This paper explores ESG reporting, with a particular focus on its application in the European Union and Croatia. ESG encompasses environmental, social, and governance factors that are becoming crucial for stakeholders and investors. The paper analyzes the development of ESG criteria and key events that have shaped this practice, as well as their contribution to sustainable business practices. Special attention is given to legislative changes in the European Union, including the directives from 2014 and 2022, which define the legal framework for ESG reporting. The benefits and challenges associated with the implementation of non-financial reporting are examined, and examples of good practices in European companies are highlighted. The focus is on the role of ESG reporting in achieving sustainability. The paper also analyzes sustainability in the Croatian economy, the role of the Croatian Chamber of Commerce and other institutions in promoting sustainable practices, and the challenges and opportunities for Croatian companies. Particular consideration is given to the impact of investment programs by the Croatian Bank for Reconstruction and Development and the United Nations on business strategies. The conclusion provides an overview of the key findings and recommendations for the further development of ESG practices, aimed at organizations, companies, investors, and the academic community.