Christina Tsiarta
Head of Advisory Services on Sustainability, ESG & Climate Change at Kreston ITH, Kreston Global ESG Advisory Group Chair
Carmen Cojocaru
ESG Technical Director on the Kreston Global ESG Expert Network Committee
ESG in Europe: Death of ESG greatly exaggerated
March 14, 2025
Interpreneur data conducted by Kreston seems to show a weakening resolve in Europe to prioritise ESG in business operations. But this data does not tell the full story. Kreston Global is finding that while clients are juggling a lot of issues, ESG is still gaining momentum.
Shifting priorities, not abandonment
As growth in the global economy begins to decline, clients have a lot of issues to grapple with, issues that they may not have even considered four years ago. But European clients are not pulling back from ESG.
‘In 2023 and into early 2024, sustainable funds in Europe experienced strong inflows, outpacing those in the United States, where ESG investing has become more politicised and faced withdrawals,’ said Carmen Cojocaru, Managing Partner at Kreston Romania. ‘Europe remains a front-runner in adopting sustainable funds, with substantial investment increases, including nearly USD 11 billion in new assets for the first quarter of 2024 alone, more than doubling previous quarter inflows. This suggests not a reduction, but growing enthusiasm and development in ESG. It seems the reported weakening may be more reflective of regional differences, rather than a true decline in Europe.’
ESG in Europe is enduring momentum
ESG adoption has suffered in the US, where it is seen as an issue that has become too politicised and too controversial, but Europe seems to be sidestepping this problem. While ESG issues have always been used in political agendas, in the EU, ESG is not seen solely as a political issue or as a topic with political connotations. If anything, EU discussion surrounding ESG centers around legal and licensing requirements, value chain requests or stakeholder pressures.
‘For example, if the company is large and within the scope of relevant legislation, then for them ESG is a legal requirement,’ said Christina Tsiarta, Head of Advisory Services on Sustainability, ESG & Climate Change at Kreston ITH, and Kreston Global ESG Advisory Group Chair. ‘If the company is an SME, it’s seen as an area that needs to be tackled because of other drivers. In our experience, clients are increasingly understanding how important ESG issues are to manage as an organisation, and taking more and more relevant action beyond just legal compliance.’
Regulatory shifts and investment trends
There has been some noise that increased EU regulation around areas such as data security is forcing ESG further down the list of priorities but Cojocaru and Tsiarta agree that data security and ESG are complimentary to each other.
‘While stricter EU regulations such as GDPR have elevated the importance of data security, they do not overshadow the significance of ESG,’ said Cojocaru. ‘These regulations highlight the need for secure and transparent operations, affecting the scrutiny of ESG-related data. Both issues are equally essential and should be addressed in tandem.’
Why ESG in Europe is still a business priority
Some of the buzz surrounding the topic of ESG might have died down, which could, Tsiarta said, be perceived as softening in the market, but ESG is definitely here to stay. Banks in the EU are now requiring information on ESG to issue certificates of performance for clients, which influence their lending and investment decisions and the terms of engagement. Investors are increasingly requesting information on the ESG performance of companies for their decision-making. Legislation such as the CSRD has expanded the scope of companies that need to report and has introduced a requirement for third-party assurance of reporting. SMEs and SMPs are already facing ESG requests from their value chain and they are in scope of some existing and of upcoming ESG-related legislation.
How ESG is shaping business decisions
All in all, reports of the death of ESG have been greatly exaggerated. ‘Accountancy firms that have invested heavily in meeting client demand on ESG actually need to be expanding their ESG strategy,’ said Tsiarta. ‘There are many drivers pushing companies to improve their performance on ESG, and new business lines are now opening up for accountancy firms as a result.’
The quiet evolution of ESG in Europe
As well as new revenue streams opening up, AI is busy making the traditional offerings obsolete. ESG is one of the main areas of upskilling that companies need to invest in.
Cojocaru is finding that in Europe, companies are doubling down on ESG by investing in industry professionals, especially within accounting firms. ‘Accountancy firms, in particular, stand to benefit from reinforcing ESG principles as they align operations with rigorous standards like the EU’s Taxonomy and the Sustainable Finance Disclosure Regulation,’ she said. ‘This strategic focus not only adheres to regulatory frameworks but also responds to the significant investor demand for sustainable investments.’
ESG pressures persist
While the headlines may have indicated that US firms are running for the hills when it comes to ESG, Chuka Umunna, JPMorgan’s global head of sustainable solutions, told the Reuters Energy Transition conference in London recently that US firms are still moving money in a way that is similar to European ones. The pressure to meet exacting ESG standards is a long way from being eased.
