Sustainability is alive, thanks to stakeholder pressure

Pending further, and hopefully favorable, shifts in the global landscape, the period from 2019 to 2024 can be deemed the age of expansion and global regulatory strengthening.

The European Union adopted the Corporate Sustainability Reporting Directive, which introduced the European Sustainability Reporting Standards (ESRS) for sustainability reporting, creating mandatory disclosure obligations for around 50,000 companies. It also passed the Corporate Sustainability Due Diligence Directive for supply chain due diligence in large firms, along with 86 other legislative packages (including directives and regulations). In the US, the SEC proposed climate disclosure requirements for listed companies, a move mirrored by the UK, India, and notably, China.

Many countries and financial markets introduced binding targets aligned with the Task Force on Climate Related Financial Disclosures guidelines, along with voluntary frameworks that either anticipated or supplemented regulatory obligations.

Global standards such as the ISSB (IFRS S1 and S2) were published as benchmarks for financial materiality. Leading asset managers (BlackRock, State Street, Vanguard) incorporated ESG criteria into their investment processes. Signatories of the Principles for Responsible Investment (PRI) now manage over $128 trillion in assets.

The year 2025 began with the inauguration of Donald Trump, and in March, the SEC scrapped its climate change regulation. Acting SEC Chair Mark Uyeda described it as “costly and needlessly intrusive.”

On February 26, 2025, the European Union proposed an Omnibus Directive that diluted environmental and human rights due diligence requirements and raised the reporting threshold to companies with over 1,000 employees. This significantly reduced the number of companies subject to mandatory reporting and introduced substantial exemptions and simplifications to the ESRS.

Several large US companies abandoned their DEI (Diversity, Equity & Inclusion) goals under current political pressure. Major banks (JPMorgan, Citi, BofA, Morgan Stanley, Wells Fargo, and Goldman Sachs) exited the Net-Zero Banking Alliance. BlackRock and others left the Net Zero Asset Managers Initiative. While the number of ESG funds joining the PRI for the first time dropped, total assets under management still increased.

Largely overlooked in the West is the fact that India and China have tightened their regulations in this period. On April 2, 2025, China issued its first global sovereign green bond, worth 6 billion yuan, entirely listed on the London Stock Exchange, attracting 47 million yuan in bids.

On the corporate front, the number of companies worldwide joining the Science Based Target Initiative (the best proxy for identifying firms committed to serious decarbonization) grew by about 1,000 over the past 12 months (as of April 14, 2025).

Even in the DEI arena, strong resistance to the political rollback is emerging. For example, at Apple’s shareholder meeting on February 25, 2025, 97% voted against suspending the company’s diversity, equity, and inclusion program—despite Trump’s effort to eliminate it “by decree.”

Despite the temporary regulatory slowdown and signs of ESG deregulation on both sides of the Atlantic, the sustainability trajectory remains strong and long-term oriented. Stakeholder pressure—from customers to investors, from employees to communities—continues to demand concrete commitments and transparency, making it reputationally risky for companies to backtrack.

In this context, sustainability is evolving from a mere compliance exercise into a strategic lever for value creation. There is a growing focus on data quality, risk management, and the use of forward-looking tools such as climate scenarios, digital reporting systems, and verifiable transition plans.