Fewer constraints, more value: why a regulatory slowdown is the perfect moment to accelerate on ESG

In a global economic landscape evolving at unprecedented speed, sustainability has ceased to be a mere bureaucratic obligation and has become a new driver of competitiveness. We are witnessing a fundamental paradigm shift: while regulatory pressure is currently easing and offering new flexibility, it is the market that is now delivering decisive momentum—turning the ecological transition into an unavoidable strategic choice for those looking to the future.

Until recently, ESG reporting was largely driven by legal obligations. Today, however, it is investors, banks, and global value chains that reward companies capable of demonstrating resilience and long-term vision. In this context, fewer regulatory constraints do not mean less commitment, but rather the freedom to interpret sustainability in a tailored and profitable way. It is no longer about complying with a form, but about seizing an opportunity: innovating processes and business models to respond to a market that recognizes real—even economic—value only in those who choose transparency and ESG robustness.

For years, the primary push toward ESG transparency stemmed from fear of sanctions or the need to comply with increasingly stringent regulatory standards. This compliance-driven approach often led companies to view sustainability as a cost or an administrative burden.

Today, the partial reduction in regulatory pressure gives companies time and space to reflect. Those that choose not to stop in the absence of immediate obligations are discovering that sustainability, when embedded into the core business, becomes a powerful tool for risk management and process optimization. It is no longer about filling out a template, but about analyzing how the company impacts the world—and how the world impacts the company.

For a credit institution or a private equity investor, a company that monitors its energy consumption, ensures social equity, and adopts strong governance is inherently less risky. This translates into what experts call a “premium price”: investors are willing to pay more for companies with strong ESG profiles, while those that ignore these factors risk suffering a “brown discount”—a devaluation linked to perceptions of obsolescence and vulnerability.

Although SMEs are often exempt from major reporting obligations, they operate within global supply chains where large players require reliable data for their sustainability reports. In this environment, accountability becomes a prerequisite for access to both markets and credit.

The real leap forward occurs when companies move from a static snapshot of the past to a dynamic vision of the future. Traditional monitoring tools often focus on basic metrics and historical data. True competitiveness, however, requires integrating qualitative dimensions: Which policies are we adopting? How are we managing social risks within our supply chain?

Two key areas are emerging with increasing importance:

1. The social dimension (S): Topics such as Diversity, Equity & Inclusion (DEI) and pay equity are no longer merely ethical concerns, but drivers of talent attraction and operational efficiency.
2. The supply chain: Assessing supplier sustainability has become essential to prevent production issues related to product or service quality, reputational scandals, and operational disruptions.

Addressing the ecological transition primarily means managing data. The ability to collect, analyze, and interpret ESG information with the same rigor applied to financial data is what truly makes the difference.

The goal should not be the formal perfection of a report, but the activation of a “new lens” through which every business decision is viewed. Mitigating negative impacts and enhancing positive ones is not a theoretical exercise—it is a way to innovate products and services, making them more suitable for a world that no longer tolerates inefficiency.

In conclusion, reduced regulatory pressure should not be interpreted as an invitation to disengage, but as a call to strategic action. Companies that anticipate change and use technology to simplify sustainability complexity will be the ones leading the market in the decades to come.

Aware that the path to sustainability can appear fragmented, Modefinance—part of the TeamSystem Group—has developed a suite of tools designed to transform ESG data complexity into strategic business assets through four vertical solutions:

• ESG Automated: The ideal solution for those needing fast, scalable assessments across large portfolios. It simplifies sustainability analysis by automating data collection and providing immediate scoring. Perfect for companies mapping their supply chains or institutions assessing large client bases without overburdening internal processes.
• ESG Advanced: For deeper insight into corporate performance, this module evaluates sustainability by analyzing company policies and concrete actions. It integrates quantitative data with a structured qualitative component, offering a granular view for organizations that use ESG not just for compliance, but as a lever for operational improvement.
• ESG Rating: The pinnacle of our methodological approach. Modefinance’s ESG Rating delivers a transparent assessment of a company’s exposure to environmental and social risks, as well as the effectiveness of its governance in managing them—providing a reliability benchmark recognized by the financial market.
• GHG Nowcasting: One of the most complex aspects of the transition is carbon footprint measurement. Through its proprietary GHG Nowcasting methodology, Modefinance can estimate greenhouse gas emissions (Scopes 1, 2, and 3) even when precise disclosed data is unavailable. Using AI-driven algorithms, macroeconomic and sector variables are transformed into accurate estimates, enabling companies to measure and monitor their climate impact in real time.

Would you like to explore how these solutions can support your growth and/or request a demo with our experts?