European institutions should shift their ESG approach from enforcement and compliance toward enabling sustainable growth and seizing new business opportunities, according to representatives from Business for Good, a think tank promoting responsible economic practices. They argue that current ESG regulations are too rigid and that a unified internal market with harmonized rules is essential for fostering innovation and economic competitiveness across Europe.
“Europe could view sustainable development goals and emerging growth markets more as business opportunities rather than obligations,” said Marga Hoek, founder and CEO of Business for Good, in an interview with Newseria. “Right now, European authorities focus primarily on whether companies are reporting properly and complying with formal requirements, with penalties for non-compliance. What’s missing is a focus on progress and development. Leading companies need incentives to innovate—not more oversight. Europe is focusing too much on the back door, while the front door remains closed.”
To accelerate ESG adoption among small and medium-sized enterprises (SMEs) in Europe and boost their competitiveness, access to capital must improve, Hoek emphasized.
“European companies need much more access to growth capital compared to those in the U.S., where it’s easier to scale a business. Europe tends to support either large corporations or very small businesses, but there’s a gap in the middle when it comes to commercialization and scaling. More action is needed here,” Hoek explained. “At the same time, ESG-related regulations and reporting obligations should be simplified so that businesses can focus on growth rather than compliance. While these rules are important, applying the 80/20 principle could help focus efforts on what truly matters.”
A more integrated European market would also help. Despite the EU often being described as a single entity, in practice, member states still operate with differing rules and market mechanisms. According to Hoek, this fragmentation hampers progress and should be replaced by more aligned frameworks.
Signs suggest that the European Commission is listening. Recent and proposed deregulation packages aim to reduce administrative burdens by at least 25% overall, and 35% for SMEs, before the end of the current EU legislative term. In February 2025, the Commission adopted the first set of ESG simplifications, particularly in sustainability reporting. The Omnibus Package focuses ESG duties on the largest companies—those with over 1,000 employees and meeting certain financial thresholds (over €50 million in turnover or €25 million in assets). This change is expected to reduce the number of reporting companies by 80%, generating annual savings of €6.3 billion and unlocking up to €50 billion in additional investments.
To accelerate sustainable business development in Poland, Hoek recommends leveraging technology and improving cross-sector cooperation.
“Technologies like AI, big data, blockchain, and machine learning can significantly reduce ESG implementation costs while creating new market access and business opportunities. These should be key focus areas for Poland,” Hoek said. “Another crucial element is stronger collaboration between businesses, academia, and the government. This would enable knowledge transfer and better use of public procurement to support sustainable markets.”
Poland is increasingly embracing the shift to sustainability. On May 27–28, Warsaw hosted the Sustainable Economy Summit, which brought together business leaders, ESG and CSR experts, policymakers, and NGOs. Discussions focused on responsible supply chain management, CO₂ emissions reduction, energy transformation, and how Europe can balance regulatory ambitions with global competitiveness—particularly in relation to the U.S. and Asia.
The message was clear: if Europe wants to lead the sustainable economy of the future, it must make ESG a growth strategy—not just a compliance obligation.
