Sustainability is a shared ambition at a global level, yet the way it is implemented differs significantly by region. According to Grant Thornton’s international research, the mid-market sector worldwide invests in ESG initiatives based on differing business considerations.
While in North America sustainability is primarily seen as a growth and investment opportunity, in Asia it forms part of innovation and digitalisation, whereas in Europe the focus is increasingly on optimising operational efficiency and regulatory compliance.
This difference is decisive from both a strategic and a business perspective.

Europe: From regulation to operational advantage

European companies operate in a more mature ESG regulatory environment. As a result of the CSRD, the EU Taxonomy and other regulations, most market participants have already gone beyond the initial compliance steps.
Accordingly, the focus is shifting:

• from compliance to integration into operations;
• from one-off projects to process-level integration;
• and from obligations to measurable business impacts.

Sustainability is thus increasingly linked to cost efficiency, optimisation of energy use, and improved financing conditions.

The “twin transition”: Linking digitalisation and ESG

One of the key elements of the European approach is the connection between the green and digital transition. Digitalisation is both an enabling tool and a foundation of ESG operations.
In practice, this means that:

• the collection and validation of ESG data is increasingly based on automated systems;

• reporting and risk management rely on shared databases;
• and decision-making is becoming increasingly data driven.

This is particularly relevant in the financial sector, where the management of ESG risks can no longer be separated from traditional risk models.

Hungary: Local manifestation of global trends

In Hungary, the ESG regulatory environment is not only catching up with European trends, but in certain areas – such as mandatory ESG reporting and certification – it has established a distinctly proactive framework.
The domestic reality is shaped by two parallel pressure paths:

The financing side (banks): Due to MNB recommendations and prudential regulations, banks are required to integrate ESG risks into their lending processes. This means that for Hungarian companies, sustainability data provision is becoming a prerequisite for creditworthiness.

The regulatory side (ESG Act): The Hungarian ESG Act and the related implementing decrees require a wide range of companies to prepare ESG reports and have them subject to mandatory, independent certification. This step elevates intent into measurable and auditable reality.

Together, these two forces result in a shift in the Hungarian market as well, from theoretical commitments towards verified data and concrete implementation. Companies that are able to demonstrate their ESG performance in a timely and professional manner – including through independent certification – gain a significant competitive advantage both in bank financing and in international supply chains.

Regional differences - shared direction

Although approaches to sustainability differ by region, several common directions are clearly emerging:

• ESG is increasingly becoming part of competitiveness;
• data and digitalisation are taking on a key role;
• and regulatory compliance is being transformed into business impact.

The key to success lies in whether companies can adapt these global trends to their own market environment.
Sustainability is not implemented according to a single model. Alongside global objectives, local regulation, market conditions and economic realities determine the concrete steps.

Croatia: From awareness to implementation

According to Moran Marangunić, ESG Consultant for Grant Thornton Croatia, Croatia is currently in a transitional phase where sustainability is moving beyond awareness and gradually becoming embedded into business decision-making.

While sustainability is often associated with environmental initiatives, particularly in sectors such as tourism and energy, the practical application of ESG principles varies significantly across industries.

"In Croatia, ESG is still predominantly perceived as an environmental issue, particularly in the tourism and energy sectors. In tourism, the focus is often on visible environmental measures (e.g. waste management, energy efficiency, water consumption), which can sometimes lean towards reputational positioning and “green” marketing. However, this approach is gradually evolving as companies increasingly recognise climate-related risks (seasonality, extreme weather events, water availability) and regulatory requirements as real business risks", explains Marangunić.

Compared with Hungary, where ESG implementation is strongly influenced by specific national legislation and mandatory certification requirements, the Croatian market remains more market driven. Companies are increasingly responding to expectations from investors, financial institutions and international business partners rather than domestic regulatory obligations alone.

This places Croatia somewhat closer to Slovakia, where ESG adoption has largely been shaped by supply chain requirements and expectations from international parent companies. However, Croatian businesses are increasingly recognising that sustainability performance is becoming an important factor in competitiveness, particularly for export-oriented sectors and companies seeking access to international financing.

Data remains the key challenge

One of the most significant obstacles for Croatian companies is not technology, but organisational readiness and expertise.

"Mid-sized companies in Croatia are generally not yet fully prepared for data-driven ESG reporting, but the key issue is not technology, it is the lack of expertise. Most companies do not have internally developed ESG knowledge, processes or clearly defined ownership of ESG data, which is why external consultants are engaged in almost all cases.", says Marangunić.

Unlike more mature European markets, where ESG reporting is increasingly supported by automated systems and integrated data platforms, Croatian companies still rely heavily on manual data collection and external advisory support. In this regard, Croatia faces challenges like those identified in Hungary, where data collection also remains largely dependent on spreadsheets and fragmented internal processes.

Nevertheless, there are encouraging signs of progress. Many Croatian companies continue investing in sustainability reporting even when they are no longer legally required to do so. Previous investments, customer expectations and preparation for future regulatory developments are motivating organisations to maintain and further develop their ESG capabilities.

The growing role of financial institutions

The financial sector is emerging as one of the strongest drivers of ESG development across Europe, and Croatia is no exception.

Over the past year, Croatian banks have increasingly incorporated ESG considerations into their lending frameworks. While formal ESG certifications are not yet a universal requirement, sustainability performance is becoming increasingly relevant in credit risk assessments and financing conditions.

"Instead of strict requirements, banks are increasingly using incentive-based mechanisms, such as more favourable interest rates and dedicated green and sustainability-linked loan facilities”, says Marangunić.

This development mirrors broader European trends. In Hungary, ESG data has become increasingly important due to regulatory expectations placed on banks, while in Croatia the momentum is primarily driven by European Central Bank expectations and the wider evolution of sustainable finance.

Different markets, common direction

Although ESG maturity differs across Central and South-Eastern Europe, a common direction is becoming increasingly evident.

Hungary demonstrates the strongest regulatory approach, supported by dedicated ESG legislation and certification requirements. Slovakia continues to be heavily influenced by international supply chains and customer expectations, while Slovenia's relatively mature sustainability culture supports steady ESG development despite the absence of specific national ESG legislation.

Croatia sits between these models. The market is moving from awareness towards implementation, driven by a combination of European regulation, financial sector expectations and growing recognition that sustainability performance influences competitiveness.

As European companies continue to integrate sustainability into core business operations, the distinction between ESG compliance and business strategy is gradually disappearing. Across all markets, organisations that successfully combine reliable data, effective governance and long-term sustainability objectives will be best positioned to create lasting business value.