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March 2025 - Business Support

Less than half of global ESG and sustainability policies are mandatory according to latest research: A recent study has revealed that just over two-fifths (42%) of global ESG and sustainability policies are mandatory. In contrast, a significant majority of policies (58%) are voluntary, which suggests that many organisations are choosing to adopt sustainability practices on their own accord, rather than in response to regulatory requirements.

ESG (Environmental, Social, and Governance) is a framework used to measure a business's impact on society and the environment and also assesses its accountability and transparency. Mandatory ESG policies operate within a legal framework, while voluntary policies enable businesses to customise their strategies to align with their specific needs.

The report, based on data from the Carrots & Sticks global database of mandatory and voluntary ESG policies (2,677 policies from 132 countries), was produced by King’s Business School and the University of Edinburgh Business School and points to a significant global shift towards voluntary ESG policies in the last decade.

The report reveals that up to 2015, just over half (52%) of ESG and sustainability policies were mandatory. However, since the UN Sustainable Development Goals were introduced in 2015, there has been a gradual but significant year-on-year decrease in the adoption of mandatory ESG frameworks, while the adoption of voluntary policies has similarly increased. As recently as 2023, the ratio of mandatory vs voluntary policies was 44.8% and 55.2%, respectively. Fast forward twelve months, the share of mandatory policies has fallen by 2.8% while voluntary policies have similarly increased.

The research also identified the sectors most impacted by mandatory sustainability disclosure requirements as finance, insurance and manufacturing; while sectors such as wholesale, property (rental and leasing) and accommodation and food services receive comparatively less scrutiny in terms of ESG and sustainability policies.

There are differing schools of thought as to the impact of voluntary ESG strategies on long-term sustainability outcomes. While the adoption of voluntary strategies can be regarded as a genuine commitment to ethical responsibility, rather than a response to regulatory requirements, some observers are worried by the lack of consistency.

Dr Klingler-Vidra one of the authors of the research states: “While progress has been made in integrating ESG considerations into business practices, the declining share of mandatory enforcement mechanisms and standardised guidelines continues to challenge global efforts to drive meaningful sustainability outcomes.”

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