MANDATORY SUSTAINABILITY REPORTING – EVOLUTION OF REGULATION IN THE EUROPEAN UNION

In times of climate changes, social inequality and resource scarcity, responsible corporate governance is essential for sustainable global economic development. The importance of sustainability reporting lies in the fact that companies present their ecological, social, and economic impacts transparently to stakeholders and take responsibility for their actions. Through such reports, companies can show how they integrate sustainability aspects into their business strategy, implement them in their business activities and what progress they are making. Until the 2008 financial crisis, corporate sustainability reporting in the EU was based on voluntary reporting, but this was replaced by mandatory sustainability reporting because of the lessons learned from the financial crisis. The reasons for this included the fact that the voluntary principle of sustainability reporting only provided the hoped-for impetus for corporate management geared towards sustainability aspects to a limited extent and that the EU's political will to transform the economy and society into a sustainable one is intended to channel capital flows into sustainable companies and business activities by means of increased transparency. The aim of this paper is to show the current development of the EU Regulation on the road to mandatory sustainability reporting.