Key Impact Points:
- Global and state regulations lead the charge: US states and foreign governments are the primary drivers of corporate sustainability regulations.
- Sustainability entrenched in corporate strategy: Most corporations have integrated long-term climate and sustainability planning into their operations.
- Rising investor and stakeholder expectations: Climate-conscious Gen Z and global investors demand transparency and action on sustainability.
Global and State Regulations Drive Sustainability Forward
While federal policies may shift with the incoming administration, sustainability momentum is expected to endure. Historically, US corporations voluntarily built sustainability programs, driven by stakeholder demands, resource management needs, and opportunities for growth in sustainable products.
“The most significant corporate sustainability regulations are originating from US states and foreign governments,” underscoring a global trend toward mandatory disclosures.
Key examples include:
- EU Corporate Sustainability Reporting Directive (CSRD): Thousands of global corporations, including US companies operating in Europe, must comply by 2025 for European operations and by 2028 for global operations.
- California’s climate disclosure legislation: By 2026, companies operating in California above certain thresholds must disclose greenhouse gas emissions and climate risks.
Despite potential federal rollbacks, a “patchwork of disclosure requirements” globally and regionally will continue shaping corporate practices.
Sustainability as Core Corporate Strategy
Sustainability is now an integral part of corporate strategy, with businesses leveraging voluntary standards over decades to measure impacts and bottom-line benefits. By 2020, 92% of Fortune 500 companies had issued voluntary sustainability reports, well before federal mandates.
“Corporations are modeling long-term climate change and sustainability considerations within their operational and investment planning,” ensuring resilience against future climate impacts. This includes adopting renewable energy and planning for resource scarcity.
Stakeholders and Investors Demand Transparency
Investor pressure and Gen Z’s rising influence further compel corporations to act. According to EY research, 55% of investors consider climate change a factor in investment decisions, while boards increasingly view environmental sustainability as a necessity for resilience.
As the business landscape evolves, corporate leaders must prepare for heightened expectations from regulations, stakeholders, and global market demands. The sustainability outlook: resilient and forward-looking.
