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Learn about the ESG regulations most relevant to your company

Understand corporate climate disclosure. Start reporting on climate risk and non-financial data. All climate & ESG reporting regulations covered.
Importance of compliance
Develop a future-proof roadmap for your operations to comply with current and future climate legislations.
Establish and encourage climate accountability across your organisation.
Avoid regulatory penalties.
Access advanced financial resources such as Corporate Green Bonds.
Stay ahead of the competition by complying with ESG regulations. You will always be one step ahead regardless of your sector or company size.
Different types of regulation
1. Reporting
In the last few years, more companies have been in the scope of climate risk disclosure and ESG reporting. Companies creating transparency by disclosing their environmental impacts and risks will improve money flows towards sustainable technologies and companies.
1a. Sustainability impact reporting
Sustainability reporting discloses an organisation's negative impacts in addition to its positive consequences on the environment, society, and economy.

The principal regulations requiring sustainability reporting are:
- EU CSRD*
- EU Taxonomy
- EU SFDR
- EU NFRD
- UK SECR.
1b. Climate risk disclosure
By reporting climate risk, companies disclose how sustainability factors might have a financial or strategic impact on their operations.

The principal regulations requiring climate risk disclosure are:
- TCFD
- EU SFDR
- EU CSRD*
- US SEC Climate-related disclosures*.
2. Towards fast climate action
Besides sustainability reporting, regulators are increasingly considering mandating companies to improve their ESG performance. The aim is to decrease organisations' environmental impact and build a decarbonised economy.

Examples include:
- DE Lieferkettengesetz
- EU CSDD*
- UK Mandatory Net Zero Transition Plan*.
*Regulation still being drafted
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Five simple steps to prepare for the ESRS, the framework for sustainability reporting under the CSRD.
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<250
250-500
>500
EU
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The SDR is a comprehensive regulatory framework that mandates companies and financial institutions to disclose their impacts, both positive and negative, on the environment and society.
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>500
250-500
<250
GB
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The CBAM is an environmental policy designed to apply the same carbon costs to imported products as would be incurred by installations operating in the EU.
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The SFDR is a European regulation standardising ESG disclosures in finance. It aims to increase transparency and prevent greenwashing. Implemented in 2021, it ensures consistent sustainability reporting and supports informed investment decisions.
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>500
250-500
EU
GB
US
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The Corporate Sustainability Due Diligence Directive (CSDDD) introduced by the European Union mandates companies to identify, mitigate, and report on the impact of their operations and supply chains on human rights and the environment. This mandatory legislation, set to take effect by 2025 or 2026, applies to both EU and non-EU companies operating in the EU and mainly targets those in high-risk industries.
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250-500
>500
EU
GB
US
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The US Federal Supplier Climate Risks and Resilience Rule enhances the climate resilience of federal supply chains. Suppliers must assess, disclose, and mitigate climate-related risks to their operations, products, and services.
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On 6 March 2024, the United States Securities and Exchange Commission (SEC) adopted the final rules, first proposed in March 2022, mandating climate-related disclosures. These aim to enhance transparency by requiring SEC registrants to include climate-related information in their registration statements and periodic reports.
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The UK Disclosure Framework for Net Zero Transition Plans is a voluntary framework that companies can use to report on their transition to net-zero emissions and support the transition to a low-carbon economy.
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<250
250-500
>500
GB
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The Streamlined Energy and Carbon Reporting (SECR) is a UK regulation that requires companies in scope to report on their emissions and energy consumption.
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In January 2024, the NFRD was officially replaced by the Corporate Sustainability Reporting Directive (CSRD). The CSRD has broadened the scope and the reporting requirements of the NFRD. 
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The TCFD Task Force has been officially disbanded and will be replaced with the Sustainability Disclosure Standards (SDS) in July 2024, with some changes to GHG reporting.TCFD was created by the international Financial Stability Board (FSB) to develop consistent climate-related financial risk disclosures for companies, banks, and investors to provide information to stakeholders.
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250-500
GB
EU
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The European Union's Fit for 55 package aims to reduce greenhouse gas emissions by 55% by 2030. The “Fit for 55” package was formally adopted in October 2023, and its implementation has begun in Member States.
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>500
EU
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The European Climate Law writes into law the goal set out in the European Green Deal for Europe’s economy and society to become climate-neutral by 2050. The law also sets the intermediate target of reducing net greenhouse gas emissions by at least 55% by 2030, compared to 1990.
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EU
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CDP is a not-for-profit organisation established in 2000 that runs the global environmental disclosure system for companies, cities, and governments. CDP has created an international standard for reporting on climate change, water, forests, and plastics.
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The EU Taxonomy is a classification that sets criteria to determine whether an economic activity significantly contributes to the six environmental objectives defined in the regulation. It is a tool to help companies and investors make sustainable investment decisions. EU Taxonomy disclosures must be made as part of the NFRD/CSRD and SFDR reporting requirements.
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The CSRD is an EU Directive that amends the scope and the reporting requirements of the Non-Financial Reporting Directive (NFRD). While the NFRD only provided guidelines for ESG reporting, the CSRD will introduce mandatory reporting standards.
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Sustainable finance in the EU is understood as finance that supports economic growth while considering Environmental, Social and Governance (ESG) fundamentals. On 6 July 2021, the European Commission adopted several measures to increase its ambition in sustainable finance.
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250-500
<250
EU
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In May 2024, the German Bundesrat (Federal Council) approved the new German Protection Act (Bundes-Klimaschutzgesetz), which aims to ensure that Germany reaches its goals of a 65% emission reduction by 2030, 88% by 2040 and climate neutrality by 2045.
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EU
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Frequently asked questions about ESG regulations

What are ESG regulations?

ESG (Environmental, Social, and Governance) regulations are frameworks and laws designed to guide businesses in reporting and improving their performance related to sustainability, social responsibility, and ethical governance.

These regulations cover a broad range of topics such as climate change impacts, human rights, labour standards, and corporate governance practices. In the European context, key regulations include the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), which provide guidelines for businesses to disclose how they manage their environmental and social impacts and ensure ethical governance​​​. For instance, the EU Taxonomy Regulation, part of the broader European Green Deal, establishes a classification system for environmentally sustainable economic activities​.

ESG regulations are becoming increasingly important as stakeholders, including investors, regulators, and the public, demand greater transparency and accountability. These regulations ensure that companies measure and disclose their environmental footprint, social engagement, and governance policies, often based on specific metrics like carbon emissions, diversity and inclusion, and board structure. By adhering to these frameworks, businesses can contribute to global sustainability goals while managing risks and enhancing their long-term resilience​​.

Why are ESG regulations important for businesses?

ESG regulations are important for businesses because they provide a structured framework to assess, manage, and report on environmental, social, and governance factors that are increasingly critical to long-term business success and sustainability.

Firstly, ESG regulations help mitigate risks. By mandating transparency in areas like environmental impact, human rights, and governance practices, these regulations enable companies to identify and manage potential risks more effectively. For instance, businesses that proactively reduce their environmental footprint and comply with climate-related regulations avoid penalties and reputational damage while enhancing their resilience against climate-related disruptions​​. The rise of environmental standards, such as the European Sustainability Reporting Standards (ESRS), forces companies to focus on their impacts and dependencies on natural and social capital, reducing the likelihood of regulatory non-compliance​​.

Secondly, ESG regulations are crucial for attracting and retaining investment. Investors are increasingly looking to allocate capital to companies that demonstrate strong sustainability performance and ethical governance. ESG-compliant businesses are seen as better prepared for future challenges, more innovative, and more capable of maintaining long-term profitability. The EU’s Corporate Sustainability Reporting Directive (CSRD), for instance, ensures that companies provide comparable, reliable sustainability information, which is critical for investor decision-making and risk assessment​​. Therefore, compliance with ESG regulations positions companies as attractive investment prospects, helping them access a broader and more sustainability-focused capital pool.

How do ESG regulations differ across regions (EU, US, UK)?

ESG regulations differ across regions primarily in their scope, legal frameworks, and enforcement mechanisms, with the EU leading in stringent and comprehensive regulatory standards, while the US and UK take more voluntary or market-driven approaches.

In the European Union, regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) impose mandatory and detailed reporting requirements for companies on their environmental, social, and governance impacts​​. These regulations are part of the EU’s broader Green Deal strategy, aiming to make Europe climate-neutral by 2050. The EU’s approach is rooted in strict legal obligations that compel large companies and financial institutions to disclose specific ESG-related data. This not only ensures transparency but also aligns businesses with the EU Taxonomy, which categorises sustainable economic activities​.

In contrast, the United States has historically relied more on voluntary frameworks, although this is evolving. ESG disclosure is often driven by investor pressure and frameworks such as those from the Securities and Exchange Commission (SEC) are becoming more prominent, particularly around climate risks and governance issues​​. In the United Kingdom, post-Brexit, ESG regulation is also gaining momentum, with mandatory Task Force on Climate-Related Financial Disclosures (TCFD) reporting for large companies and a focus on building net-zero pathways​. However, both the UK and US have yet to implement comprehensive, legally binding ESG frameworks comparable to the EU’s, favouring a more market-driven approach that encourages voluntary reporting alongside emerging mandatory requirements.

What are the benefits of anticipating ESG regulations?

Anticipating ESG regulations allows businesses to proactively manage risks, improve resilience, and gain a competitive advantage by aligning early with future sustainability standards.

By adopting ESG practices early, companies can stay ahead of regulatory requirements and avoid costly last-minute adjustments. Anticipation helps businesses build systems and strategies that not only comply with upcoming laws but also embed sustainability into their core operations, thereby improving long-term resilience​​. For instance, early adoption of emissions reporting or governance improvements ensures that companies can swiftly adjust to new regulations, such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), without disruptions to their operations​​. This proactive approach reduces the risk of non-compliance, potential fines, and reputational damage, all of which can arise from delayed adaptation to new rules.

Moreover, early movers in ESG often benefit from enhanced investor confidence and market opportunities. Investors are increasingly factoring ESG performance into their decision-making, and companies that demonstrate leadership in sustainability attract more capital​​. Additionally, businesses that anticipate and align with ESG trends are better positioned to meet the growing consumer demand for sustainable products and services, improving their market share and brand loyalty. This foresight not only boosts financial performance but also enables firms to establish themselves as industry leaders in sustainability, gaining a reputational edge over competitors​​.

What are the penalties and risks for non-compliance with ESG regulations?

Non-compliance with ESG regulations can lead to significant penalties, including fines, reputational damage, and restricted access to investment opportunities, as well as increased operational risks.

In regions like the European Union, penalties for non-compliance with ESG regulations, such as the Corporate Sustainability Reporting Directive (CSRD), can include substantial fines for failure to meet mandatory reporting standards​​. These penalties extend beyond financial costs to legal actions and operational disruptions, especially if companies are found to be in breach of environmental or social responsibilities. Additionally, non-compliance can lead to restrictions in accessing certain markets or government contracts, where adherence to ESG principles is a prerequisite​​. The EU’s stringent sustainability reporting requirements also emphasise double materiality, meaning companies must disclose not only financial risks but also how their activities impact society and the environment, with non-disclosure resulting in regulatory scrutiny and sanctions​.

Beyond financial penalties, reputational damage is a significant risk. Investors, consumers, and stakeholders increasingly value sustainability and ethical business practices, and failure to comply with ESG standards can erode trust and brand value​​. Companies that lag in adopting ESG standards may also face divestment or exclusion from ESG-focused investment funds, limiting access to capital​​. Furthermore, operational risks rise as companies fail to anticipate regulatory changes, leading to disruptions in supply chains, increased costs, or heightened exposure to environmental and social risks that could have been mitigated through early compliance​​.

How can companies ensure compliance with ESG regulations?

Companies can ensure compliance with ESG regulations by implementing comprehensive governance structures, conducting regular audits, and integrating ESG considerations into their core strategies and operations.

To achieve compliance, companies need to develop robust governance frameworks that clearly define responsibilities for ESG performance at all levels of the organisation, from the board to operational teams​​. Appointing dedicated sustainability officers or ESG committees can help ensure that the company remains updated on regulatory changes, such as the EU's Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS)​​. Regular training for employees on ESG practices, coupled with clear reporting processes, helps embed compliance into everyday operations. Companies can also leverage digital tools and systems for data collection and monitoring, ensuring they meet the disclosure and transparency requirements set by regulations like the EU Taxonomy​​.

In addition to governance, companies should conduct regular internal and external audits to assess their performance against ESG criteria and regulatory standards​​. Audits help identify gaps and risks in compliance and enable timely corrective actions before regulatory deadlines. Moreover, integrating ESG factors into corporate strategy, such as aligning business models with sustainability goals or setting science-based targets for emissions reductions, ensures long-term compliance. Engaging with stakeholders, including suppliers and investors, also ensures that companies remain aligned with regulatory expectations and market demands for transparency and accountability​​. This proactive and strategic approach to ESG helps businesses not only comply but thrive in an evolving regulatory landscape.

What role do carbon accounting and decarbonisation play in ESG regulations?

Carbon accounting and decarbonisation are central to ESG regulations, as they help companies measure and reduce their greenhouse gas emissions, aligning with sustainability goals and regulatory requirements.

Carbon accounting plays a vital role in enabling companies to track their emissions across all scopes, ensuring transparency and accountability in line with global frameworks like the Greenhouse Gas Protocol​​. By quantifying emissions from direct operations (Scope 1), purchased electricity (Scope 2), and value chains (Scope 3), businesses can identify their carbon footprint and areas for improvement​​. This data is critical for complying with ESG regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), which require detailed disclosures on carbon emissions and reduction strategies​​. Through accurate carbon accounting, companies demonstrate their commitment to mitigating climate risks, which is increasingly demanded by regulators and investors alike​. Modern sustainability teams use carbon accounting software to manage their company's emissions.

Decarbonisation efforts are equally crucial, as they involve actively reducing a company’s emissions through various initiatives, including energy efficiency, renewable energy adoption, and sustainable business practices​​. ESG regulations often set specific targets or frameworks, such as science-based targets or the EU’s net-zero goals, pushing companies to transition to low-carbon operations​​. By integrating decarbonisation into their strategies, companies not only comply with regulations but also position themselves as leaders in sustainability, benefiting from improved market competitiveness and access to green finance​​. Thus, carbon accounting and decarbonisation together ensure that businesses can measure, manage, and ultimately reduce their environmental impacts in alignment with global sustainability objectives.

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