Global ESG policy varies, depending on the political and business climate within each respective country or region. In this study, we used Plural’s ESG legislation tracker to examine ESG and corporate governance policy across the United States, the African Union, particularly Nigeria and South Africa, and the European Union.
Over the past fifteen years, increased focus has been paid to global trade, sustainability, and climate change. In response, many corporations have implemented policies that better assess and mitigate the negative impacts of their operations. At the same time, governments have further regulated corporate responsibilities and reporting requirements. The result of these actions is a policy environment that can feel impossible to navigate. This is true for businesses and consumers alike.
These policies are environmental, social, and governance (ESG) policies, or corporate governance policies. The ESG landscape is vast. Any one corporation could be subject to a plethora of overlapping regulations, including:
- Private regulations (business groups
- Semi-private regulations (regulated stock exchanges
- Public regulations (governments at the local, national, and regional levels)
Navigating this legislative environment can be difficult. There’s significant regional variation in attitudes towards ESG policies by policymakers and consumers. Corporate governance policy in the U.S., for example, has been far more market-led than in Europe. In Europe, the European Union and national governments have driven policy forward.
The Plural team analyzed new developments in ESG policy to better understand this rapidly changing field. We examined more than 30 policies across nine countries, spanning the European Union and the African Union. In this report, we detailed the patterns we discovered in each region. Additionally, we laid out notable trends that could influence the development of ESG policy.
Global ESG Policy in Africa, Europe, and the United States
Africa
Africa holds a unique position in global ESG, supply chain, and corporate governance discussions, impacted significantly by European business activities. Both European and African authorities are intensifying legislative efforts to enhance transparency and corporate responsibility. In Nigeria, recent laws aim to standardize corporate governance and ESG policies, while South Africa encourages ESG disclosure for listed companies and emphasizes sustainable investments and social equality. The African Union’s ongoing study is expected to expand ESG regulations continent-wide, promoting standardized corporate governance.
Europe
Over the past fifteen years, the European Union has significantly shaped global corporate governance policies. Recent key legislations and directives include the Shareholder Rights Directive (2014), ensuring shareholders’ rights and reducing short-termism; the General Data Protection Regulation (2018), a stringent privacy law; the European Green Deal (2020) and the European Climate Law (2021), both fostering the green transition and aiming for climate neutrality by 2050; the Non-Financial Reporting Directive (2023), mandating ESG performance disclosure; and the Corporate Sustainability Due Diligence (2025), promoting proactive measures in human rights and environmental impacts. These policies have global ramifications, influencing corporate governance worldwide, and serving as a blueprint for other countries on matters ranging from environmental impact to supply chain monitoring.
United States
In the U.S., ESG policy is characterized by Congressional gridlock and varying state trends, contrasting the global trend of steady ESG progress. The Uyghur Forced Labor Prevention Act, passed in late 2021, represents a rare consensus, prohibiting imports produced with forced labor, especially from China’s Xinjiang region. Broader ESG efforts in Congress are stagnant, though the Biden administration has promoted ESG through regulatory channels. State actions on ESG are polarized, with 11 states introducing pro-ESG legislation and 37, generally more conservative states, introducing anti-ESG legislation in 2023. This divergence complicates compliance for companies operating nationwide. Notably, California has passed stringent laws requiring extensive ESG disclosures from large companies.
Notable Trends in Global ESG Policy
This research identifies crucial ESG regulation trends, providing foresight into global developments:
- Jurisdictional Expansion: ESG policies in Europe are spreading rapidly, with national precedents often adopted EU-wide. This is evident in supply chain due diligence and ESG reporting standards.
- Organizational Expansion: ESG policies, initially targeting specific entities, are expanding to cover a wider range of organizations. The transition from the EU’s Non-Financial Reporting Directive to the Corporate Sustainability Reporting Directive highlights this trend.
- U.S. Backlash: The U.S. is experiencing significant pushback against ESG regulations, creating a growing divide between American and European corporate requirements. In 2023, 14 states enacted 22 anti-ESG bills, reflecting this trend and highlighting the potential compliance risks for businesses focusing on ESG in these regions.
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