Between mandatory and voluntary: The hybrid nature of EU corporate sustainability reporting

• Florence School of Transnational Governance
• EUI Climate Workshop
• STG Climate

Seminar as part of the EUI Climate Workshop

Mandatory sustainability reporting has become a key policy tool in the EU’s sustainable finance agenda to enhance the quality, transparency and comparability of sustainability information disclosed by companies. A notable example is the recently adopted Corporate Sustainability Reporting Directive (CSRD), which requires companies to provide investors and other stakeholders with relevant and comparable information on their sustainability risks, performance and impact based on a specific set of sustainability reporting standards. Whereas the CSRD aims to strengthen the mandatory character of the EU sustainability reporting framework, the reporting standards adopted in July 2023 by the European Commission uncover a more flexible and somewhat hybrid regulatory approach, containing both mandatory and voluntary elements.

Based on a forthcoming publication by the Robert Schuman Centre for Advanced Studies, researchers Laura Iozzelli (research fellow at the EUI School of Transnational Governance) and María del Carmen Sandoval Velasco (research associate at the EUI Robert Schuman Centre for Advanced Studies – Florence School of Banking and Finance) will provide an overview of the evolution of the EU sustainability reporting framework and analyse the tension between mandatory and voluntary features in the newly adopted reporting standards. What are the policy implications of the EU’s approach? Will greater flexibility in environmental, social and governance (ESG) disclosure requirements lead to the profound environmental, economic and social changes demanded by the EU’s sustainable finance agenda or will the CSRD turn sustainability disclosure into a 'tick-the-box’ exercise, overlooking the very essence of having a positive impact on sustainability?