How do we combine the goal of climate neutrality and sustainable behavior with competitiveness? At the beginning of this year, coinciding with the new legislative term of the European Commission, several businesses and member state representatives came up with ideas to simplify regulations so as to improve the competitiveness of the EU without falling behind in the sustainable development goals. With this statement, Assoc. Prof. Milena Angelova, Secretary General of the Bulgarian Industrial Capital Association (BICA), opened the first debate panel of the ESG&FRIENDS 2025 forum, organized by ESGnews.bg. The panel in question approached the theme of non-financial reporting and competitiveness of the European Union.
Competitiveness of European companies
“One of the most pressing issues facing the European Commission is the combination of sustainability on the one hand and competitiveness on the other. We drew up a comprehensive framework at European level for what we want to achieve in terms of sustainability. We also set specific political targets – for example, to be carbon neutral by 2050. In fact, these conditions are still absolutely valid today.”
These were the words of Sven Gentner, Head of the Corporate Reporting, Audit and Credit Rating Agencies Unit at the Directorate-General for Financial Stability, Financial Services and Capital Markets of the European Commission.
“EC President Ursula von der Leyen stressed that the Green Deal remains a key element of the Commission’s policy, which will be implemented. There is something else – the problems we are trying to solve by achieving these goals are getting worse. That is why we need to act faster. At the same time, we are in a completely different environment than the one four or five years ago. The reasons for this are clear – the war in Ukraine, energy prices, competition from other foreign players. Our task is to ensure that companies doing business in the EU are not overwhelmed, stay competitive and at the same time adhere to common goals,” he explained.
On February 26, President Von der Leyen will announce some adjustments to the current regulations.
“The goal is to give companies more time to deal with the rules, as well as to relax the rules themselves. This is a political decision – the goal is to let businesses take a breather and become competitive again. But this is exactly what politics is – the ability to unite different goals in a way that leads to a working solution. Let me emphasize once again – we must act quickly and transparently. In Bulgaria, large companies are about to submit non-financial reports for the first time, and everything must be ensured so that this can happen without unnecessary difficulties,” Gentner said.
He is adamant that it is extremely important that all parties concerned remain focused on the problem.
“The directive can only work if we have a common European framework that operates in all member states. Secondly, as I have already said, we understand that there is a need for changes to help businesses. Such changes will be made. However, this does not mean that the requirements will disappear. Sustainability remains an extremely important element that will have to be at the heart of the entire European Union. It must be understood that the problems we want to solve were not created by bureaucracy or regulations. They already existed when we started our work. And they affect everyone – politicians, companies, customers. Our task is to explain once again what we are trying to achieve and how simplifying the rules will help to achieve this,” said Sven Gentner.
Reporting challenges for Bulgarian businesses
“The topic of sustainability reporting is very important for business at the moment. Regarding listed companies, we can say that they have always maintained high standards of good corporate governance and social responsibility. A challenge here is reporting related to climate and the environment and, in particular, the need to build expertise, which is built slowly and with difficulty. The lack of data is another problem that companies encounter when starting the reporting process. There is a significant problem for holding companies, since there are several companies on the stock exchange having many subsidiaries from a wide variety of economic activities, and this makes collecting and consolidating data for them even more difficult.” This was the comment made by Hristina Pendicheva, an expert from the Financial Markets Regulation Directorate at the Bulgarian Ministry of Finance.
Regarding delays, she explained that the audit requirement is also something that makes it difficult for listed companies.
“Back in November, the first sustainability auditors were registered, and that required the convening of extraordinary general meetings at the companies so that they could elect sustainability auditors. The need for businesses to have time to prepare is an essential element here,” explained Hristina Pendicheva.
She added that the Ministry of Finance expects to see the EC’s proposals for deferrals for companies that have not yet started the sustainability reporting processes. She also pointed out as a problem for Bulgarian companies that the CSRD directive has not yet been transposed in some EU member states as this makes the activities of Bulgarian companies difficult.
“We will rely on the EC to assist the remaining countries that have not yet implemented the directive, but most of all we rely on the sharing of good practices. There are many challenges and many difficulties in implementing the directive and good practices are most useful for companies,” said Hristina Pendicheva.
Auditing of reports in the EU
“Auditors have a leading role in the development of this process and many of the large audit firms have invested a lot of money and time to build this capacity and fulfill their important role in the reporting chain. The necessary working groups were created in IDES (Institute of Certified Public Accountants) so that we could participate in the discussion on transposing CSRD into our legislation. These changes are already a fact, and we have made the necessary organization to conduct the training. The first such auditors have been registered since November, and currently their number is over 300.” This was statement offered by Plamen Valnev, representative of IDES and associated partner, Audit at KPMG Bulgaria.
He emphasized that all subsequent auditors will be registered after passing the necessary exams.
“I think we are prepared, but of course, there are challenges. There is a big gap in the expectations of what companies imagine auditors to do and what we can do. Another challenge is that Bulgarian companies, which will have to report in the first and second waves, do not have the capacity to be better prepared, although they are making efforts. There is a negative attitude present in some of the companies, as they perceive the directive and the standards as an obligation, which is not the case. The standards actually tell companies how to report in the most correct way what they do,” added Plamen Valnev.
Training reporting process professionals
“The academic community is a little worried and this is not new. In the last three and a half years we have lived in a situation of political instability, and this has not helped us at all. On the other hand, our goals are long-term oriented, and I think we are going in the right direction. Sofia University has responsibly taken on the task of creating a sufficiently strong network of experts, not only in management, but also in the industry from a technological perspective. We want to be of assistance to consultants who are trying to build this accompanying infrastructure, including external consultants and experts in various fields. We have created a long program, and specific courses related to our master’s programs.”
This was the comment made by Assoc. Prof. Dr. Marina Stefanova – Deputy Dean for “Sustainable Development, Support and Engagement” at the Faculty of Economics of Sofia University “St. Kliment Ohridski”.
“The US has 12 months to withdraw from the Paris Agreement. However, we see that 24 states have formed a coalition and declared separately from the federal government their will to continue implementing their goals at the state level. We see how detrimental all other policies related to sustainability are. I believe that in our professional community there is a clear understanding of which problems are real, and which are imposed. There is internal hygiene and trust in a network that is united by common values, to bring Bulgarian business to profitable positions”, emphasized Assoc. Prof. Dr. Marina Stefanova.
Translated by Tzvetozar Vincent Iolov
