The only way is forward on sustainability

As the world turns its attention to Baku for COP29, where governments, businesses, and stakeholders gather to address the mounting climate crisis, the tension between rhetoric and action is palpable. From environmental degradation, natural disasters, weather extremes, and food and water insecurity, to economic disruption, the stakes are unmistakable: our planet’s future hinges on turning words into actions, and the discussions at Baku reflect the undeniable role that governments, businesses, and societies must play in forging a resilient future. 

Among the regions with the potential to drive transformative action, the European Union is at the forefront of shaping sustainability-related legislation. Yet, last week, EU lawmakers announced an initiative to consolidate various environmental, social and governance obligations into a single regulation aiming at watering down the sustainability regulatory landscape. This includes the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive, which are defining pieces of legislation aimed at transforming corporate accountability and aligning business practices with environmental and societal needs. Some member states were already seeking to avoid adapting the directive into national law, and others were speaking about placing a moratorium on its implementation, framing them as useless red tape

These events—one pushing for progress, the other stalling it—are not unrelated. The interdependence between international climate goals and local action is clear: without robust frameworks like the CSRD and the CSDDD, efforts to align business practices with planetary needs falter. 

As stewards of the B Corp movement, we remain firm in our belief that we cannot build a sustainable economy unless we ensure that businesses are transparent about and accountable for their impact on society and the environment. Across regions, B Lab advocates for political and governmental action on economic systems change to push for meaningful legal change around corporate accountability and social and environmental impact. In Europe, this advocacy took shape through the Interdependence Coalition, an initiative supported by B Lab Europe to influence key sustainability legislation. With over 300 signatories from European businesses, the coalition underscored the urgent need for clear, enforceable rules that hold directors of large businesses accountable for their significant impact on people and the planet.

The companies we work with opt for a better way of doing business. With over 9,300 Certified B Corps worldwide our collective experience highlights the feasibility and benefits of integrating comprehensive sustainability indicators into business strategies, and our standards provide a roadmap for how corporate accountability can build a more sustainable and equitable economy. 

B Lab analysis of companies data in the B Impact Assessment—B Lab’s tool for measuring, managing, and improving positive impact performance for environment, communities, customers, suppliers, employees, and shareholders—and independent studies demonstrate the benefits of corporate sustainability management. Notably, B Corps report increased employee retention and experience enhanced financial resilience, showcasing how sustainability efforts can translate into financial performance improvements.

Some organizations prioritize sustainability because it aligns with their values, irrespective of its immediate financial benefits. For many B Corps and responsible companies, managing sustainability reflects a commitment to societal and environmental stewardship. They believe in balancing benefits to their shareholders with those of other impacted stakeholders (like workers, suppliers, and the communities where they are located) to achieve optimal results - otherwise known as stakeholder governance. 

Others see sustainability management as a strategic way to manage risk (so-called ‘enlightened shareholder value’). They might be worried about long-term systemic risks, such as the deterioration of social cohesion or the impact of rising temperatures on agricultural yields. And they might also be focused on shorter-term impacts that are already happening today, like increasingly severe storms or the precarity of our electric grids. Companies that neglect these factors risk overlooking significant opportunities and threats, which can hinder their ability to adapt to evolving market dynamics and stakeholder expectations. As sustainability factors acquire ever more importance, companies that fail to integrate them may face increased challenges and diminished competitiveness. 

The CSRD and ESRS provide crucial frameworks for identifying impacts, assessing risks, and unlocking opportunities across workforces, clients, communities, and the environment. More than compliance tools, these standards are blueprints for resilience, innovation, and trust-building in an era of mounting environmental and social challenges. Companies with sustainability strategies are better positioned to navigate transition risks, capture emerging opportunities, and foster a culture of innovation and trust. As organizations face increasing environmental and social challenges, adopting the CSRD and ESRS frameworks is not only prudent but essential for long-term success. Walking back on this legislation will adversely impact companies and investors far beyond the European continent.

The European Union is credited with playing a leading role globally in determining how businesses must align their operations with the planet and its people’s long-term needs. Laws like the General Data Protection Regulation (GDPR) have shifted business norms all over the world. Now is the time for the European Parliament to embrace its leadership role, not shirk it. 

Member states should hold firm to the agreed European-wide commitment to ensure companies are held accountable through reporting on their impact on people and the planet. To renege on these agreements would betray the democratic process and the trust of the EU’s 750 million citizens, who overwhelmingly expect businesses to operate in the broader interests of society and the planet, as was revealed in the initial consultation report to what became the CSDDD.

This is not just a matter of moral obligation—it’s a pragmatic imperative. Ultimately, flip-flopping will not help politicians’ standing with business leaders either, who want predictability and transparency so that they can plan and manage their companies responsibly. 

Now is the time for courage. We urge the governments of Europe, and all global leaders gathering at COP29, to seize this moment to create an economy that is truly for the benefit of our people, our businesses, and our common nature and habitat.