Regulating for sustainability: disclosure and due diligence mandates as drivers of organisational change

The general objective of this dissertation is to deepen the understanding of the extent to which sustainability regulation can operate as a transformative instrument, capable of steering business organisations—whose impacts are salient for sustainable development—towards the implementation of sustainability principles and practices. In doing so, the dissertation also examines the capacity of regulatory instruments to provide a framework for modelling business systems, that is, to configure the organisational processes, routines, controls and decision arenas through which sustainability is identified, managed and rendered decision-relevant. This thesis includes three investigations that explore this question through complementary theoretical and methodological approaches. In particular, each investigation examines, respectively: (i) the potential and limits of the emerging European sustainability reporting architecture to address severe social equity concerns—focusing on modern slavery risk and the interplay between reporting standards and due diligence logics; (ii) the characteristics and limitations of mandatory environmental, social and governance (ESG) risk disclosure as a regulatory transparency device—using the U.S. Securities and Exchange Commission (SEC) regime as an instructive benchmark for understanding what regulation tends to produce at the level of disclosure outputs; and (iii) the organisational responses and change trajectories potentially activated by the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS) in a high-sensitivity sector (Aerospace and Defence sector, A&D)—analysing how a mandatory reporting may trigger internal reconfiguration and whether such responses remain procedural or evolve toward deeper forms of organisational change. Accordingly, each chapter contains one of these investigations. The first chapter, informed by critical accounting and normativity perspectives, concludes that reporting requirements can raise awareness and structure corporate attention to modern slavery, yet they risk stabilising symbolic compliance unless complemented by robust due diligence obligations and enforcement capacity, as envisaged by the Corporate Sustainability Due Diligence Directive (CSDDD). The second chapter, based on a structured content analysis of mandatory risk disclosures, shows that mandatory ESG risk reporting may become generic, mimetic and liability-shaped, thereby increasing disclosure volume without necessarily generating decision-useful specificity or proactive mitigation commitments. The third chapter, drawing on an integrated framework that combines Oliver’s strategic responses and Laughlin’s models of organisational change, finds that early responses to CSRD/ESRS are hybrid and dynamic—moving from anticipatory to pragmatic acquiescence while coexisting with compromise and manipulation—and that double materiality functions as a key mechanism for structuring internal sensemaking and legitimising sustainability within business functions. However, the case study indicates that, in contexts characterised by strong interpretive schemes and high organisational maturity, the outcome may consolidate as advanced reorientation (morphostatic change) rather than full interpretive transformation (morphogenesis/colonisation). Overall, this dissertation reflects on the central mechanisms and conditions through which sustainability regulation can (or cannot) become a durable norm of practice and a driver of organisational transformation. Across the three studies, the findings suggest that the transformative potential of the European regulatory project is simultaneously enabling and fragile: it is enabling insofar as it can configure internal systems—particularly through double materiality and due diligence logics—but fragile insofar as sectoral constraints, organisational ideologies, compliance burden, and institutional uncertainty may redirect regulatory ambition toward procedural compliance rather than substantive sustainability change.