Voluntary policies continue to dominate ESG landscape

Voluntary ESG frameworks continue to dominate the landscape of ESG and sustainability policies, with the proportion of mandatory policies continuing their downward trajectory since the introduction of the UN Sustainable Development Goals. 

Today, 58% of global ESG business regulations are voluntary, according to the the 2024 Carrots & Sticks report by researchers at King’s Business School and The University of Edinburgh Business School. In 2023, voluntary policies accounted for 55.2% of global ESG business regulations.

Persistent global reliance on voluntary ESG frameworks reflects a broader trend toward flexibility and self-regulation in sustainability, despite growing calls for stronger mandatory accountability. Researchers warn that the declining share of mandatory enforcement mechanisms and standardised guidelines continues to challenge global efforts to drive meaningful sustainability outcomes.

Only 42% of global ESG and sustainability policies are mandatory, requiring businesses to take specific actions, often enforced through laws and regulations to ensure compliance. In contrast, voluntary policies offer guidance through frameworks, codes, and recommendations that businesses can opt to follow without legal obligation.

Share of mandatory policies has declined since 2015

Before 2015, a majority (52%) of ESG policies were mandatory, a trend that has reversed since the introduction of the UN Sustainable Development Goals in that year. Since then, voluntary frameworks have continued to dominate the landscape of ESG and sustainability policies year-over-year.

Carrots & Sticks is a comprehensive database of ESG and sustainability policies, comprising 2,677 policies from over 130 countries, nearly 80 international and regional organisations, and in 38 languages, and spanning from 1897 to the present day.

The research was led by Dr. Robyn Klingler-Vidra, Vice Dean for Global Engagement at King’s Business School, King’s College London, and Dr. Adam William Chalmers, University of Edinburgh.

Finance and manufacturing are most regulated

Dr. Chalmers said the analysis showed that the global ESG policy landscape is significantly varied, with a patchwork of approaches that reflect priorities and levels of commitment to sustainability across countries and industries. The most targeted industries for sustainability disclosure requirements are finance and insurance sectors, as well as manufacturing-related industries.

Dr Klingler-Vidra added: “While progress has been made in integrating ESG considerations into business practices, the declining share of mandatory enforcement mechanisms and standardised guidelines continues to challenge global efforts to drive meaningful sustainability outcomes.”

Carrots & Sticks was launched in 2006 as a collaborative initiative between Global Reporting Initiative (GRI), the UN Environment Programme and KPMG International to highlight sustainability reporting standards trends.