Balancing sustainability reporting

Rollbacks in the US and the European Union may embolden regulators elsewhere to delay or dilute ESG disclosure rules by citing competitiveness concerns

- SHANTANU SRIVASTAVA

THE GLOBAL MARKET for environment, social, and governance (ESG) investing is growing slowly, but steadily. Sustainable debt markets (markets for instruments such as green bonds) grew 10% year-on-year in 2024 after declining for two consecutive years. However, the foundation of this growth—reliable corporate sustainability reporting—is under increasing strain, posing a potential risk to the market's continued expansion. Global institutional investors are expressing growing concern over the escalating issue of corporate greenwashing, emphasizing that the materiality, comparability, and accuracy of sustainability disclosures require significant improvement.

Against this backdrop, three big markets—the US, the European Union (EU), and India—have each taken different regulatory steps around sustainability disclosures recently. These developments come at a critical time for ESG investing, when the demand for reliable, comparable, and verified data continues to grow. For investors and companies alike, these regulatory shifts reveal a widening gap in how jurisdictions are balancing climate goals under economic and political pressure.