From Regulation to Action: How the EU Drives Corporate Sustainability

The European Union has established sustainability as a fundamental legal pillar, evolving from mere recommendations to binding regulations for companies. Directives such as the CSRD and the Green Taxonomy, aligned with the Sustainable Development Goals (SDGs), are designed to enhance transparency, promote corporate responsibility, and foster resilient and sustainable economic growth.

Source: Freepik

In recent years, sustainability has become a central pillar of the European Union’s (EU) economic and social policies. Current reforms in this field reflect not only a response to the global climate emergency but also a historical evolution in which the integration of environmental, social, and governance (ESG) criteria has shifted from being a recommendation to a legal obligation for companies.

Impact of current sustainability reforms

The reforms promoted by the EU aim to ensure that companies adopt more responsible and transparent practices. Among them, the Corporate Sustainability Reporting Directive (CSRD) stands out, requiring companies to disclose detailed information about the impact of their activities on the environment, human rights, and working conditions. These measures are intended not only to improve accountability but also to encourage the transition toward more sustainable and competitive long-term business models.

In addition, green taxonomy mechanisms have been implemented, establishing clear criteria to define which activities can be considered sustainable. This facilitates channeling investments into sectors aligned with the EU’s climate goals, strengthening sustainable finance as a fundamental pillar of the green transition.

The role of the European Parliament and acceptance of these measures

The current sustainability regulation did not emerge suddenly. Since the 1990s, the European Parliament began to integrate environmental issues into the legislative agenda, influenced by the growing scientific consensus on climate change and pressure from civil society. With the Paris Agreement of 2015, the EU made a clear commitment to lead the fight against global warming, which served as a catalyst for a more ambitious agenda.

The European Parliament has been a key player in this evolution. Its debates and resolutions have driven the creation of a regulatory framework that requires Member States and companies to align their strategies with the goal of climate neutrality by 2050. Moreover, parliamentary support was crucial in turning initiatives such as the European Green Deal and the CSRD from proposals into binding directives.

The acceptance of sustainability as a guiding principle in the EU stems from several historical factors:

• Citizen and social pressure: environmental and consumer movements demanded greater transparency and corporate responsibility.

• Environmental crises: from the Exxon Valdez oil spill to wildfires and heat waves in Europe, natural disasters highlighted the need for action.

• Competitive advantage: the EU recognized that the sustainable transition was not only an ethical obligation but also an opportunity to position itself as a global leader in green innovation.

Connection with the Sustainable Development Goals (SDGs)

EU reforms are directly aligned with the United Nations Sustainable Development Goals (SDGs), a global framework to eradicate poverty, protect the planet, and ensure prosperity for all by 2030. The adoption of responsible business practices becomes a vehicle for achieving goals such as climate action (SDG 13), responsible consumption and production (SDG 12), and gender equality (SDG 5), among others. In this sense, companies must understand that their role goes beyond regulatory compliance; they are active agents of transformation in line with international commitments.

Today, these directives mark a structural shift: companies can no longer see sustainability as an accessory element but as an integral part of their strategy and operations. In doing so, the EU seeks not only to mitigate the effects of the climate crisis but also to ensure resilient and responsible economic growth for future generations.

Discover how our consulting services can help your company comply with the CSRD, the Green Taxonomy, and the SDGs: info@mosaic.mx