Sustainability as a Competitive Advantage

How manufacturing companies can transform their strategy today

At the beginning of last year, the EU directive on corporate sustainability reporting came into effect. This year, financial institutions are already submitting their first reports under the new rules. More companies will be affected by this requirement in 2025, including a large part of the Czech industrial sector.

Regardless of legislation, more and more manufacturing companies are already facing demands from customers or banks for non-financial reporting. How can businesses best use this transition period to gain a competitive edge? How can they meet customer expectations and remain in the supply chain? We asked Lukáš Ferkl, Managing Partner and CTO at EnviTrail, for insights.

What impact do international ESG standards have on Czech manufacturing companies, and how is their adaptation evolving?

Many companies have been involved in sustainable development, or as it is now commonly referred to—ESG, for years. However, for most businesses, this is a new situation. It is crucial for companies to understand that the European Sustainability Reporting Standards (ESRS) are indeed administratively demanding. However, in most cases, they require reporting on matters that companies are already reporting elsewhere. The main challenge is consolidating all this information into a prescribed format and filling in any missing data. Additionally, ESRS requires reporting on carbon footprint, something that companies have not necessarily calculated before.

What are the main barriers to implementing ESG policies in industrial companies?

It depends on what we mean by “ESG policy.” Most responsible industrial companies already engage in sustainable practices to some extent—they manage waste, monitor harmful emissions, reduce energy consumption, and take care of their employees. The real challenge lies in implementing European reporting standards, which are both complex and very recent, making it unclear how exactly they should be applied.

How do (or should) ESG criteria influence strategic decision-making within companies?

ESG is fundamentally a risk and opportunity management tool, designed to assist in strategic decision-making. Ideally, companies should move beyond seeing ESG as just a regulatory burden and instead use it as a tool to guide business decisions—such as evaluating long-term corporate strategies in light of climate change and prolonged drought risks. This is exactly what we advise our clients and help them implement.

Is there an effective general strategy for implementing ESG goals within companies?

As mentioned earlier, ESG is a risk management method that incorporates sustainable development principles, and one of the key pillars of sustainability is economics. Companies should first establish their general corporate strategy and then build a sustainability strategy on top of it. The natural link between these two is economic performance.

What are the main challenges in calculating and reducing the carbon footprint in small and medium-sized industrial companies? How can they effectively address them?

Carbon footprint calculations serve as the data foundation for making decisions about decarbonization measures. Companies should focus on collecting data in areas they can directly influence. For example, if energy consumption has the biggest impact, then detailed energy tracking is essential.

When it comes to reducing the carbon footprint, companies must understand that there is no magic wand to instantly become carbon-neutral. Instead, they need to prepare for a series of small, incremental steps. Achieving a 3-5% reduction per year is considered a very good outcome.

What role do digitalization and advanced technologies play in making manufacturing more sustainable? Can you highlight key technologies or innovations for reducing the carbon footprint in manufacturing?

Automation and intelligent process control systems are key. Most companies have huge potential to improve efficiency through process optimization, which naturally reduces their carbon footprint. While each industrial sector has its specific needs, innovation is one of the most important drivers of carbon footprint reduction. Key examples include:

Renewable energy sources, such as solar power, battery storage systems, and electrification instead of natural gas. However, these are no longer considered cutting-edge innovations but rather established practices.

Computational methods and simulations that enhance efficiency in manufacturing and prototyping.

Additive manufacturing (3D printing), which leverages computational models, making it faster, more cost-effective, and less energy-intensive than traditional manufacturing.

How do ESG factors affect relationships with suppliers and customers?

End customers, particularly OEMs (Original Equipment Manufacturers), now have much stricter sustainability commitments than European legislation itself. Maintaining open communication in supplier-buyer relationships is crucial since OEMs often don’t realize which demands are realistic.

For example, an automaker initially required all its suppliers to achieve carbon neutrality by 2030—an unrealistic goal. After discussions with suppliers, they adjusted the requirement to a 5% annual carbon footprint reduction, which is ambitious but achievable.

Are there financial tools or support available for companies working to improve their ESG policies and reduce their carbon footprint?

There is a lot of talk about financial support, but few real opportunities exist. There are some grant programs, but in banking, ESG-related financial services are still underdeveloped.

For large-scale projects (tens of millions of euros), issuing Green Bonds is an interesting financing option.

For small and medium-sized enterprises (SMEs), a new initiative from the European Commission is available—EDIHs (European Digital Innovation Hubs). These centers provide know-how, services, training, and technology for testing at low or zero cost to help SMEs innovate and enhance competitiveness.

A key advantage of these centers is access to cutting-edge knowledge, human resources, research capabilities, and independent expert guidance—all without the commercial bias of tech vendors or incomplete consulting services.

What impact does ESG implementation have on company financing? Are banks and investors more inclined to fund companies with strong ESG agendas?

In many cases, ESG compliance is a prerequisite for financing. However, it does not always play a decisive role in risk assessments or evaluations—at least not yet.

That said, banks are increasingly required by regulators and legislation to track and report their financing of sustainable projects. This shift is happening gradually. But today, ESG compliance is often the first filter determining whether a bank will even consider funding a project.

What role does employee education and training play in ESG and sustainability? What types of programs would you recommend?

The Czech business environment is quite conservative, and our approach to ESG and sustainability remains reserved and often misunderstood. Therefore, it’s important to educate employees without falling into the trap of oversimplifications or greenwashing.

One effective approach is implementing visible, everyday sustainability measures that employees can easily understand—such as water conservation, waste sorting, or energy-saving initiatives.

Finding the right training programs is challenging. Workshops or corporate events focused on sustainability—like those offered by Brain4Industry—are often very successful. These events provide direct links between sustainability, production, and technology, making them an ideal tool for embedding sustainability across the organization.

How do you see the link between ESG initiatives and marketing? Are businesses effectively communicating their sustainability commitments to customers?

Marketing is crucial. When companies promote sustainable products, they are also promoting sustainability itself—similar to how marketing healthy foods also promotes a healthy lifestyle.

Companies should not be afraid to promote their sustainable initiatives, but they must also be mindful of ethical marketing boundaries.

How do you see the future of ESG?

Ideally, ESG will evolve towards greater sustainability in business operations. However, for this to happen, the administrative burden must be reduced, and the focus should shift toward business-driven aspects of ESG, such as risk and opportunity management.

Author: Michaela Winklerová