Sustainability Atlas
Policy, Standards & Strategy·12 min read··...

Playbook: adopting regulation watch (eu/us/global) in 90 days

what's working, what isn't, and what's next. Focus on a sector comparison with benchmark KPIs.

In 2024, the global sustainability regulation landscape experienced an unprecedented acceleration: the EU's Corporate Sustainability Reporting Directive (CSRD) expanded mandatory ESG disclosures from 11,700 to approximately 50,000 EU companies and an additional 10,000 non-EU entities, while 16 jurisdictions worldwide adopted the International Sustainability Standards Board (ISSB) standards IFRS S1 and S2 within just 18 months of their June 2023 release (S&P Global, 2025). Meanwhile, the ESG reporting software market surpassed $1 billion in annual revenue, growing at a 19-30% CAGR as organizations scramble to operationalize compliance (Deloitte, 2024). For investors evaluating portfolio companies across Asia-Pacific and beyond, understanding this regulatory mosaic—and implementing a systematic monitoring capability within 90 days—is no longer optional but essential for risk management and value creation.

Why It Matters

The regulatory convergence happening across major economic blocs represents a fundamental shift in how companies must account for, report, and manage their environmental and social impacts. Three forces are reshaping the investment landscape:

Materiality Becomes Mandatory. The EU's double materiality framework under CSRD requires companies to disclose both how sustainability issues affect their financial performance (financial materiality) and how their operations impact the environment and society (impact materiality). This bidirectional lens means investors can no longer rely on voluntary, cherry-picked disclosures.

Scope 3 Accountability Intensifies. California's SB 253 Climate Corporate Data Accountability Act requires companies with over $1 billion in revenue to disclose Scope 1 and 2 emissions by 2026, with Scope 3 value chain emissions following in 2027. Given that Scope 3 typically accounts for 70-90% of a company's carbon footprint, this creates cascading data demands throughout supply chains—particularly relevant for Asia-Pacific manufacturing hubs.

Regulatory Fragmentation Creates Compliance Arbitrage Risks. While the EU pushes forward with CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD), the US SEC's climate disclosure rules remain stayed following March 2025 withdrawal of defense, creating a bifurcated landscape. Investors must navigate companies with varying disclosure obligations depending on their operational footprint.

For portfolio managers, the implications are clear: companies with robust regulation monitoring capabilities will identify compliance risks earlier, access capital more efficiently, and avoid the reputational damage of disclosure failures.

Key Concepts

The Three-Tier Regulatory Architecture

Understanding the current sustainability disclosure landscape requires mapping three distinct but increasingly interconnected tiers:

Tier 1: Mandatory National/Regional Frameworks

  • EU CSRD/ESRS: Affects ~50,000 EU companies and ~10,000 non-EU entities; Wave 1 companies (large listed entities with 500+ employees) began reporting for FY 2024 with disclosures due in 2025
  • California SB 253/261: Applies to companies with $1B+ revenue operating in California
  • Malaysia National Sustainability Reporting Framework (NSRF): Large-cap listed companies (RM 2B+ market cap) began reporting in 2025

Tier 2: Global Baseline Standards

  • ISSB IFRS S1 (General Requirements) and S2 (Climate): Effective January 2024, now adopted by 16 jurisdictions including Turkey, Tanzania, Zambia, Canada, Japan, and Hong Kong
  • GHG Protocol: The foundational standard for carbon accounting, with 750+ pages of technical guidance

Tier 3: Voluntary Frameworks with Market Pressure

  • CDP (formerly Carbon Disclosure Project): 23,000+ companies disclosed in 2024
  • Task Force on Climate-related Financial Disclosures (TCFD): While formally dissolved in 2024, its recommendations live on through ISSB integration
  • Science Based Targets initiative (SBTi): 4,000+ companies with validated targets

Double Materiality Assessment

The EU's CSRD introduces a rigorous double materiality assessment process that investors should understand:

  1. Impact Materiality: Evaluates actual or potential positive/negative impacts on people and environment
  2. Financial Materiality: Assesses risks and opportunities that could materially affect the company's cash flows, access to finance, or cost of capital
  3. Stakeholder Mapping: Identifies affected communities, workers, value chain partners, and ecosystems
  4. Time Horizon Analysis: Considers short-term (<1 year), medium-term (1-5 years), and long-term (>5 years) impacts

Sector-Specific KPI Benchmarks

The following table presents benchmark KPIs for regulation monitoring across key sectors:

SectorPrimary KPIGoodBest-in-ClassData Source
Financial Services% portfolio with TCFD-aligned disclosure>60%>85%CDP Financial Services Report 2024
ManufacturingScope 3 supplier coverage rate>40%>70%SBTi Corporate Manual
EnergyMethane intensity (kg CH4/TJ)<2.5<0.5IEA Methane Tracker
TechnologyData center PUE (Power Usage Effectiveness)<1.4<1.2Uptime Institute
Real EstateBuilding carbon intensity (kgCO2/m²)<50<25CRREM Pathways
Consumer Goods% products with validated carbon footprint>30%>60%Product Environmental Footprint (PEF)

What's Working and What Isn't

What's Working

Automated Regulatory Intelligence Platforms. Companies like IntegrityNext and Sweep have developed AI-powered regulatory tracking that automatically maps new requirements to company-specific obligations. These platforms reduce manual monitoring time by 60-80% while maintaining coverage across 100+ jurisdictions.

Integrated Carbon-Financial Reporting. The Persefoni-Workiva partnership exemplifies successful integration, enabling automated data flow from carbon accounting systems directly into SEC filings and CSRD disclosures. This approach eliminates manual spreadsheet reconciliation and creates audit-ready data trails.

Phased Implementation Strategies. Organizations that adopted a crawl-walk-run approach—starting with Scope 1/2 emissions before tackling Scope 3—achieved compliance readiness 40% faster than those attempting comprehensive coverage simultaneously (Deloitte ESG Survey, 2024).

Cross-Functional Governance. Companies establishing dedicated ESG steering committees with representation from legal, finance, operations, and sustainability functions demonstrated 2.5x higher rates of on-time disclosure completion compared to those relying on siloed sustainability teams.

What Isn't Working

Spreadsheet-Based Compliance Management. Organizations still relying on Excel for regulatory tracking face exponential complexity as disclosure requirements multiply. A single multinational may now face 40+ distinct reporting obligations across different jurisdictions with varying deadlines, formats, and materiality thresholds.

Treating Compliance as a One-Time Project. The regulatory landscape is dynamic: the EU's February 2025 Omnibus Simplification Package proposed reducing CSRD data points by 60% and raising applicability thresholds from 250 to 1,000 employees. Companies that embedded flexibility into their compliance architecture adapted quickly; those with rigid systems faced costly rework.

Underestimating Scope 3 Data Collection Challenges. Despite comprising the majority of most companies' carbon footprints, Scope 3 emissions data remains notoriously difficult to collect. A 2024 CDP analysis found that only 38% of corporate Scope 3 disclosures met basic quality thresholds, with supplier non-response rates exceeding 50% in many sectors.

Ignoring Assurance Requirements. CSRD mandates third-party limited assurance from the first reporting year, with potential escalation to reasonable assurance. Companies that failed to engage auditors early faced last-minute scrambles and qualified opinions.

Key Players

Established Leaders

Workiva (NYSE: WK): The Iowa-based public company provides connected financial and ESG reporting with pre-built templates for GRI, CDP, TCFD, and SASB frameworks. Their 2024 acquisition of Sustain.Life for $100 million expanded carbon accounting capabilities.

Sphera: A comprehensive operational risk and ESG management platform serving heavy industries including manufacturing, chemicals, and energy. Strong capabilities in product stewardship and supply chain transparency.

Wolters Kluwer: The Dutch information services company offers integrated legal, regulatory, and sustainability compliance solutions, particularly strong in EU regulatory tracking.

Bloomberg Terminal ESG: Provides institutional investors with integrated ESG data, controversy alerts, and regulatory filing analysis across 11,800+ companies globally.

Emerging Startups

Watershed: California-based carbon management platform that raised $100 million in Series C funding in February 2024 at a $1.8 billion valuation. Clients include GM, FedEx, Visa, and BlackRock. Strong in net-zero strategy and curated carbon project marketplace.

Persefoni: Arizona-based carbon accounting platform that codified the Partnership for Carbon Accounting Financials (PCAF) standard. Raised $50 million Series C-1 in August 2023 at $300 million valuation, with particular strength in financial services.

IntegrityNext: German supply chain ESG platform with CSRD, EUDR, and CBAM compliance modules. Provides automated supplier assessments with 80+ sustainability criteria.

Greenomy: Brussels-based RegTech startup offering CSRD, VSME, and EU Taxonomy alignment with generative AI support for disclosure drafting.

Key Investors & Funders

TPG Rise Climate: The $7.3 billion climate-focused fund led Persefoni's Series C-1 and has deployed capital across carbon accounting, grid storage, and sustainable agriculture.

Breakthrough Energy Ventures: Bill Gates-backed fund investing in hard-to-abate sector solutions, including regulatory technology enabling industrial decarbonization tracking.

Generation Investment Management: Al Gore's sustainable investment firm with $45 billion AUM, actively investing in ESG data and analytics infrastructure.

European Investment Bank (EIB): The EU's climate bank has provided financing for RegTech startups through its innovation programs, supporting EU Green Deal implementation.

Examples

1. Unilever's Integrated Compliance Architecture

The Anglo-Dutch consumer goods giant implemented a unified regulatory intelligence platform in 2024 that monitors disclosure requirements across 70+ jurisdictions where it operates. Key features include automated alerts for regulatory changes, centralized document management with version control, and real-time dashboards showing compliance status by entity. The system identified the EU's proposed Omnibus simplification package within 24 hours of publication, enabling immediate assessment of operational implications. Result: 30% reduction in compliance personnel time and zero missed disclosure deadlines in 2024-2025 reporting cycles.

2. Temasek's Portfolio-Wide ESG Monitoring

Singapore's sovereign wealth fund developed a proprietary regulatory risk scoring system that evaluates each portfolio company against applicable sustainability disclosure requirements. The system assigns risk scores based on operational footprint (which jurisdictions), company size (applicability thresholds), sector (materiality topics), and current disclosure maturity. Portfolio companies receiving "high regulatory exposure" scores are provided with dedicated support resources and quarterly check-ins. Result: 85% of portfolio companies achieved ISSB-aligned disclosure readiness ahead of Singapore's expected mandatory adoption timeline.

3. Toyota's Scope 3 Supplier Integration Program

Facing extensive Scope 3 disclosure requirements under both Japanese SSBJ standards and EU CSRD (through European subsidiaries), Toyota launched a tiered supplier engagement program in 2024. Tier 1 suppliers (800+ entities representing 80% of procurement spend) received standardized carbon reporting templates, training webinars, and access to discounted carbon accounting software. Tier 2 suppliers received industry benchmark data and simplified reporting tools. The program achieved 72% Tier 1 supplier response rate within 12 months, compared to an industry average of 45%. Result: CSRD-compliant Scope 3 disclosure for FY 2024 European operations with limited assurance obtained.

Action Checklist

  • Week 1-2: Regulatory Scoping – Map all entities against jurisdiction-specific disclosure requirements (CSRD, ISSB, state laws); identify Wave applicability and timelines
  • Week 3-4: Double Materiality Assessment – Conduct stakeholder mapping and identify material sustainability topics using EFRAG implementation guidance
  • Week 5-6: Gap Analysis – Compare current data availability against ESRS/ISSB disclosure requirements; prioritize high-materiality gaps
  • Week 7-8: Technology Selection – Evaluate and select regulatory monitoring and carbon accounting platforms; negotiate enterprise agreements
  • Week 9-10: Data Infrastructure – Establish automated data collection processes for emissions, water, waste, workforce metrics; integrate with ERP systems
  • Week 11-12: Governance & Controls – Document internal controls for ESG data; establish review workflows; engage external assurance provider for pre-assessment
  • Ongoing: Regulatory Intelligence – Configure automated alerts for regulatory changes; establish quarterly review cadence with legal and sustainability teams

FAQ

Q: Our company operates in Asia-Pacific with no EU subsidiaries—does CSRD still apply to us?

A: Potentially, yes. CSRD applies to non-EU companies that generate €150 million or more in EU revenues for two consecutive years AND have either a large EU subsidiary or an EU branch generating €40 million+ in revenue. Additionally, your EU customers may request CSRD-aligned data to meet their own Scope 3 disclosure requirements. The February 2025 Omnibus proposal may raise this threshold to €450 million, but until finalized, the original thresholds apply.

Q: How should we prioritize between ISSB standards and jurisdiction-specific requirements like CSRD?

A: The ISSB provides a global baseline, while CSRD represents a "building block plus" approach with additional EU-specific requirements. Practical strategy: build your disclosure architecture around ISSB S1/S2 as the foundation, then layer on jurisdiction-specific additions (CSRD's impact materiality, EU Taxonomy alignment, etc.). Joint EFRAG-ISSB guidance published in May 2024 maps interoperability between frameworks.

Q: What's the realistic budget for implementing a regulation monitoring capability?

A: For mid-market companies (500-5,000 employees), expect $50,000-$200,000 annually for software licensing, plus equivalent internal personnel costs for implementation. Enterprise organizations ($5,000+ employees, global operations) typically invest $200,000-$500,000+ in software plus dedicated FTEs. ROI typically materializes through reduced audit fees, avoided penalties, and improved capital access terms.

Q: How do we handle the uncertainty around SEC climate rules given the current litigation?

A: While the SEC's climate disclosure rules remain stayed with uncertain future, prudent companies are preparing anyway for three reasons: (1) California SB 253/261 applies to many US companies regardless of SEC action; (2) institutional investors increasingly require TCFD/ISSB-aligned disclosure as a condition of capital; (3) the SEC's 2010 climate guidance remains in effect, and staff may issue comment letters on material climate risks in existing filings.

Q: What level of assurance should we plan for, and when?

A: CSRD requires limited assurance from Year 1, with potential escalation to reasonable assurance based on future EU decisions. ISSB-aligned jurisdictions are implementing similar requirements. Practical approach: engage your auditor during the planning phase (not after drafting disclosures) to align on evidence requirements, control documentation, and materiality thresholds. Budget 15-25% of overall compliance costs for assurance fees.

Sources

Topics

biomaterialsstandardscarbon intensityScope 3opex

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