Dr Gavriil Gavriil: Embedding an ESG strategy is not a plug-and-play process, it requires a fundamental shift

Organisations need to invest in internal knowledge and structures; without this grounding, ESG can feel like a cost rather than a strategic opportunity, according to Dr Gavriil Gavriil, Senior Manager, Sustainability, at Grant Thornton Cyprus, who adds that embedding an ESG strategy is not "a plug-and-play process", but instead requires a fundamental shift from businesses.

"Ultimately, ESG integration is a phased transformation, not a checklist," he tells CBN in an interview, where he also reveals what he thinks is required in order for the Paris Agreement's ambitious targets to be reached.

Can you describe Cyprus’ current ESG framework? Have there been any changes, in light of international and geopolitical developments?

Cyprus’ ESG framework is largely shaped by EU legislation and continues to evolve rapidly. The foundation was laid with the Non-Financial Reporting Directive (NFRD), which was transposed into national law in 2017 and required certain companies to disclose sustainability-related information. The subsequent introduction of the Corporate Sustainability Reporting Directive (CSRD) in 2022 significantly expanded the scope, bringing more companies into the fold and requiring more detailed and standardised ESG disclosures, aligned with the European Sustainability Reporting Standards (ESRS).

A significant development this year is the introduction of the Omnibus Simplification Proposal, a game-changer in the sustainability reporting landscape. Issued by the European Commission, the proposal aims to make ESG reporting more manageable, particularly for small and medium-sized enterprises (SMEs). It builds on the CSRD and reflects the Draghi Report’s call for smarter, more proportionate regulation. It also proposes a phased-in approach to assurance, allowing companies time to adapt before being required to obtain external limited assurance, helping reduce initial compliance costs while still supporting broader ESG goals.

While this Omnibus Proposal aims to ease reporting burdens, there is however a growing concern that simplification could easily slip into deregulation. If most companies are exempt from disclosing ESG data, we risk losing visibility over progress and weakening accountability across the value chain. But simplification should not mean removing the obligation to report. The social and market pressures driving sustainability, from investors, financial institutions, and consumers will remain. ESG is still highly relevant, increasingly strategic, and a clear differentiator for businesses that embrace it.

How do you think Cyprus’ entrepreneurial ecosystem is performing in terms of ESG adoption? Do you have any suggestions on how to improve engagement?

Cyprus’ entrepreneurial ecosystem is still in the early stages of ESG adoption. While awareness is growing, particularly among larger corporates and regulated entities, many small and medium-sized enterprises (SMEs) continue to face barriers. These are less about intent and more about limited resources, technical capacity, and the perception that ESG is a compliance burden rather than a strategic advantage.

To change this, we need targeted support such as tailored training and capacity-building so we can help business leaders understand how ESG links to financial performance, operational efficiency, and market access. Positive incentives, such as green loans, ESG-linked credit, or transition financing, also drive engagement by making sustainability financially attractive.

Finally, simplified reporting frameworks, like those proposed by the EU Omnibus Proposal, can make ESG more accessible for SMEs. Ultimately, these efforts are not just about regulatory compliance; they are about reframing ESG as a business enabler. For Cyprus, where SMEs represent the backbone of the economy, supporting this transition is essential. It will not only reinforce the resilience and adaptability of individual businesses but also ensure that the national economy aligns with the EU’s broader climate and sustainability objectives, including the Green Deal and the digital transformation agenda.

How do you help businesses become more sustainable?

At Grant Thornton, we support businesses across all stages of their sustainability journey through a comprehensive, hands-on ESG advisory approach tailored to the local market. We recognise that many companies, especially SMEs, are engaging with ESG for the first time and often find the regulatory landscape complex and resource-intensive.

Our work typically starts with an ESG baseline assessment, where we evaluate the company’s current standing across environmental, social, and governance dimensions. We then carry out materiality or double materiality assessments, which help organisations identify the ESG topics most relevant to their operations and stakeholders. These insights form the basis for building a strategy that is not only compliant but also integrated with the company’s core business objectives. This includes designing and embedding ESG governance structures, selecting key performance indicators (KPIs), and integrating ESG considerations into everyday business functions, from supply chain and HR to procurement and finance. We also guide clients through their reporting and disclosure obligations, particularly under EU and other international frameworks.

A key part of this process involves calculating greenhouse gas (GHG) emissions, covering own and value chain emissions, allowing companies to understand their carbon footprint. Based on these insights, we help clients develop decarbonisation strategies and action plans aligned with international standards such as the Science Based Targets initiative (SBTi), and consistent with the EU’s climate goals.

We also assist companies in green finance mechanisms, such as sustainability-linked loans, and help clients improve their supply chain sustainability ratings, which are becoming increasingly relevant for market competitiveness and cross-border partnerships. This work is essential because ESG is not a side activity, it’s deeply connected to how businesses create value, manage risk, and remain resilient. For example, identifying and addressing inefficiencies in energy use or logistics can lead to immediate cost savings while also reducing environmental impact and exposure to future regulatory constraints. Our goal is to make sustainability practical, measurable, and aligned with business strategy, so that companies in Cyprus are not only compliant but also future-ready.

How easy is it for a company to embed an ESG strategy? How would you advise businesses to proceed?

Embedding an ESG strategy is not a plug-and-play process, it requires a fundamental shift in how a company understands its operations, impact, and long-term value creation. ESG isn’t just about ticking compliance boxes; it must be fully integrated into governance, culture, risk management, and strategic planning. For many companies, the ESG journey begins in response to regulatory demands or growing pressure from investors, customers, and supply chain partners. This external push often comes before internal readiness, making it difficult to respond effectively without the right foundations.

That’s why capacity building is the essential first step. Organisations need to invest in internal knowledge and structures. This includes training leadership and key staff to understand how ESG links to sector-specific risks, financial performance, and long-term competitiveness. Without this grounding, ESG can feel like a cost rather than a strategic opportunity. Once the right capabilities are in place, the first priority should be governance. Appoint ESG responsibility at the board or executive level, embed it into existing oversight structures, and ensure there’s accountability across functions. Next, we help define clear, measurable goals using SMART KPIs and integrate them into operational planning. ESG targets should be tracked with the same discipline as financial metrics, supported by structured review cycles and cross-departmental collaboration.

Ultimately, ESG integration is a phased transformation, not a checklist. But with the right leadership, internal alignment, and strategic clarity, companies can shift from reactive compliance to proactive value creation.

Can you explain what sustainability reporting is, and why it is important for businesses? How vital is ESG for business continuity?

Sustainability reporting is the structured disclosure of a company’s non-financial performance, including its environmental impact, social outcomes, and governance practices. It captures how a business identifies, manages, and responds to risks and opportunities related to climate change, human rights, diversity, resource use, and ethical conduct.

While the CSRD introduced a binding framework that would have required many European companies to report under the European Sustainability Reporting Standards (ESRS), recent delays and uncertainty around its full implementation have renewed attention on voluntary frameworks. Well-established standards like the Global Reporting Initiative (GRI), the UN Global Compact (UNGC), and the Task Force on Climate-related Financial Disclosures (TCFD) remain widely used and offer businesses a credible pathway to disclose their ESG performance in a consistent and meaningful way.

However, sustainability reporting is far more than a compliance exercise. It provides essential transparency to key stakeholders, who increasingly demand clarity on how businesses are addressing ESG risks and opportunities. It enables trust, enhances market credibility, and helps position businesses as responsible and future-ready. Reporting also ensures alignment with broader policy goals, including the EU Green Deal and the Paris Agreement, by making corporate targets measurable and accountable.

Equally important, ESG has become a core pillar of business continuity. Companies today face rising exposure to climate-related events, regulatory changes, and reputational risks. For instance, a Cyprus-based company reliant on international supply chains could face disruption from extreme weather, resource shortages, or carbon border taxes. A well-integrated ESG strategy, supported by robust reporting, allows companies to anticipate and mitigate these risks.

There are clear internal advantages as well. The reporting process provides valuable insights into operational inefficiencies, supply chain vulnerabilities, and regulatory exposure. It supports long-term planning, performance management, and innovation. For example, a Cypriot company in the tourism sector might reduce emissions through renewable energy adoption and improve water efficiency, creating cost savings and market differentiation.

Moreover, companies that lead on ESG are better equipped to withstand crises, whether environmental, financial, or geopolitical. They are more likely to maintain investor trust, attract top talent, and forge long-term partnerships. In this sense, ESG is not just about managing risk, it is a framework for creating strategic value and ensuring business resilience.

Do you think the public and private sectors will be able to reduce emissions to the levels required by the Paris Agreement on climate change? How is Grant Thornton Cyprus progressing in this respect?

The targets set by the Paris Agreement, to limit global warming to well below 2°C and pursue efforts to stay below 1.5°C, are both ambitious and absolutely necessary. Whether they will be met remains uncertain. While there has been significant progress, especially in Europe, we are not yet on track globally. Emissions are still rising in many regions, and the transition away from fossil fuels is happening too slowly. That said, the EU remains one of the most committed regions, with initiatives like the Green Deal, the Fit-for-55 package, and the Sustainable Finance framework laying the foundations for systemic change.

Reaching the Paris targets will ultimately depend on political will, private sector mobilisation, and the speed at which climate technologies scale. We believe it’s possible, but only if both public and private actors treat the transition with the urgency it demands. Delayed action will make the pathway much steeper and costlier.

At Grant Thornton Cyprus, we are working to accelerate this shift. In the public sector, we support authorities in designing climate strategies, developing net-zero pathways, and aligning policy with long-term decarbonisation goals. In the private sector, we help businesses calculate their carbon footprint, identify decarbonisation opportunities, and set science-based emissions targets.

We also assist in aligning with the EU Taxonomy, structuring green finance, and preparing for climate-related disclosures under frameworks like the CSRD. Importantly, we support companies in embedding climate risk into governance and long-term planning, not just to comply, but to remain competitive and resilient in a changing world.

The road to Paris alignment is steep but with clear regulation, robust data, innovation, and strong financial incentives, it’s achievable. And while Cyprus has a smaller footprint in global terms, our local businesses have a real opportunity to lead by example, especially SMEs, which are the backbone of our economy. At Grant Thornton, we are not only advising on the transition, we’re actively helping build the capacity to make it happen.

At the end of the day, ESG is no longer a theoretical concept or a trend. It’s becoming part of how business is done. In Cyprus, we still have work to do, especially in helping smaller businesses build the right skills and systems, but I’m optimistic. The momentum is there, and with the right support, we can build an economy that’s both competitive and aligned with long-term sustainability goals. At Grant Thornton, we’re not just advising from the sidelines, we’re working alongside organisations every day to make this shift practical and achievable.