The debate on corporate transparency is experiencing a paradoxical speed clash.
The European Union, once positioned as the leading regulatory force through the European Green Deal — with its ambitious targets for reducing environmental impact and proposals such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) — has, in recent months, shifted towards a rhetoric of simplification.
In February this year, the European Commission responded to criticism of “excessive bureaucracy” with the Omnibus Simplification Package — postponing the full application of the CSRD by two years, exempting companies with fewer than 1,000 employees, and promising to simplify the data points in the EU Taxonomy and the European Sustainability Reporting Standards (ESRS) — all with the aim of reducing reporting obligations by 25% to 35%.
More recently, in July, it recommended that SMEs adopt the voluntary VSME standard, designed as a practical guide to organising ESG reporting in a way that is proportional to their size and aligned with requirements from clients and value chains. Just a few months earlier, the Draghi Report had already warned that overly dense regulation could undermine the competitiveness of European companies compared to their North American and, above all, Asian counterparts.
While Europe slows down, Beijing is accelerating.
In December 2024, China’s Ministry of Finance published the Basic Standards for Corporate Sustainability Disclosure, the first stage of a standard that will become mandatory for major listed companies.
These companies will have to report on fiscal year 2025 by April 2026, with gradual extension to the entire Chinese economy by 2030. China is not only adopting double materiality, but also including requirements on biodiversity and the circular economy — topics that may end up being watered down in the new version of the ESRS.
The North American Landscape
Across the Atlantic, the movement is one of retreat. In March, the U.S. Securities and Exchange Commission (SEC) decided in court not to defend its Climate Disclosure Rule, spreading uncertainty over its entry into force and signalling that a new draft is unlikely before a public consultation.
There has also been a request to withdraw from the Paris Agreement, with official exit set for January 2026. Even so, several states, such as California and New York, have adopted their own ESG rules and requirements affecting both public and private companies operating in their territories. Some companies, however, choose to maintain disclosures to satisfy investors by following global standards such as SASB, TCFD, GRI or ISSB.
Market pressure does not slow down with political shifts.
A global KPMG survey of 153 financial institutions in 28 countries shows that integrating ESG risks into credit models is now one of the most cited strategic challenges by banks and regulators.
From the investors’ side, the International Sustainability Standards Board revealed that more than 20 jurisdictions — representing almost 55% of global GDP — have already committed to its standards.
A recent study analysing companies in 62 countries concluded that those disclosing ESG data pay, on average, 0.5% less on the cost of equity. This is thanks to the higher quality and reliability of the information, which attracts institutional investors willing to accept slightly lower returns in exchange for lower risk.
What lessons can be drawn from this global landscape?
First, delaying legislative timelines does not create a competitive buffer — on the contrary, global value chains and international financiers adopt comparable metrics regardless of each region’s political pace.
Second, banks and investors guided by market regulators’ recommendations are converging towards standardised requirements to compare risks and opportunities, reducing the space for vague narratives or incomplete data.
Third, companies that treat reporting purely as a compliance exercise risk missing a strategic opportunity. The sooner ESG metrics are integrated into risk management, the faster they can be turned into benefits and competitive advantage.
The global regulatory framework may fluctuate, but investors’ compass remains fixed on transparent, comparable, and auditable reporting. For European companies aiming to compete in global markets or secure financing at attractive rates, the choice is between waiting for Brussels’ green light or starting now — even with small steps, as a warm-up lap before the pack disappears around the first bend.
The future does not slow down: those who turn ESG data into an advantage today will lead tomorrow; those who hesitate accept the loss of competitiveness and the risk of being left behind.
Excerpt written by Beatriz Santos
*Cover Photo by Christophe Meyer on Unsplash
