Sagi Cohen
This December, the EU set a new benchmark for sustainability with the formal of its Packaging and Packaging Waste Regulation (PPWR). The new law, set to take effect in 2026, outlines clear goals to reduce plastic packaging waste and addresses the entire lifecycle of packaging. It is the latest in a growing body of legislation and regulation aimed at increasing corporate sustainability.
The implications for European companies are significant. Sustainability is no longer just a moral imperative or marketing tactic鈥攊t鈥檚 a regulatory requirement, compelling businesses to adopt robust and well-defined corporate sustainability strategies. Beyond mere compliance, the regulation also signifies a broader shift in market dynamics: sustainability has become a core component of value creation and competitive differentiation.
Why ESG is a Strategic Necessity
Environmental, Social, and Governance (ESG) principles now play a crucial role in evaluating corporate performance, attracting investors and guiding strategic decisions. Companies that proactively embrace these principles are better equipped to handle market fluctuations, regulatory changes like the PPWR, and growing environmental challenges. ESG offers a structured way to align operational goals with broader societal priorities, delivering meaningful impact and tangible benefits for both businesses and the communities they serve.
This focus on sustainability isn鈥檛 just about compliance; it鈥檚 a strategic advantage. McKinsey that companies with strong ESG policies consistently increase their enterprise value, enhance their brand reputation, and attract conscientious investors. Other stakeholders鈥攚hether investors, consumers or employees鈥攁re drawn to businesses that demonstrate integrity and in their environmental and social practices.
When executed with genuine commitment and measurable outcomes, ESG is not just a matter of compliance or a marketing exercise. It is a practical framework to build loyalty, nurture long-term relationships, and maintain a competitive edge in today’s marketplace.
Europe’s Leadership in ESG Practices
The European Union has set a high standard for integrating ESG into business practices. In November 2022, the European Council adopted the (CSRD), which introduced mandatory ESG reporting for large companies meeting specific thresholds, such as exceeding 鈧�50 million in net revenue, having over 250 employees, or holding more than 鈧�25 million in total assets. These mandatory reports aim to establish greater transparency and accountability in corporate sustainability practices.
The leading European private equity firms have increasingly embraced ESG as a central element in evaluating potential investments.
US vs. EU Perspective
Thanks to the CSRD and the new PPWR, ESG principles are deeply ingrained in EU business practices. These regulations have created a culture of accountability, driving European businesses to align their strategies with regional sustainability goals. In contrast, the U.S. market has fewer regulatory mandates, resulting in a more varied and gradual approach to adopting ESG initiatives.
US companies that prioritize sustainability now, without waiting for laws or regulations, can position themselves as leaders in the forward-thinking global marketplace. Case studies from the EU demonstrate how robust ESG practices drive enterprise value. For example, 脴rsted, a Danish energy company, transformed itself from a fossil fuel-dependent business to a global leader in renewable energy. By divesting its oil and gas assets and heavily investing in offshore wind power, 脴rsted became the world’s in 2019. Subsequently, its soared and in October 2024, Norway’s state-controlled oil and gas company Equinor in 脴rsted, reflecting confidence in renewable energy strategy and growth potential. This success exemplifies how a strategic shift towards sustainability can enhance market value and attract investors.
Practical Solutions for Sustainable Impact
Achieving sustainability doesn鈥檛 have to mean reinventing the wheel. Companies can take meaningful steps by adopting simple, impactful solutions that complement their products. For example, by replacing traditional plastic packaging with , businesses can reduce their environmental footprint without compromising on quality or functionality. This is sustainability in action鈥攔eal change, achievable at scale, and aligned with broader ESG goals.
As Europe leads the way, businesses in the U.S. and beyond have a chance to rise to the occasion. By prioritizing authentic, actionable initiatives鈥攍ike shifting to local manufacturing when possible, re-evaluating materials, and making changes in supply chains鈥攃ompanies can play their part in tackling global environmental challenges and creating lasting impact.
The evidence is clear: Sustainability isn鈥檛 a side project. With regulations tightening, consumers demanding greater accountability, and investors prioritizing ESG performance, businesses that fail to adapt risk falling behind. The time to act is now.