Human Capital as a Key Factor for Organizations’ ESG Goals Adrian Petre and Doru Alexandru Plesea The Bucharest University of Economic Studies, Romania petreadrian10@stud.ase.ro pleseadoru@gmail.com Abstract. The integration of Environmental, Social and Governance (ESG) in the long-term development strategies of companies is a mandatory condition for ensuring their sustainability and for maintaining competitiveness on the market. Thus, the main objective of this empirical work is to analyze the extent to which European companies currently manage to fulfill certain specific requirements related to ESG and the role played by highly qualified human capital in this process of sustainable development. To achieve this goal, a diverse research methodology is used, consisting of critical comparative analysis of the specialized literature, interpretation of statistical data, and econometric analysis. Our analysis is based in particular on European companies data from various fields of activity and different sizes, extracted by Eurofound through a complex survey. The main results demonstrate how European Union Member States are clustered and ranked based on different ESG pillars, with Sweden, Denmark, Estonia or Finland as the best performers and Greece and Cyprus as the weakest performers. At the same time, the research highlights the limited role of highly qualified human capital in supporting the development of the ESG pillars included in the analysis. We also pointed out the effect on companies' competitiveness and resilience, as well as the need for underperforming companies to develop and integrate human capital in the process of long- term sustainable and inclusive development, being the basic resource of any organization. The article may have a contribution to the literature because it demonstrates how EU Member States can be grouped according to specific ESG criteria of domestic companies, and also the role of highly qualified in boosting these criteria. Our study also may have possible practical implications, both for the academic environment, and also for the managers involved in the development of the business sector. We consider that our empirical results may contribute to the decision-making process regarding the future investments of the organizations. Keywords: Human capital, ESG, sustainability, Tertiary education 1. Introduction Geopolitical developments, climate changes, increased urbanization or massive industrialization are just some of the factors that highlight the need for radical transformations in business models. The business environment represents one of the pillars of any economy and society, which is why it becomes imperative that they respond effectively to such challenges and adopt a proactive, responsible, and sustainable attitude. In order to be sustainable, competitive and inclusive on long-run, the companies must fulfill different Environmental, Social, and Governance (ESG) requirements. In this context, the main objective that we have set for this work is to analyze the current degree of fulfillment of some of the ESG requirements by companies in the European Union (EU) Member States and to test the role of highly qualified human capital in stimulating their achievement. We consider that through this research, we can make a contribution to the state of knowledge in the field by demonstrating empirically how EU companies manage to fulfill certain specific criteria related to sustainability, the way in which the countries of origin can be grouped according to common characteristics, at the same time testing the ability of smart human capital to positively influence these specific ESG pillars. The paper is structured as follows: Section 1 presents a summary of the state of knowledge in the field, Section 2 describes the applied research methodology, and Section 3 details the obtained results. The paper concludes with the authors' general conclusions. 2. Literature Review At the scientific literature level, numerous studies analyze the link between ESG regulations and organizations' performance. On the other hand, other researches analyzes the role of human capital in this process. Lee and Rhee (2023) analyzed the impact of corporate ESG management on the brand, and their results showed that social and governance activities have a positive effect on brand loyalty, image, and attitude. Zeng and Jiang (2023) tested the link between ESG and the performance of companies in the agricultural and forestry sectors, and concluded that the two variables are significantly and positively correlated, and that higher ESG ratings are beneficial to improving corporate performance. 1042 Proceedings of the 24th European Conference on Knowledge Management, ECKM 2023