What is ESG?

Sustainability, resilience, social responsibility, green investments, and CSR have continuously evolved in definition. Ultimately, business organizations are increasingly settling on the precise term “ESG,” which refers to managing impact in the following areas:

E (Environment) – environmental protection
S (Social) – social responsibility
G (Governance) – governance

As of 2025, the majority of market participants will be required to disclose their ESG indicators. Some organizations obligate by European Commission directives and regulations, while others will be driven by investor pressure. Organizations that act in advance of these requirements will be better positioned to secure favorable financing conditions, strengthen their reputation, and build more resilient businesses.

Regulation

The European Commission has adopted a decision requiring most companies operating within the European Union to report non-financial ESG indicators starting in 2027. However, the largest and publicly listed companies are already preparing these reports as early as 2025. The reported data must be retrospective, meaning that the ESG report prepared in 2027 will need to include comparative data for both 2025 and 2026. Importantly, the regulation is not only about compliance—major institutional banks are also encouraging the disclosure of non-financial indicators by offering more favorable financing terms for green products.

Value for reputation

Investments in ESG are already highly valuable today. As many as 63% of companies state that ESG contributes to increasing organizational value, while only 8% of organizations surveyed* disagreed with this statement.
*Reputation Index 2025

Large quoted companies, large banks and large insurers (over 20 companies in Lithuania).

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Companies with 250+ employees and/or €50M turnover and/or €25M capital.

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Small and medium companies, other SMEs on a voluntary basis (to be tightened as the deadline approaches).

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Advanced organisations list the advantages:

  • It is easier to attract investors and get better financing conditions.
  • Competitive advantage translates into increased consumer trust in the brand.
  • Lietuvoje atliktas reputacijos tyrimas* rodo, kad įdirbis ESG srityje lemia aukštesnę reputaciją.

    *reputacijosindeksas.lt

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ESG – The Importance of Corporate Sustainability and Social Responsibility for Business

Environmental, social, and corporate governance (ESG) is an increasingly important concept that enables companies to reduce their risks, improve their performance and create more value for all stakeholders – shareholders, employees, the people around them, and the natural environment that surrounds us.

ESG factors can affect a company’s long-term success

ESG factors can affect a company’s long-term success in various ways. For example, environmental protection can help companies cut costs – lowering CO2 emissions often means lower energy costs. Companies that are more advanced in sustainability often enjoy a better reputation and greater resilience to crises. A background in social responsibility helps attract talent and retain existing teams. Achievements in governance lead to more effective risk management, goal achievement and simply more value for shareholders.

ESG is becoming an important investment criterion

Performance in ESG is also becoming an increasingly important criterion for investors. There is a growing appreciation for companies that operate in a sustainable and responsible way. Investing in ESG progress allows investors themselves to reduce risk, achieve their goals and contribute to tackling global warming and other social and environmental challenges that our world is facing.

ESG regulation in Lithuania

Sustainability requirements in Lithuania are tightening rapidly. In 2023, the European Union adopted the Corporate Sustainability Reporting Directive (CSRD), which obliges large companies to prepare and publicly disclose sustainability reports. Furthermore, an amendment passed in April 2025 now requires businesses to submit sustainability reports starting in 2027, covering the years 2026 and 2025.

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