Global ESG regulations and their impact on European companies

While the implementation of the CSRD in Europe is stalling due to political discussions around the Omnibus Directive, other countries around the world are actively advancing their ESG regulations. China, Brazil, Canada, Australia, and many others are introducing new reporting requirements – often based on the ISSB standards – increasingly establishing ESG reporting as an international minimum standard.

For internationally operating companies from the EU, this creates an urgent need for action: local subsidiaries and branches will be required to report in accordance with country-specific ESG regulations in the future, regardless of how regulatory requirements evolve at the EU level and whether the European CSRD applies to them.

As a result, globally active companies are now compelled to address various ESG requirements and to adapt their data, processes, and reporting structures accordingly.

Overview of adopted ESG regulations worldwide

While Europe remains in regulatory limbo due to the current Omnibus dispute and the sluggish CSRD/ESRS implementation, other countries are actively driving forward ESG reporting requirements. Especially outside the EU, several national standards have already been adopted, which have significant implications for German, Italian, Dutch, and all other European companies with subsidiaries, branches, or business operations on the ground. The following is an overview of the most important ESG regulations that have been adopted so far:
 

India – Business Responsibility and Sustainability Report (BRSR)

India has introduced the Business Responsibility and Sustainability Report (BRSR), a national ESG standard mandatory for the top 1,000 listed companies. The standard is GRI-oriented, with partial alignment to ISSB requirements. ESG-relevant information must be reported for the financial year 2022–23, with market capitalization on the NSE/BSE as the size criterion. For companies with listed Indian subsidiaries, this results in a local reporting obligation.
 

Singapore – Sustainability Reporting Requirements (ACRA/SGX)

Singapore has introduced Sustainability Reporting Requirements, based on ISSB (IFRS S1/S2). From 2025, listed companies on the SGX will be required to report, followed by large, non-listed companies from 2027. The criteria are capital market orientation and revenue size. The regulation particularly requires the disclosure of Scope 1 and Scope 2 emissions. For European companies with holdings or branches in Singapore, ESG data must be reported locally in line with ISSB standards by 2025 at the latest.

Canada – Canadian Sustainability Disclosure Standards (CSDS)

Canada has adopted the Canadian Sustainability Disclosure Standards (CSDS). Companies can voluntarily choose to apply the standards. From January 1, 2025, reports can be submitted. The CSDS are ISSB-based and provide companies with transition periods to adjust to the new requirements. The regulation is especially relevant for companies seeking ESG transparency advantages in financing and capital market activities – a trend that also impacts international business partners and Eruopean corporate subsidiaries in Canada.
 

Australia – Australian Sustainability Reporting Standards (ASRS)

Australia has introduced the Australian Sustainability Reporting Standards (ASRS), another ISSB-compatible standard. Reporting will start from January 1, 2025, for companies with revenues over AUD 500 million. The ASRS requires disclosure of climate-related financial information. Large corporations and listed firms are affected. For German companies and other businesses within the EU with Australian branches, this could also result in local ESG reporting obligations.

Mexico – Normas de Información de Sostenibilidad

Mexico has adopted its Normas de Información de Sostenibilidad, introducing mandatory ESG reporting for private companies that publish financial statements. From January 1, 2025, affected companies must disclose their ESG information according to Mexican standards. The regulation is independent but ISSB-inspired, with a moderate degree of international similarity. For companies with private subsidiaries in Mexico, this means an additional ESG reporting process, independent of any potential CSRD obligations in Germany.

Japan – SSBJ Sustainability Disclosure Standards

Japan has introduced its SSBJ Sustainability Disclosure Standards, closely aligned with ISSB IFRS S1 and S2. From the 2025 fiscal year, application will initially be voluntary, becoming mandatory from 2027 – targeting listed companies on the TSE Prime Market with a market capitalization exceeding JPY 3 trillion (approx. EUR 18 billion). For European companies with listed holdings in Japan or close capital market ties, this brings new disclosure obligations.

Turkey – SPK-ISSB Reporting Requirement (2024)

Turkey has also introduced ESG reporting requirements through the SPK-ISSB Reporting Requirement. From January 1, 2024, capital market-oriented companies with revenues exceeding TRY 500 million, balance sheets over TRY 250 million, or more than 250 employees are required to disclose ESG information. The standard is based on TCFD and ISSB, affecting both domestic and foreign companies with subsidiaries or branches in Turkey. Its early introduction makes Turkey a regional pioneer.
 

ESG regulations in development and pilot phase worldwide

Alongside the ESG reporting requirements that have already been adopted, numerous countries are currently working on their own sustainability reporting standards. Many of these are aligned with ISSB guidelines (IFRS S1/S2) and emphasize climate-related financial disclosures. For internationally active German companies, respectively, all European companies, it is crucial to monitor these developments early, as implementation dates have already been announced in many regions.
 

China – CSRC and SSE Drafts

China is preparing to introduce mandatory ESG standards for listed companies and major financial institutions. Two drafts have already been published: the CSRC Draft for capital market-oriented companies and the SSE ESG Disclosure Standard for firms listed on the Shanghai Stock Exchange. Both are closely aligned with ISSB standards and TCFD recommendations. Mandatory application is planned for 2025. Initially, companies in the Prime Segment and large financial institutions will be affected. Firms with listed subsidiaries or capital market activities in China face imminent reporting obligations.

Brazil – CVM-ISSB Reporting Requirement

Brazil is developing mandatory ESG reporting requirements for listed companies, aligned with IFRS S1 and S2. The CVM-ISSB Reporting Requirements are expected to come into effect for the 2026 financial year. All capital market-oriented companies on the B3 Stock Exchange will be affected. Companies in Germany, Italy, Austria, the Netherlands, and all the other companies within the EU, with listed holdings or capital market ties in Brazil should start preparing for the new disclosure requirements early.

United Kingdom – UK SDR/ISSB Reporting

The United Kingdom is planning ISSB-based ESG reporting requirements for large capital market-oriented companies and financial institutions through its UK Sustainability Disclosure Requirements (SDR). The standard is currently under consultation, with implementation announced for 2025/2026. Key areas include climate-related risks, Scope 1 to Scope 3 emissions, and governance disclosures. For companies with UK subsidiaries or capital market activities, the SDR is an early relevant development.
 

Nigeria – ISSB-Alignment Disclosure Standard

Nigeria has been testing an ISSB-Alignment Disclosure Standard since 2024, based on IFRS S1 and S2. Mandatory application has not yet been officially scheduled, but initial pilot reports are already being prepared. Large, capital market-oriented companies and financial institutions are affected. European firms with subsidiaries in Nigeria should actively monitor these developments, as a mandatory requirement is likely imminent.

 

ESG reporting obligations in the USA temporarily halted

Unlike many other countries, the US Securities and Exchange Commission (SEC) had ambitious plans for comprehensive ESG reporting obligations for listed companies, particularly concerning climate-related financial information. The draft SEC Climate Disclosure Rule was originally scheduled to become mandatory in 2025. However, following significant criticism from business and politics, along with legal challenges, the regulatory process has been indefinitely halted.

For companies with US subsidiaries or stock listings, this currently offers a temporary reprieve – but ESG reporting remains a relevant topic in the US: many investors and rating agencies continue to demand voluntary ESG disclosures, often based on ISSB, TCFD, or GRI standards. Additionally, individual US states may establish their own ESG regulations.

Potential impacts on companies with international business

The international ESG regulations have direct consequences for European companies with subsidiaries, branches, and business partners in affected countries. We have summarized five key issues and their potential impacts:
 

Hypothetical example: German company with a subsidiary in China

To better illustrate the practical effects of international ESG regulations, the following fictional example shows how a German company with a subsidiary in China might be affected by current and future ESG requirements.

Example Company Profile

ESG reporting obligation assessment
 

1. Direct obligation through capital market orientation
Is the subsidiary capital market-oriented (e.g. IPO or bond issuance on a Chinese stock exchange)?

Answer: No
Consequence: No direct obligation through the Chinese CSDS (currently)


2. Direct obligation through ESG-specific regulations
Does the subsidiary fall under Chinese ESG obligations due to sector-specific regulations or environmental requirements?

Answer: Yes, as the chemical industry is one of the regulated sectors
Consequence: Potential reporting obligations regarding environmental requirements, government investments, or industry-specific rules

3. Indirect obligation via supply chain laws
Must the subsidiary provide ESG data because it is part of the supply chain for ESG-reporting companies?

Answer: Yes, possible
Consequence: The Chinese subsidiary may be required to fulfill ESG obligations to supply customers such as Chinese automotive manufacturers, who themselves are subject to CSDS reporting requirements

This example illustrates that ESG reporting obligations do not only affect capital market-oriented companies directly. Subsidiaries in regulated industries or companies integrated into ESG-relevant supply chains can also be subject to local disclosure requirements. For internationally operating corporate groups, this means keeping track of diverse regulations, harmonizing ESG governance globally, and proactively integrating potential reporting obligations into their group-wide structure.
 

What companies need to do now

The growing ESG requirements from international markets like China, India, and Mexico increase the pressure to act for companies with international subsidiaries. To minimize risks and avoid inefficiencies in reporting, companies should prioritize the following actions:
 

• Gain an overview of relevant ESG regulations
  Systematically record in which countries subsidiaries or joint ventures are located and what ESG obligations apply or have been announced there. Feel free to use Envoria’s Excel template for tracking international ESG regulations.
• Compare standards and align requirements
  Analyze differences and overlaps between CSRD, ISSB, SEC requirements, and local standards such as China’s CSDS.
• Map ESG KPIs and reporting obligations
  Create a mapping that shows which KPIs are required for which standards and how existing data sources can be used or expanded.
• Establish global ESG data structures
  Implement consistent data models and IT systems to record, verify, and consolidate ESG data internationally in a uniform way.
• Define and harmonize group-wide ESG reporting processes
  Set clear roles, responsibilities, and timelines for data collection and reporting – both for CSRD and for local reporting standards.
   
   

Conclusion: global ESG reporting requirements need a strategic master plan

For German companies and all other European businesses, ESG reporting obligations no longer stop at national or European borders. Those operating internationally must keep an eye on global developments and align their reporting systems accordingly. Isolated measures are no longer enough – what’s needed is an integrated approach that interlinks international standards, local requirements, and the company’s group-wide ESG strategy.

The earlier companies start creating transparency around their global ESG obligations, establishing international ESG data collection structures, and adapting processes accordingly, the better they can manage risks, reduce effort, and seize opportunities in international markets.