ESG: Burden or Strategic Advantage?

Line Markert, ESG expert, partner, and chair of Horten’s board of directors, is unequivocal in her advice to companies. She advocates for embracing ESG and leveraging its requirements as a strategic tool to gain a competitive edge in the market.

“You can choose a compliance-driven approach, viewing it as tedious and burdensome, but in the long run, that mindset will hurt your business. Sustainability has been a competitive advantage for some time, and the new regulations only reinforce this trend. ESG isn't just an obligation that slows us down—it's a golden opportunity to propel your business forward. It should be embraced strategically and with clear focus," she advises.

ESG as part of the business strategy

Companies that effectively integrate ESG into their strategy not only gain goodwill among investors, customers and stakeholders but are also better equipped to handle future risks and opportunities.

“ESG-focused strategies can boost productivity, enhance employee engagement, and create a more resilient business, better prepared to navigate an increasingly complex and dynamic world. Companies that prioritize ESG have the chance to build lasting, sustainable relationships with stakeholders, strengthening their reputation and driving long-term value.”

“In today’s business landscape, ESG is no longer optional—it’s an essential element of any modern strategy. Companies must strike a careful balance to achieve both financial and non-financial goals.”

Large Companies Place Demands on Smaller Ones

The Corporate Sustainability Reporting Directive (CSRD) will soon enforce new requirements on companies across the EU. The largest firms will be the first to report under the European Sustainability Reporting Standards (ESRS), but in practice, these regulations will impact entire value chains simultaneously.

“As part of the value chain model, large companies must impose ESG requirements on their subcontractors. When reporting, they need to account for key businesses in their supply chain. For example, if you’re Novo Nordisk in Kalundborg and discharge wastewater to Kalundborg Utility, you’ll require them to provide data. Since Kalundborg Utility supplies water to a major manufacturer directly subject to CSRD, they too must meet these standards. This clever design ensures that big companies, while directly impacted, also push requirements down to smaller firms that aren’t yet covered by the regulations.”

How Do You Tackle the Sustainability Challenge?

For small businesses, becoming ESG-compliant and turning it into a strategic advantage can feel overwhelming. But it's not just smaller firms facing this challenge—many companies find it necessary to bring in ESG experts and external consultants to manage the process.

“Start with a materiality analysis to identify what truly matters for your business. Approach it strategically and commit to it. Rather than trying to tackle everything at once, focus on the most significant and straightforward areas for reporting. Once you see progress, move on to the next challenge—one step at a time.”

ESG regulations are becoming increasingly complex, affecting a growing number of businesses. Navigating ESG reporting requires careful consideration, as it involves not just legal compliance but aligning the entire organization to make informed strategic decisions and fully capture the benefits of sustainability efforts.

At Horten, we assist companies in navigating the legal, commercial, and political implications of ESG and sustainability initiatives. Our services cover everything from understanding the scope of regulations to effectively integrating ESG practices into business strategy. This includes developing new frameworks for collaboration with key customers, suppliers, and other stakeholders as companies adapt to the evolving sustainability agenda.

Key Questions to consider:

• How can ESG give us a competitive edge?
• Can it enhance our appeal to potential applicants?
• What expectations should we set for our employees?
• What delivery terms should we establish?
• How should our contracts with business partners be structured?
• What framework conditions need to be in place?
• For implementation: How will we gather the necessary technical data?
• Which external advisors should we engage?

By focusing on ESG, companies can aim for sustainable value creation, mitigate risks, enhance their reputation, and make a positive impact on society and the environment. Strategically implementing ESG principles allows businesses to build a more responsible and resilient long-term model.
Read more on our ESG theme page.