As ESG regulation expands across Europe, financial institutions are under pressure to integrate sustainability into existing governance and risk frameworks. Featuring insights from Daniel Meneghin of Lunar Bank, the article argues that ESG should not oper
As sustainability regulation expands across Europe, financial institutions face a critical challenge.
The real task is not simply complying with ESG reporting requirements but embedding sustainability considerations into the core risk and governance frameworks that already shape business decisions.
Daniel Meneghin, Head of ESG and CSRD at Lunar Bank, argues that many organizations risk approaching sustainability as a separate compliance exercise rather than a strategic transformation.
“There’s a huge gap between the theory and the practicality of how to do things,” Meneghin said. “Even when CSRD started, I read the regulation and thought: ‘This is way too much’.”
For many institutions, new regulatory mandates have introduced complex reporting expectations. Yet Meneghin stressed that the real opportunity lies in using these frameworks to drive meaningful organizational change rather than simply producing disclosure reports.
“I don’t think de-regulation is an issue at all,” he said. “In fact, it helps companies because it gives you more time to actually do things and not only focus on the reporting end.”
He explained that some organizations are choosing to move ahead with sustainability initiatives even when the regulatory timetable does not yet require full compliance.
In some cases, boards are adopting ESG frameworks voluntarily as part of broader strategic commitments.
“Some organizations decide they are going to go all in with the regulations even if they are not yet directly affected,” Meneghin said.
The biggest obstacle, however, is structural. Many institutions attempt to create separate sustainability programs that operate independently from existing governance frameworks. Meneghin argued that this approach rarely succeeds.
“Sustainability in an organization derives from risk,” he said. “It is fundamentally a risk exercise.”
Instead of creating new departments or processes, institutions should embed sustainability considerations directly into existing enterprise risk management frameworks, operational controls, and governance structures.
“You need to embed the process and not build something new,” Meneghin said. “Otherwise there is no buy-in, there are no synergies, and nothing really works.”
According to Meneghin, effective ESG integration begins with a clear understanding of material risks and impacts across the organization’s value chain.
