Environmental, social, and governance (ESG) policies are rapidly evolving across different countries, reflecting both ambitious climate goals and political realities. While Europe moves forward with sweeping regulations (the EU is even debating an ‘Omnibus’ package to streamline its sustainability laws), individual nations like Spain and the United Kingdom are charting their own courses. Beyond Europe, countries such as India and the United States provide additional context, from pioneering mandatory corporate responsibility to contentious debates over climate disclosure.
Spain: From Voluntary Reporting to Mandatory Carbon Disclosure
Spain has emerged as one of Europe’s most ambitious ESG regulators, placing climate action at the centre of its ESG strategy and accelerating mandatory climate reporting in response to recent environmental crises. In the wake of catastrophic wildfires that scorched over 300,000 hectares in summer 2025, Prime Minister Pedro Sánchez announced a 10-point climate emergency plan.
A cornerstone of this plan is mandatory carbon reporting for companies, a significant shift from Spain’s previous voluntary measures. In September 2025, the government approved Royal Decree 214/2025, which makes carbon footprint disclosure compulsory from 2026 onward. This bold move builds on Spain’s Climate Change Law 7/2021 and aligns with new EU-wide sustainability reporting standards.
Under the Spanish decree, large enterprises and public agencies must report their greenhouse gas emissions and show how they will reduce them. Specifically, reporting will cover Scope 1 (direct emissions) and Scope 2 (indirect energy emissions) starting with 2025 data (reported in 2026). Scope 3 (supply chain/other indirect emissions) becomes mandatory by 2028 for the biggest entities.
Companies are also required to publish five-year decarbonisation plans detailing how they will cut emissions, with clear targets, and host these plans on their websites or sustainability reports. To ensure credibility, large firms will need external assurance for their data in certain cases, especially if applying for public funds or if Scope 3 emissions are a major share.
In total, roughly 4,000 Spanish organisations – including corporations with over 250 employees (per Spain’s Law 11/2018 on non-financial reporting) and government bodies are covered by these rules. Small and mid-size enterprises (SMEs) aren’t directly obliged, but they may feel indirect pressure as big customers demand ESG data from their suppliers.
This national effort complements the European Union’s broader ESG directives. The EU’s Corporate Sustainability Reporting Directive (CSRD) requires large companies Europe-wide (including Spain) to report extensive sustainability information alongside financial results. The CSRD introduces ‘double materiality, meaning companies must disclose not just how ESG issues affect them financially, but also how the company’s activities impact society and the environment.
However, since passing the directive, the EU is aiming at reducing reporting obligations for companies under sustainability rules by up to 80 % to enhance competitiveness. In this context, a “stop the clock” directive was adopted in April 2025, postponing the reporting requirements for companies currently in the scope of CSRD for two years.
The relevant omnibus package, amending the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), introduced by the European Commission in early 2025, foresees that only companies with more than 1,000 employees and either a turnover above €50 million or a balance sheet total above €25 million remain subject to the rules. The European Parliament is expected to vote on the Omnibus Package 1 at the end of October, in line with the current legislative calendar.
Therefore, Spain’s push for carbon reporting and transition plans are more ambitious than EU rules. In fact, Spanish firms that prepare for CSRD compliance (the first reports under CSRD are due in 2025 for FY2024 data) will already be well-positioned to meet the new Spanish requirements In short, Spain is using both EU frameworks and its own national legislation to drive transparency and action on ESG – especially E (environment), fuelled by an acute sense of climate urgency.
United Kingdom: A Global Alignment Approach to ESG Rules
Figure: A conceptual illustration of the UK (left) and EU (right) ESG pathways. The UK favours a flexible, globally aligned approach, whereas the EU has adopted more prescriptive rules. Companies operating across borders must navigate both.
In the United Kingdom, ESG policy has been shaped by the country’s role as a global financial hub and its political climate post-Brexit. The UK government is aiming to make the UK a global centre for sustainable finance, which means aligning its rules with international standards rather than simply mirroring the EU. A key aspect of the UK approach is support for the new International Sustainability Standards Board (ISSB). UK regulators are working to adopt the ISSB’s disclosure standards as the basis for British requirements, emphasising financial materiality (i.e. how ESG issues create risks or opportunities for the company’s value). By focusing on investor-relevant information, the UK hopes its standards will be compatible worldwide.
In practice, several components form the UK’s ESG disclosure regime:
- Climate Risk Reporting (TCFD) – The UK was among the first countries to mandate climate-related financial disclosures in line with the Task Force on Climate-related Financial Disclosures. Since 2022, large companies and financial institutions in Britain have been required to report on their climate risks and strategies. This ensures businesses assess how global warming could impact their operations and finances.
- Streamlined Energy & Carbon Reporting (SECR) – UK law also requires companies above certain size thresholds to disclose their energy use and greenhouse gas emissions annually. SECR, introduced in 2019, makes carbon and energy data a standard part of business reporting, complementing the climate-risk focus of TCFD.
- Sustainability Disclosure Requirements (SDR) – The UK is developing rules for asset managers and financial products to prevent greenwashing. Firms marketing ‘sustainable’ investment funds must adhere to disclosure standards under the SDR, ensuring transparency about ESG claims. (This is analogous to the EU’s SFDR but tailored to the UK market.)
- UK Green Taxonomy (in development) – To guide investors, Britain is working on its own classification system for what counts as environmentally sustainable economic activity. This Green Taxonomy, still under consultation, will likely resemble the EU’s taxonomy but with UK-specific tweaks, helping channel money into truly green projects.
- UK Sustainability Reporting Standards (SRS) – In mid-2025, the government published draft sustainability reporting standards based on the ISSB’s global baseline. These standards (once finalised after consultation) are initially for voluntary use, but the Financial Conduct Authority (FCA) plans to consult on making them mandatory for UK-listed companies. The goal is to ensure British companies report ESG information in a way that investors globally can compare and trust.
Politically, the UK has tried to balance climate leadership with concerns about over-burdening business. Notably, at COP26 in 2021 the UK declared it would become the world’s first ‘Net Zero Aligned Financial Centre,’ mandating that financial institutions and listed companies publish net-zero transition plans by 2023. This means British companies are expected to outline how they will cut their emissions and hit the country’s 2050 net-zero goal. Even as Britain charts its own path outside EU regulations, its commitment to net-zero remains (though some targets like petrol car phase-outs were recently delayed for political reasons).
Overall, the UK’s ESG policy approach can be seen as less prescriptive than the EU’s, but still robust: leveraging global frameworks, focusing on investor needs, and reinforcing London’s status in green finance. Non-compliance isn’t taken lightly either – UK regulators can impose fines up to 4% of global turnover (capped at £20 million) and even jail time for directors in serious cases. The clear message is that, despite some political debates about ‘over-emphasis’ on ESG, the direction of travel in the UK is toward more transparency and accountability on sustainability issues.
Global Perspectives: Examples from India, the US, and Beyond
Looking beyond Europe, ESG policy trends globally show a mix of pioneering initiatives and political contention. India stands out as an early innovator in ESG mandates, especially on the social component. In 2014, India became the first country in the world to legally require corporate social responsibility spending – large companies must donate 2% of their net profits to social causes each year. This rule (Section 135 of the Companies Act) has mobilised billions of dollars for education, health, and environmental projects in India over the past decade. Moreover, India’s securities regulator (SEBI) has introduced a comprehensive ESG disclosure framework known as Business Responsibility and Sustainability Reporting (BRSR). As of 2022, the top 1,000 listed companies in India are required to publish annual BRSR reports detailing their performance on a broad range of environmental, social, and governance metrics.
The BRSR is essentially a standardised ESG scorecard, about 150 data points covering climate data (emissions, energy use, water), waste management, workforce and community initiatives, board diversity, and more. India is even phasing in value-chain (Scope 3) disclosures and encouraging third-party assurance for these reports. By mandating BRSR, Indian authorities aim to improve transparency and make companies assess their sustainability impacts more rigorously, in line with global reporting norms. These moves, mandatory CSR spending and ESG reporting, illustrate how a developing economy can lead on governance and social responsibility, ensuring businesses contribute to national development goals.
In the United States, the trajectory of ESG policy has been more contested. There is significant investor interest in sustainability (many U.S. companies voluntarily produce TCFD reports or set climate targets), but at the federal level ESG rules have faced political pushback. The U.S. Securities and Exchange Commission (SEC) did propose sweeping climate disclosure rules in 2022 that would have required publicly traded firms to report their greenhouse gas emissions, climate risks, and transition plans in their annual filings.
However, these rules became embroiled in legal challenges and political controversy. By March 2025, amid opposition from some lawmakers and industry groups, the SEC announced it would pause defending its climate disclosure rule in court, effectively delaying implementation. This reflects the divided U.S. landscape: on one hand, states like California forged ahead with their own climate transparency laws (e.g. requiring large companies to report emissions), while on the other hand, several state governments have attacked ‘ESG investing’ as contrary to financial interests. The net effect is regulatory uncertainty at the federal level.
Still, many U.S. companies with global operations find themselves compelled to follow EU or international ESG standards – for example, American multinationals will have to comply with Europe’s CSRD for their EU businesses and UK rules within the UK. In that sense, global market pressure is nudging U.S. firms toward ESG reporting even absent uniform domestic mandates. The U.S. example shows how politics can influence ESG policy, with debates over the balance between corporate transparency and regulatory burden.
Other countries are also shaping the global ESG mosaic. Singapore and Hong Kong have introduced requirements for listed companies to publish sustainability reports (with Singapore aligning with TCFD for climate reporting by 2025). Japan updated its corporate governance code to promote ESG disclosure and require climate risk reporting for large firms. Even China has signalled moves toward mandatory environmental disclosure for corporations, given its climate pledges.
These examples underscore a worldwide trend: ESG considerations are increasingly seen as material to business success and stakeholder trust, and governments are beginning to standardise how companies must account for them. The approaches vary – some lean on hard law and quotas (as in India’s CSR law), others on market-driven guidelines and investor pressure – but the direction is clear.
