Navigating ESG transformation

As global sustainability standards evolve at an unprecedented pace, Chinese companies expanding or operating in Europe face an increasingly complex regulatory landscape. Environmental, Social, and Governance (ESG) transformation has become a business imperative, driven by stakeholder expectations and reinforced by a web of new EU regulations. To help companies navigate this rapidly shifting environment, KPMG Netherlands hosted the ESG Roadshow for Chinese Companies on October 16, 2025, bringing together experts across sustainability reporting, governance, and taxation.

The event offered a deep dive into the latest European ESG regulatory developments, financial reporting requirements, tax incentives, and governance frameworks for non-EU parent companies. It also showcased how Chinese organizations can leverage European best practices and climate transition strategies to unlock new opportunities for compliance and sustainable growth.

Vera Moll, Partner, Sustainability Reporting & Strategy

Vera Moll opened the session by addressing the accelerating pace and scope of ESG regulation in Europe. “Perspectives can differ,” she began, noting that while global attention is fixed on the 1.5°C climate target, the regulatory pathways to reach it are diverging. The increase in ESG regulations, spanning tax, data, cybersecurity, and sustainability reporting, has created a complex compliance landscape that can feel overwhelming for multinational companies.

Moll outlined how frameworks such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) have become central pillars of the European ESG agenda. Both regulations aim to enhance transparency, accountability, and value creation by integrating ESG considerations into core business operations.

She emphasized that sustainability reporting is quickly becoming as essential as financial reporting, and in many cases even more influential in shaping investor confidence and corporate reputation. According to Moll, companies must understand their legal obligations, map stakeholder expectations, and conduct scenario planning to anticipate regulatory risks and market shifts.

“Businesses can no longer treat ESG as an external requirement,” she noted. “It must be internalized, embedded into governance, data, and technology systems, to both protect and create value.”

Kevin Luo, Senior Manager, Capital Markets Accounting Advisory Services

Building on Moll’s overview, Kevin Luo delved into the technical and procedural aspects of ESG and financial reporting, focusing on the Netherlands’ move towards digital filing standards. From the financial year 2025 onward, all Dutch legal entities are required to submit annual returns using Standard Business Reporting (SBR), a national framework that standardizes the digital exchange of business data with authorities and banks.

Luo explained the distinctions between XBRL and iXBRL formats and the implications for companies with listed securities in the EU, which must comply with the European Single Electronic Format (ESEF). He also clarified the exemptions provided by Article 403 and Article 408 of the Dutch Civil Code, which are crucial for Chinese parent companies with European subsidiaries seeking to understand where consolidated reporting may or may not be required.

“The shift to standardized digital reporting is not just an administrative change,” Luo said. “It represents a step toward more integrated, transparent, and traceable sustainability and financial disclosures.”

For Chinese parent companies with European subsidiaries, Luo advised early preparation, aligning ESG and financial teams, validating data integrity, and ensuring compatibility between local accounting systems and EU reporting frameworks.

Merijn Betjes, Partner, KPMG Meijburg & Co., ESG Tax and Legal

Turning to the financial opportunities embedded within the ESG transformation, Merijn Betjes highlighted how credits, grants, and incentives (CGI) can act as catalysts for sustainable growth. His message was clear: ESG is not only about compliance, it is also about strategic advantage.

Betjes outlined how companies can access funding opportunities across Europe to support investments in energy efficiency, decarbonization, research, and innovation. He provided concrete examples from Poland, Italy, France, and the Netherlands, demonstrating how firms can secure tax credits or grants covering up to 60% of eligible sustainability-related project costs.

“The most successful organizations,” he noted, “approach incentives holistically, aligning funding strategies with business goals, centralizing compliance, and ensuring continuous improvement.”

Betjes also presented the KPMG Incentives Credits Opportunity Navigator (ICON), part of the KPMG Digital Gateway platform, which helps businesses identify relevant funding sources across jurisdictions. Based on KPMG research, he warned that 80% of the companies fail to realize the full benefits of available incentives, primarily due to fragmented processes and lack of coordination.

“By optimizing governance and adopting a coordinated incentives process,” Betjes concluded, “companies can strengthen both cash flow and competitiveness while accelerating their climate transition.”

Wikash Bansi, Partner, Sustainability Reporting & Assurance

The next session, led by Wikash Bansi, explored how strong ESG governance underpins credible sustainability performance. He explained that while many organizations focus on data and disclosure, true transformation depends on the integration of ESG within corporate governance systems, linking internal controls, risk management, and corporate culture.

Bansi illustrated the gap between ambition and reality: despite growing awareness, many companies still rely on siloed, manual ESG processes with unclear roles and limited data quality. “There is a significant difference between what is required under ESRS standards and what most organizations currently deliver,” he observed.

He outlined the core elements of effective ESG governance, including clear ownership at board and executive levels, robust internal controls, and data governance structures that ensure reliability and transparency. Examples include control mechanisms for Scope 3 emissions, biodiversity data, and human rights metrics, all critical for both regulatory compliance and strategic steering.

“Good governance creates confidence,” Bansi emphasized. “It enhances transparency, reduces risk, and enables organizations to provide reliable ESG information to stakeholders and assurance providers alike.”

Jacquelina Zhou, Manager, Sustainability Advisory
Marco Frikkee, Partner and Head of Sustainability Reporting & Assurance

In the final sessions, Jacquelina Zhou and Marco Frikkee demonstrated how regulatory compliance and sustainability strategy can converge into market advantage. Through a series of European case studies, they illustrated how decarbonization and circular economy practices can help Chinese companies strengthen their competitive positioning in Europe.

Zhou discussed how EU initiatives such as Fit for 55, the EU ETS Directive, and the EU Taxonomy are shaping a low-carbon future. Companies that proactively invest in decarbonization, through clean mobility, renewable energy, and sustainable procurement, can not only reduce risk but also build customer trust and brand differentiation.

She shared examples of how players in the logistics industry like Zalando and PostNord have integrated carbon insetting and renewable infrastructure to meet consumer expectations for greener delivery options. “Sustainability leadership,” Zhou said, “is no longer a moral choice. It’s a business imperative that directly affects access to markets, financing, and talent.”

Frikkee complemented this perspective by examining real-world reporting use cases, such as suppliers to European retailers being required to provide product-level carbon footprints. He emphasized that sustainability data and transparency are increasingly becoming prerequisites for doing business in Europe.

He concluded with KPMG’s “10 Golden Rules for Successful Sustainability Management”, stressing that companies must integrate ESG into strategy, governance, and culture. “Sustainability transformation is an ongoing journey,” Frikkee noted. “It requires continuous learning, stakeholder engagement, and internal alignment to create real, measurable value.”

The ESG Roadshow concluded with a clear message: the path toward sustainable transformation is both challenging and rewarding. For Chinese companies operating in Europe, understanding regulatory expectations is only the first step. The greater opportunity lies in using ESG as a lever for innovation, trust, and long-term value creation.

As the event’s discussions revealed, compliance and competitiveness are no longer separate objectives. By combining robust governance, credible reporting, and strategic use of tax incentives, businesses can align with Europe’s sustainability goals while achieving their own growth ambitions.

Ultimately, KPMG’s experts called for a collaborative approach, one that bridges regulatory understanding with practical execution. By embedding ESG into every layer of corporate strategy and governance, Chinese organizations can not only navigate complexity but also lead the transition toward a more resilient, low-carbon global economy.