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

Abstract

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