Sustainability: Moving the Conversation Forward

Shedding a light on a topic of deep interest to Mazars, we commissioned the Economist Intelligence Unit to examine the relationship between regulation and sustainability. In this article, the way in which sustainability can be both measured and encouraged via regulation is researched, as well as the differences between countries and regions in adopting sustainable practices.

How sustainability is understood by businesses and investors has changed dramatically since it was first considered within corporate social responsibility in the 1960s. It has grown from being an annual report to shareholders of the actions taken in relation to a company’s broader social and ethical obligations to become an integral part of many companies’ business strategies.

There is no global agreement on corporate social or sustainability reporting requirements and there are significant differences in how the US, the EU and Asia are developing frameworks, programmes and legislation to achieve the global shift to sustainability.

Europe – money talks

In January 2018, the European Commission (EC) laid out plans to cement sustainability into the European financial system. Many of the EC’s suggestions are already being put in place. Further EU legislation should be agreed by 2019 to compel the financial industry to deliver the €180bn needed each year to hit Europe’s climate change targets.  

China – sustainability an economic value-add

Rapid economic growth has left China facing some of the most severe environmental issues on the planet. Whilst recognising the investment cost required, China views sustainability as an opportunity for its companies to develop innovative technologies that will allow the country to move up the value-added export chain. What is clear is that it wants a return on its environmental investments. By focusing on research and development, China hopes to lead the world in environmental technology.

US – The states and market rebel

President Donald Trump has made it very clear he is no fan of climate change initiatives. But not everyone agrees with him. In June 2018 the US Senate rejected his plans for deep cuts to renewable energy research budgets and individual states are developing their own projects without the need for federal regulation. Individual states are piling yet more pressure on coal. California has set ambitious clean energy targets. Other states are pushing out polluters, promoting electric vehicles and pollution caps. Consumers are demanding change and business is being forced to respond.