A new study by University of Cambridge students and DNV finds companies are leveraging ESG policies to strengthen business performance, despite regulatory uncertainty.
According to the “Beyond compliance: Unlocking strategic value through sustainability regulations” report, with mounting environmental challenges, shifting investor expectations, and rapidly evolving regulatory frameworks, Environmental, Social, and Governance (ESG) reporting has become a business imperative.
But for truly forward-looking organizations, ESG is no longer about meeting minimum compliance thresholds. It’s about leveraging ESG as a catalyst for innovation, resilience, and long-term value creation.
Regulatory field surrounding ESG obligations
2025 will be a pivotal year as new reporting requirements, the harmonization of standards, and enhanced accountability are poised to reshape the ESG landscape. The International Sustainability Standards Board (ISSB) sustainability disclosure standards (IFRS S1 and S2) continue to influence consistent and transparent sustainability reporting across jurisdictions; countries including Canada, China, Australia, Singapore and the United Kingdom have aligned their sustainability reporting to ISSB standards.
Meanwhile, the European Union (EU) has introduced an ‘Omnibus simplification package’ to harmonize and streamline the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Border Adjustment Mechanism (CBAM), and the EU Taxonomy. The proposal seeks to minimize redundancy in datapoints and foster consistency across sustainability initiatives.
While the details are still being negotiated, there is significant debate about how far the simplification package should go. Interoperability between ISSB and CSRD will facilitate a coherent approach, enabling organizations to comply effectively across sectors and regions. As the ESG landscape transforms, it is critical to focus on how these changes are impacting the organizations they target.
To understand the strategic impact of ESG regulatory compliance, the study surveyed 43 organizations from around the globe, representing 15 sectors. The survey examined changes in awareness, engagement, and focus on sustainability. In this report we go beyond the basics of compliance and dive deep into whether businesses see strategic benefits from ESG reporting obligations.
The survey found that 72% of respondents believe ESG compliance has increased their organization’s value to investors or shareholders.
Each of these improvement areas plays a pivotal role in enabling long-term ESG maturity:
Integrating sustainability into financial processes is not just about accounting for ESG-related costs; it’s about redefining value creation. Forward-thinking organizations are embedding ESG into capital allocation, risk assessments, and long-term investment planning.
Data infrastructure remains a foundational challenge. Many organizations still lack the systems to collect, manage and report ESG data with the rigor and speed expected by regulators and investors. Investing in scalable digital tools and analytics will enable better benchmarking, transparency, and informed decision-making.
Supply chain visibility has become non-negotiable. As due diligence requirements extend beyond Tier 1 suppliers, businesses must map and monitor their supply chains to ensure ethical, environmental, and operational compliance.
Workforce training ensures ESG is embedded in daily operations. Without shared understanding and engagement at all levels, even the most ambitious sustainability strategies can falter. Upskilling employees on ESG standards, frameworks, innovations and impacts is essential.
Demand for clearer and streamlined frameworks points to the confusion created by fragmented global regulations. Harmonization of standards and practical implementation support will empower companies to act with greater clarity and confidence.
Financial incentives including subsidies, tax relief, or innovation grants can accelerate investment in clean technologies, circular business models, and socially inclusive practices, particularly for small and medium-sized enterprises.
Ultimately, strategic investment in these areas will not only help organizations meet ESG requirements but will position them to lead in a future where transparency, accountability, and sustainability are critical to long-term competitiveness.
Align ESG strategy with business strategy
Ensure ESG is embedded into corporate goals, not siloed as a reporting function. Integrate sustainability into financial planning, risk management, and operational decision-making.
Treat data as a strategic asset
Invest in tools and talent to improve ESG data quality, granularity, and traceability, particularly across complex value chains.
Activate culture and capability
Equip leaders and staff with ESG knowledge and empower them to identify innovation opportunities aligned with sustainability strategies.
Engage stakeholders transparently
Use ESG reporting as a platform to build trust with investors, customers, and communities. Demonstrate both intention and measurable impact.
Measure beyond regulation
Establish KPIs that go beyond regulatory checkboxes. Track ESG’s contribution to revenue growth, brand strength, employee retention, and innovation.
