Regulatory Pressure and Corporate Sustainability: How Policy Changes Influence Business Strategies and Profitability

Abstract

This study explores how evolving regulatory frameworks influence corporate sustainability strategies and financial performance. Against the backdrop of the EU’s Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy, and the German Supply Chain Due Diligence Act, the research investigates how companies adapt strategically and operationally to increasing regulatory demands. Using a qualitative methodology based on expert interviews across diverse industries, the study reveals that while regulatory compliance often imposes short-term financial and organizational burdens, it can also catalyze innovation, strategic repositioning, and long-term value creation. The findings highlight the heterogeneity of corporate responses, shaped by internal governance, industry context, and leadership commitment. The study concludes with practical recommendations for both policymakers and corporate leaders, emphasizing the need for clearer regulatory guidance, robust ESG data infrastructures, and the cultural integration of sustainability within organizations.