Voluntary ESG policies are on the rise while mandatory regulation declines
February 5, 2025
Despite ongoing regulatory developments, the voluntary adoption of sustainability policies continues to dominate the landscape as only 42% of global ESG and sustainability policies are classed as mandatory, according to new research.
The 2024 Carrot & Sticks report revealed that this reflects a decline from 2023, when 44.8% of policies were mandatory, which highlights a modest but noticeable shift towards a greater prevalence of voluntary policies year-over-year.
In particular, the report found a 2.8 percentage point decrease in mandatory policies, accompanied by a corresponding 2.8 percentage point increase in voluntary policies.
This aligns with the trend that, since the introduction of the United Nations Sustainable Development Goals (SDGs) in 2015, voluntary ESG policies have increasingly taken the lead in the regulatory landscape. Prior to 2015, 52% of ESG policies were mandatory.
Dr Robyn Klingler-Vidra, vice dean for global engagement at King’s Business School, King’s College London, said: “While progress has been made in integrating ESG considerations into business practices, the decreasing number of mandatory policies and standardised guidelines continues to challenge global efforts to drive meaningful sustainability outcomes.”
The report also looked at the use of SDGs and found that SDG8: Decent Work and Economic Growth and SDG 16: Peace Justice and Strong Institutions were the most frequently discussed goals in policies, referenced 2568 times and 2314 times in disclosure and ESG and sustainability policy out of the 2677 policies analysed.
Meanwhile, SDG 1: No Poverty, SDG 4: Quality Education, SDG 5: Gender Equality and SDG 14: Life Below Water have little to no policy engagement.
The Global Reporting Initiative (GRI) Standards were also referenced in 477 policies. Among these, six policies explicitly mandated the use of GRI Standards.
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Last Updated: 6 February 2025