply chain resilience but also ensures compliance by integrating sustainability criteria into supplier selection, risk management, and contract management. Companies that actively engage their suppliers, set clear sustainability expectations, and leverage procurement as a strategic tool will be better positioned to navigate regulatory requirements. A lack of in-house expertise and financial resources further complicates the transition. To overcome these obstacles, companies must invest in technology for data tracking, simplify reporting processes, and seek external guidance. Training employees and embedding sustainability into the company’s DNA — including procurement strategies — will be crucial in navigating this evolving regulatory landscape.
How can leaders effectively align sustainability goals with corporate objectives to initiate meaningful organizational transformation?
Sustainability should not be viewed as a separate initiative but as a core business strategy that enhances long-term value. Companies that successfully align sustainability goals with corporate objectives integrate environmental and social considerations into their mission, ensuring they become a driving force rather than an afterthought. This requires setting clear, measurable targets that link sustainability efforts to business performance, whether through cost reductions, innovation, or risk mitigation. Engaging employees, customers, and suppliers in sustainability initiatives fosters a shared purpose and creates momentum for meaningful transformation. Additionally, continuous education and upskilling within the organization help leaders and teams stay informed about regulatory changes and emerging sustainability trends.
Could you elaborate on how a materiality analysis can shape a company’s sustainability strategy and risk management approach?
A well-executed materiality analysis is one of the most powerful tools for shaping a company’s sustainability strategy. It allows businesses to pinpoint which environmental, social, and governance (ESG) issues are most relevant to their operations and stakeholders, ensuring that sustainability efforts are both strategic and impactful. By focusing on the most material issues, companies can allocate resources more effectively, mitigating key risks and identifying growth opportunities. A particularly critical aspect of this process is understanding that the majority of sustainability risks occur in the upstream supply chain, where companies have limited direct control but significant responsibility. To conduct a meaningful risk analysis in line with the requirements of the Double Materiality Assessment (DMA), companies must rethink traditional supplier relationships and establish a new model of collaboration based on transparency and mutual accountability. Moving from transactional interactions to true partnerships on equal footing enables businesses to proactively identify and address risks while fostering resilience and long-term sustainability. Moreover, integrating materiality assessments into risk management frameworks helps organizations anticipate regulatory challenges and stakeholder concerns before they become critical issues. Ultimately, a strong materiality-driven approach not only strengthens corporate sustainability but also builds credibility and trust with investors, customers, and employees.
What specific skills and mindset shifts do you believe are critical for leaders to successfully drive sustainability efforts?
For leaders to drive sustainability successfully, they must embrace a systems-thinking approach, recognizing the interconnectedness of environmental and social factors with business operations. A mindset shift is necessary—from viewing sustainability as a compliance issue to seeing it as an innovation and value-creation opportunity. Leaders must also cultivate resilience and adaptability as sustainability regulations and expectations continue to evolve. Ethical leadership is essential, prioritizing long-term impact over short-term financial gains. Additionally, fostering a culture of collaboration, both internally and externally, enables companies to leverage partnerships and collective intelligence for more effective sustainability initiatives.
How can companies best utilize the qualitative and quantitative data required by the ESRS standards to create actionable sustainability strategies?
The European Sustainability Reporting Standards (ESRS) require companies to collect and disclose extensive qualitative and quantitative sustainability data. Rather than treating this as a compliance burden, businesses should leverage it to drive informed decision-making and competitive advantage. The latest EFRAG report on CSRD emphasizes that companies must have a clear understanding of their supply chains, identifying the specific product categories and suppliers where they have the most significant impact. This is essential to ensure that they report a relevant and appropriate number of data points, which, on average, stand at around 250. By integrating relevant data points into business intelligence systems, companies can identify trends, measure progress, and refine their strategies over time. Benchmarking performance against industry peers can highlight strengths and areas for improvement. Additionally, sharing this data transparently with stakeholders builds trust and enhances corporate reputation. Companies that use ESG data proactively will not only meet regulatory demands but also strengthen their market positioning.
What are some innovative ways to involve stakeholders — such as employees, suppliers, and affected communities — in a company’s sustainability journey? Could you bring a couple of examples of best practices of certain companies?
Stakeholder engagement is fundamental to a successful sustainability journey. Companies that move beyond traditional communication and actively involve employees, suppliers, and affected communities create a culture of shared responsibility. Innovative engagement methods include collaborative platforms where employees and partners can co-develop sustainability initiatives, supplier partnerships that promote sustainable practices across value chains, and investments in community projects that align with corporate sustainability goals. For example, Patagonia empowers its customers to participate in environmental activism, while Ørsted collaborates with its suppliers along the Climate Journey to become the first CO2-neutral energy company in Europe. Companies that genuinely involve stakeholders in sustainability efforts foster loyalty, innovation, and long-term business resilience.
How can companies leverage compliance with the CSRD and other regulations to gain a competitive edge in their respective industries?
Rather than viewing sustainability compliance as a cost burden, forward-thinking companies recognize it as a driver of competitive advantage. Meeting CSRD and CSDDD requirements enhances brand reputation, making businesses more attractive to investors, customers, and top talent. Furthermore, compliance pushes companies to innovate, leading to the development of sustainable products, services, and business models that differentiate them from competitors. Sustainable operations often result in cost efficiencies through resource optimization and waste reduction. Additionally, companies that proactively align with EU sustainability standards gain access to new markets and investment opportunities, positioning themselves as industry leaders.
What are the key obstacles in accurately measuring the environmental, social, and governance (ESG) impacts, and how can these be addressed?
Measuring environmental, social, and governance (ESG) impacts remains a significant challenge for companies due to inconsistent data, varying reporting frameworks, and limited measurement methodologies. Many organizations struggle with incomplete or unreliable data, making it difficult to track progress accurately. Additionally, the lack of standardized ESG metrics across industries leads to difficulties in benchmarking performance. To address these challenges, businesses must invest in robust data collection tools, establish clear ESG measurement frameworks, and align with globally recognized sustainability reporting standards. Greater transparency and third-party verification can further enhance the credibility of ESG disclosures.
How can companies balance transparency in sustainability reporting with the need for impactful corporate communication and activism?
Sustainability reporting is more than just compliance—it’s a powerful tool for storytelling and brand positioning. Companies must find a balance between transparency and strategic corporate communication to ensure their sustainability narratives resonate with stakeholders. While transparency is crucial to building trust, excessive technical jargon can make reports inaccessible. A key aspect of this evolving communication landscape is the need to establish a new logic of communication across the entire supply chain. Suppliers should no longer be seen as external entities but as integrated parts of the supply chain, fostering a new vision of partnership that extends beyond sales into procurement. By embedding this approach, businesses can create more resilient and transparent supply networks, ensuring that sustainability commitments are reflected at every level. Effective sustainability communication involves combining data-driven insights with compelling storytelling that connects with investors, consumers, and employees. Companies must also avoid greenwashing by ensuring that all sustainability claims are backed by verifiable actions. Aligning reporting with corporate activism and purpose-driven initiatives enhances both credibility and engagement.
How do you envision the evolution of sustainability reporting frameworks and their influence on business practices over the next decade?
Sustainability reporting frameworks will continue evolving, becoming more integrated, real-time, and technology-driven. The use of artificial intelligence (AI) and blockchain will improve data accuracy and traceability, reducing greenwashing risks. Companies will move beyond compliance-driven sustainability reporting to proactive ESG leadership, using sustainability metrics to drive business strategy and stakeholder engagement. Over the next decade, we can expect more standardized, globally aligned reporting systems that provide greater comparability across industries. Businesses that embrace this shift will benefit from increased investor confidence, regulatory preparedness, and long-term resilience.
What will the 2025 Sustainability Program encompass? Do you plan to make some changes and tweaking of the program structure? Do you plan to include more real cases of companies to study? How will participants learn, and what can they expect to get out of the program?
The 2025 Sustainability Program will build upon the success of its first edition while incorporating valuable participant feedback. However, the training addresses current legal changes and adjustments. The EU omnibus procedure in particular is currently causing great uncertainty in the European economy. On the one hand, it must be taken into account that it will be months before the current draft comes into force, if at all. However, the CSRD logic will not change much, the double materiality matrix will remain the same. Only the data points will be reduced to around 880 points. Your business situation will only improve if you learn how to carry out an impact-risk analysis and identify the key stakeholders with whom you can start risk management together. If you continue to rely on expensive AI tools and consultancies, the number of data points to report will not improve. And this is exactly where our seminar comes in: we want to enable you not only to fulfil your reporting obligations, but also to generate significant added value from the sustainable transformation. With regard to the CSDDD, which will experience even more significant cuts, the only thing that remains to be said at this point is that CSRD cannot be implemented if you do not know your supply chain. The watershed of the law will only put even more pressure on SMEs. Our seminar also sees great added value here, as SMEs are the backbone of the German economy. So, the program will feature a stronger emphasis on real-world case studies, enabling participants to learn from companies that have successfully implemented sustainability strategies. The learning experience will be highly interactive, with hands-on workshops, peer discussions, and expert insights shaping a transformational journey. Participants can expect to leave with actionable strategies and a network of like-minded sustainability professionals ready to drive change within their organizations.
Authors: Marina Schmitz Researcher, lecturer, IEDC-Bled School of Management, Postgraduate studies; CSR Expert at Polymundo AG (Germany) and Prof. Dr. habil. Lisa Fröhlich Professor in Sustainable Supply Chains, Founder of ispira Think Tank Sustainable Supply Chains
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