The update of the Corporate Governance Code in 2020 marked a significant turning point in the governance practices of listed companies, serving as a benchmark even for unlisted companies aspiring to sustainable growth in the market. This change is not merely formal but reflects a new entrepreneurial philosophy geared towards "sustainable success."

The Concept of "Sustainable Success"

In the first article of the new code of conduct, the concept of “sustainable success” is introduced, which directs the decisions of the board of directors towards long-term value creation. This vision not only protects the interests of shareholders but also considers the needs of all relevant stakeholders.

The Crucial Question: What Constitutes Sustainable Success?

In this context, governance becomes essential for companies, as it enables them to effectively manage environmental and social aspects, in line with international best practices. Strong governance allows companies to face current and future challenges by integrating sustainability into their business models.

How to Communicate the Cultural Change within the Company?

A crucial aspect is how to communicate this cultural change within companies.

The regulations have recently been enriched with new tools to support business continuity, in particular:

• The European Union has established a set of criteria (so-called EU Taxonomy) to determine whether an economic activity can be considered environmentally sustainable, guiding companies towards responsible investments and protecting all stakeholders from greenwashing practices.
• In Italy, the Corporate Sustainability Reporting Directive (CSRD) was transposed with Legislative Decree No. 125 of September 6, 2024, introducing Sustainability Reporting (replacing the previous Non-Financial Statement) and its drafting standards (so-called ESRS principles). This reporting represents an important step in transparency and commitment to sustainable practices.

Implications for SMEs and Microenterprises Although unlisted SMEs and microenterprises are not directly subject to the mentioned regulations, they are still indirectly involved. Sustainability and governance practices influence the following areas:

• Access to Credit: Financial institutions are increasingly inclined to grant preferential loans to sustainable businesses.
• Supply Chain: Larger companies are interested in establishing and maintaining business relationships with virtuous ESG companies, as they are required to provide sustainability information throughout the value chain.
• Competitive Positioning: Corporate reputation and market attractiveness are strongly tied to commitments in environmental, social, and governance matters.
• Company Value: The cultural shift described above emphasizes the importance of sustainability as a key factor in business continuity and value growth.

Governance represents a strategic opportunity for companies to create long-term value while meeting the needs of all stakeholders. Adopting these principles can be crucial for the future success of companies, regardless of their size.

Technesthai, with its financial planning product - Dynamic Business Planner (DBP) - has activated the ESG module with the specific goal of helping SMEs in ESG reporting: the module already incorporates the ability to create a sustainability report aligned with MEF methodology and compliant with European regulations, as well as to activate specific investment plans to improve ESG performance. Visit our website at this page to learn more.