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Thirty years after Maastricht: financial integration in the European Union

This paper explores financial integration dynamics in the EU since the Maastricht Treaty by providing an articulated and structured historical narrative that analyses the progress that the EU has made in building the regulatory...

Mandatory sustainability reporting has become a key policy tool in the EU’s sustainable finance agenda to enhance the quality, transparency and comparability of sustainability information disclosed by companies. A notable example is the recently adopted Corporate Sustainability Reporting Directive (CSRD), which requires companies to provide investors and other stakeholders with relevant and comparable information on their sustainability performance, risks and impact based on a specific set of sustainability reporting standards. Whereas the CSRD aims to strengthen the mandatory character of the EU sustainability reporting framework, the reporting standards adopted in July 2023 by the European Commission (EC) uncover a more flexible and somewhat hybrid regulatory approach, containing both mandatory and voluntary elements. In this policy paper, we provide an overview of the evolution of the EU sustainability reporting framework and analyse the tension between mandatory and voluntary features in the reporting standards adopted by the EC. Will greater flexibility in environmental, social and governance (ESG) disclosure requirements lead to the profound environmental, economic and social changes demanded by the EU’s sustainable finance agenda objectives? Or will the CSRD turn sustainability disclosure into a “cherry picking” and ‘tick-the-box’ exercise, overlooking the very essence of having a positive impact on sustainability?

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