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What is ESG?

What do ESG regulations represent?

ESG regulations are governmental standards for ESG-related activities, reporting, or disclosure of information.
From 2024, businesses in Bulgaria will have to prepare ESG (Environmental, Social, and Governance) reports, which are part of European regulations. These regulations aim to improve transparency regarding the impact of companies on the environment, society, and corporate governance. They are targeted at large businesses and aim to ensure that companies contribute to sustainable development and are in line with the goals of the EU Green Deal. Thus, ESG reports become a mandatory standard for business in Bulgaria, as part of the trend to promote sustainable development and responsible management.

“ESG” stands for Ecology, Social Responsibility, and Governance

This is a framework used primarily in the business and investment world to assess a company/business’s ethical impact and sustainability practices. ESG criteria help investors and other stakeholders understand how the company manages risks and opportunities related to environmental, social, and governance factors.

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ECOLOGY

This refers to the company’s impact on the environment. It includes how the company responds to issues such as climate change, the use of natural resources, pollution and waste management, and its stance on environmental conservation. Companies with strong ecological practices may focus on reducing their carbon footprint, using renewable energy, and ensuring sustainable resource use.

SOCIAL RESPONSIBILITY

This refers to the way a company manages relationships with its employees, suppliers, clients, and the communities in which it operates. Key aspects include labor practices, employee health and safety, diversity and inclusion, human rights, and community engagement. Companies with strong social practices often commit to fair labor practices, protection of human rights, and positively contribute to their communities.

GOVERNANCE

This aspect includes the internal practices and policies adopted by a company to govern itself, make effective decisions, comply with legal requirements, and satisfy the needs of external stakeholders. It encompasses issues such as corporate governance structures, executive compensation, audits, internal controls, and shareholder rights. Good governance practices are crucial for ensuring accountability, fairness, and transparency in a company’s operations.

ESG criteria are becoming increasingly important in investment decisions, as many investors believe that companies with strong ESG practices are more sustainable in the long run and better positioned to address environmental and social challenges. Additionally, a strong ESG profile can enhance a company’s reputation and stakeholder trust.

WHAT ESG SERVICES WE OFFER

In Bulgaria, as in other countries of the European Union, compliance with ESG (Environmental, Social, and Governance) is a requirement for certain categories of companies.

Large Public Companies

Large companies that are publicly traded are often required to adhere to ESG standards. This includes providing information related to environmental impact, social responsibility, and governance practices.

Financial Institutions

Banks, insurance companies, and other financial institutions are increasingly subject to ESG regulations, especially in terms of their investment practices and offered products.

EU-Funded Companies

Firms that receive funding from the European Union may be required to adhere to specific ESG criteria, especially if the funding is related to environmental or social projects.

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Companies with Public Share Offerings

Companies listed on stock exchanges, like the Bulgarian Stock Exchange, may have specific requirements for ESG reporting, in line with EU regulations.

Large Private Companies

Even if not publicly traded, large private companies, especially those with significant environmental impact or social influence, may be subject to ESG regulations.

It is important to note that the requirements for ESG compliance can vary depending on the size of the company, the sector in which it operates, and the specific regulations applicable in Bulgaria and the European Union. Additionally, these requirements are evolving, with an increasing focus on sustainability and corporate responsibility in both national and international contexts. The ESG criteria (Environmental, Social, and Governance) are applicable across a wide range of business sectors. In essence, any industrial sector that impacts or is impacted by environmental, social, and governance factors can benefit from the implementation of ESG principles. Here’s how ESG encompasses different sectors:

ENERGY AND UTILITIES

This sector is subject to serious analysis for environmental impacts, especially regarding carbon emissions and the implementation of renewable energy. ESG considerations include transitioning to sustainable energy sources, reducing greenhouse gases, and responsible resource management.

FINANCE AND BANKING

ESG in this sector focuses on responsible investment policies, ethical lending practices, transparency in financial reporting, and managing social and environmental risks in investment portfolios.

TECHNOLOGY AND TELECOMMUNICATIONS

ESG issues may include data privacy and security, ethical use of artificial intelligence, energy-efficient technologies, and reduction of electronic waste.

CONSUMER GOODS AND RETAIL

This sector focuses on sustainable material use, labor practices in the supply chain, product safety, and waste reduction.

HEALTHCARE AND PHARMACEUTICALS

Key ESG factors include ethical clinical trials, access to medicines, responsible marketing practices, and the environmental impact of pharmaceutical production.

MANUFACTURING

ESG encompasses reducing environmental impacts from manufacturing processes, ensuring worker safety, and promoting ethical practices in the supply chain.

REAL ESTATE AND CONSTRUCTION

Primary ESG issues include sustainable construction practices, energy efficiency of properties, and responsible land use.

TRANSPORT AND LOGISTICS

This sector is assessed for fuel efficiency, emission reduction, and sustainable supply chain management.

AGRICULTURE AND FOOD PRODUCTION

ESG in this sector covers sustainable agricultural practices, food safety, and fair labor practices.

MEDIA AND ENTERTAINMENT

Here, ESG may include ethical content production, diversity and inclusion in media representation, and the environmental impact of digital infrastructure.

HOSPITALITY AND TOURISM

ESG considerations include sustainable tourism practices, community impact, and fair labor practices.

ESG principles are relevant to all sectors, focusing on sustainable and ethical operations, responsible management, and positive social impact. The specifics of implementing ESG can significantly vary depending on the nature of each sector and its unique challenges and opportunities.

WHAT ESG SERVICES WE OFFER

In Bulgaria, as well as in other countries of the European Union, compliance with ESG (Environmental, Social, and Governance) is a requirement for certain categories of companies.

DEVELOPMENT OF AN ESG STRATEGY

Horizons Bulgaria assists companies in developing a comprehensive ESG strategy aligned with their business goals. This includes identifying key ESG issues related to the company, setting goals, and integrating ESG changes into overall business planning and decision-making.

MATERIALITY ASSESSMENT

Conducting assessments to identify and prioritize the ESG issues that are most significant to the business and its stakeholders. This helps companies focus their efforts on areas with the greatest impact and relevance.

ESG REPORTING AND DISCLOSURE

Guiding companies in preparing ESG reports and disclosures. This includes aligning reporting with recognized frameworks such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB), or the Task Force on Climate-related Financial Disclosures (TCFD).

RISK ASSESSMENT

Identifying and assessing risks and opportunities related to ESG, and integrating them into the overall risk management framework. This includes assessing risks associated with climate change, social issues, and governance practices.

COMPLIANCE AND REGULATIONS

Consultation on Compliance and Regulations: Assisting companies in navigating the evolving landscape of regulations and standards related to ESG. Consultants provide guidance on compliance with local and international regulations, as well as industry-specific standards.

SUSTAINABILITY AND CAPACITY BUILDING

Sustainability Initiatives: Advice on developing and implementing specific sustainability initiatives, such as energy efficiency programs, waste reduction efforts, sustainable supply chain management, and social responsibility projects.
Training and Capacity Building: Providing training and resources for building internal capacity to manage ESG. This helps


ESG consulting refers to the practice of advising companies on their strategies and practices in the areas of Environmental, Social, and Governance (ESG). This type of consultation is becoming increasingly important as businesses and investors become more focused on sustainability and ethical operations. Let’s look at the three components:

Environment: This aspect focuses on how a company’s operations impact the natural environment. It includes managing the carbon footprint, waste management, resource conservation, and the overall impact of the company on ecosystems. ESG consultants help companies develop strategies to reduce their environmental impact, comply with environmental regulations, and implement sustainable practices.

Social Responsibility: This part relates to how a company manages relationships with its employees, suppliers, customers, and communities. It covers topics such as labor practices, diversity and inclusion, human rights, community engagement, and customer satisfaction. ESG consultants assist companies in developing and implementing policies and practices that promote social well-being and fair treatment of all stakeholders.

Governance: This area involves the internal system of practices, controls, and procedures that a company adopts to govern itself, make effective decisions, comply with the law, and satisfy the needs of external stakeholders. Key issues in governance include diversity in the board of directors, executive compensation, audits, internal controls, and shareholder rights. ESG consultants advise on best governance practices, helping companies establish transparent, accountable, and ethical management structures.

In summary, ESG consulting helps companies navigate and improve their sustainable and ethical practices in the areas of environment, social responsibility, and governance. This not only assists in risk management and regulatory compliance but also enhances corporate reputation, attractiveness to investors, and long-term sustainability.

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Horizons Bulgaria is a consulting company with 20 years of experience and presence among leading business practices

Our ESG consulting services will assist in the development of a corporate ESG strategy, action plan, and implementation of changes, monitoring, and automated monitoring through software suitable for your business. Analysis, reporting, and public sharing of results.

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