Source: El Periódico de la Energía.

The CEO and co-founder of TransitionX Europe shares key insights for companies to meet their sustainability commitments: “A good report is essential, but generating impact is even more important.” Sustainability has become one of the fundamental pillars of companies as they are increasingly compelled to report all their actions in this area.

However, companies find it challenging to adapt to these dynamics. In this interview, the CEO provides recommendations for SMEs to navigate these times where sustainability is destined to take center stage.

How are companies, both SMEs and large corporations, addressing the new regulatory demands?

We are in the midst of a massive shift regarding transparency management. For years, we’ve seen a move towards enhancing more sustainable business models. But now, a historic transformation in how companies report and communicate is underway. This brings both challenges and opportunities.

Companies need to adapt to shifting demands and expectations from their audiences, regulatory bodies, and the market while identifying new risks and opportunities to secure competitive advantages that didn’t exist even a few years—or months—ago.

It’s a critical challenge. A recent report by the IBM Institute for Business Value reveals that companies invest 43% more resources in communication and reporting than in acting and innovating to create real sustainability impact. While we believe that promoting honest and effective communication can inspire other organizations and build trust with stakeholders, the priority must always be to advance tangibly in energy transition or decarbonization—and then, of course, transparently communicate those efforts.

What are the main motivations and benefits of adopting ESG strategies?

This goes beyond regulatory compliance. For businesses, it’s about improving competitiveness when maintaining and attracting new business. In the B2B space, questions about carbon footprint, annual reports, or ratings with organizations like CDP or EcoVadis are becoming more common.

Research shows that 84% of executives (DP World & Supply Chain Dive, 2023) responsible for supply chains see sustainability as a key factor in selecting partners or suppliers. This reflects growing pressure, not just from regulations, but from within the value chain itself. Companies failing to meet sustainability expectations risk losing clients and compromising competitiveness.

Another crucial benefit of advancing decarbonization, as well as improving social or governance practices, is making organizations more resilient, attracting talent, and—something many companies are unaware of—gaining access to sustainable financing under better credit conditions (e.g., green bonds or Sustainability-Linked Loans).

Companies that prioritize these areas reduce operational risks, protect their reputation, and build trust with stakeholders. In short, familiarizing themselves with, implementing, and communicating ESG progress is no longer optional. It’s essential for protecting competitiveness and driving business success.

How would you define the maturity and preparedness of the Spanish private sector in this field?

Data shows that larger organizations are better positioned to measure, report, and establish sustainability strategies, thanks to their greater resources, access to consultancy and technology, and an earlier start. For example:

• Over half (57%) of IBEX 35 companies already have decarbonization roadmaps validated by SBTi.

• 78% of these companies have earned an A or A- score in the CDP initiative, showcasing robust corporate climate action strategies.

Compared to other countries, the percentage of listed companies with SBTi-validated transition strategies is 12% higher in the UK, though Spain is 15% ahead of the S&P 500 in the US.

It’s crucial for organizations to start preparing now to comply with CSRD regulations by conducting double materiality analyses, implementing efficient ESG data management systems, and drafting sustainability reports. The sooner they adopt these practices, the more competitive they’ll be in an increasingly demanding market.

However, companies of all sizes in Spain face significant challenges. Many still rely on manual processes or Excel for ESG data management. This methodology is prone to errors, slows audits, and increases workloads, unlike the advanced software solutions now available.

What strategies do you recommend for transparently communicating ESG commitments and avoiding greenwashing?

Kantar research shows that 42% of CEOs globally admit they struggle to articulate an effective and compelling ESG narrative. People remember stories, not disjointed data or actions. To do this effectively and legally, companies must prioritize communicating based on verifiable data and contextualizing their achievements without exaggeration.

Technology plays a critical role, ensuring the traceability of quantitative information, minimizing legal risks, and maximizing credibility.

Looking ahead to June 2027, companies must prepare for the transposition of two new European directives against greenwashing. However, as the Iberdrola-Repsol case (the first trial in Spain on greenwashing) has shown, legal risks—and regulatory frameworks—already exist under current laws like the Unfair Competition Law (LCD 3/1991) and General Advertising Law (LGP 34/1988).

ISO certifications can help businesses validate their communications, protect themselves legally, and pursue ethical and attractive messaging.

The upcoming European greenwashing regulations require precision in sustainability claims, prohibit vague or unsupported statements, and impose fines of up to 10% of annual turnover for violations.

Our team supports companies by structuring coherent and credible narratives, highlighting real achievements while minimizing risks. After analyzing ESG data and generating reports, we leverage this valuable information to craft communication strategies developed by creatives and lawyers, ensuring alignment with these new regulations.

How can technology support energy transition, strategy, and sustainability reporting?

The use of software enhances report quality and stakeholder communication, acting as a key catalyst for simplifying and improving ESG management. At TransitionX, for example, we use an advanced platform developed with award-winning software engineers. This tool automates data collection, ensures traceability, and generates custom reports.

Not only does this save time and costs, but it also provides valuable insights for decision-making in areas like decarbonization, social issues, or governance. For instance, companies can use technology platforms to identify high-emission areas in their supply chain and prioritize corrective actions.

AI is enabling the detection of ESG metrics across various file types, automating data requests from internal teams or external suppliers, and simplifying the external audit process, which is mandatory under the CSRD for double materiality analyses and sustainability reports.

What are the implications of the delay in transposing the CSRD directive into Spanish law?

The CSRD will come into effect on January 1, 2025, marking a milestone in corporate sustainability reporting in Europe and beyond.

Although official transposition may not be complete by December 31, 2024, both the CNMV and ICAC recommend that Spanish companies prepare their 2024 sustainability reports in line with EFRAG standards for the CSRD, which are more stringent than current requirements under Law 11/2018. Adopting these standards early will ease the transition to the new framework and ensure comparability with other European companies.

Independent verification of sustainability information will also be crucial. Verifiers must rely on national and international technical standards like ISSA 5000 or COESA guidelines.

Companies should prioritize three areas: understanding the regulations, improving data quality, and adopting ESG technology. The sooner they address these areas, the better positioned they’ll be to succeed in this evolving landscape.