LAYER 4: POLICY & GOVERNANCE
Policy & Governance
The rules of the game – regulation, standards, and the principles beneath.
IN THIS SECTION
In 30 Seconds
Layer 4 is where sustainability becomes codified. Regulations, standards, and frameworks that define what organisations must (and should) disclose, commit to, and demonstrate.
Mandatory: CSRD (EU), ISSB (global baseline), national regulations – what you must do.
Voluntary: SBTi, SBTN, TNFD, CDP, GRI – what leading organisations choose to do.
The pattern: What's voluntary today becomes mandatory tomorrow. TCFD was voluntary – now it's embedded in CSRD. Understanding governance trajectories is strategic advantage.
Where This Fits
Policy & Governance is Layer 4 in our 5-layer sustainability model:
L4 translates science into requirements – connecting planetary boundaries (L1) and ecosystem realities (L2-L3) to corporate obligations (L5). Every disclosure framework requires data that flows up from the layers below.
The Framework Landscape
Mandatory Disclosure
What you must do
- CSRD (EU) – Corporate Sustainability Reporting Directive. Double materiality, detailed standards (ESRS), phased rollout from 2024.
- ISSB/IFRS S1 & S2 – Global baseline for sustainability disclosure. Climate-first, investor-focused, jurisdictional adoption ongoing.
- UK SRS – UK Sustainability Reporting Standards (coming 2025). ISSB-aligned with UK-specific requirements.
- SEC Climate Rules – US climate disclosure (delayed, contested).
Voluntary Frameworks
What leaders choose to do
- SBTi – Science Based Targets initiative. Net zero pathways aligned with 1.5°C. Increasingly table stakes for corporates.
- SBTN – Science Based Targets for Nature. Freshwater, land, biodiversity, ocean targets. Emerging but growing fast.
- TNFD – Taskforce on Nature-related Financial Disclosures. Nature risks and dependencies. Likely to follow TCFD path to mandatory.
- CDP – Global disclosure platform. Climate, water, forests. Supply chain transparency driver.
Global Frameworks
The overarching goals
- UN SDGs – 17 Sustainable Development Goals. Widely referenced, sometimes superficially. Most meaningful when linked to material impacts.
- Paris Agreement – 1.5°C target underpinning all climate frameworks.
- Kunming-Montreal GBF – Global Biodiversity Framework. 30x30 target, nature-positive by 2030.
Underpinning Principles
The logic beneath the rules
- Polluter Pays – Those who cause harm bear the cost
- Precautionary Principle – Act before certainty when stakes are high
- Lifecycle Thinking – Full value chain impact assessment
- Waste Hierarchy – Prevent > Reuse > Recycle > Recover > Dispose
- Double Materiality – Impact on company AND impact on world
The Voluntary → Mandatory Trajectory
Understanding governance trajectories is strategic advantage. Today's voluntary commitment is tomorrow's regulatory requirement.
Strategic implication: Organisations that adopt voluntary frameworks early build capability before competitors are forced to catch up.
The Policy Landscape
Policy isn't just something you comply with – it's something you engage with and help shape. Understanding the political context helps you navigate uncertainty and position strategically.
UK Policy Trajectory
- 2050 trajectory: Solid – cross-party consensus on net zero destination
- 2030 pathway: Steeper – near-term targets require acceleration
- Quality over quantity: Not more policy, but better-aligned policy
- Lever alignment: Regulatory instruments not yet fully aligned with each other
Political Context
Political headwinds and backlash cycles are normal – but the fundamentals remain unchanged:
- Science is clear: Potentially heading to 2.6°C world; past 2°C = increasingly unpredictable
- Economic case holds: Green economy = 2nd best performing sector over past decade (WEF)
- WEF Risk Register: Environmental risks: 2/10 near-term → top of register long-term
- Local realities: MPs will struggle to oppose renewables when they see local job creation
The Business-Policy Interface
Proactive organisations don't just respond to policy – they help shape it:
- Vocalise needs: What policy changes would make sustainable choices easier?
- Join industry networks: ISEP policy networks, trade associations, sector coalitions
- Engage constructively: Consultations, evidence submissions, pilot programmes
- Build partnerships: Unlikely alliances often drive policy progress
Policy advocacy is part of sustainability strategy, not separate from it.
Who Operates at L4
Standard Setters
Defining the rules
ISSB, Verra, SBTi, SBTN, TNFD Secretariat
How does your standard connect to real outcomes?
Regulators
Mandating compliance
EU Commission, FCA, SEC, national governments
Does regulation drive behaviour change?
Assurance Providers
Verifying claims
Big 4 auditors, specialist verifiers, rating agencies
What gives stakeholders confidence?
The Pandion View
Governance frameworks are essential – but they're tools, not destinations. The risk is treating compliance as the goal rather than the minimum bar.
Disclosure without action is just paperwork. The best organisations use L4 frameworks as scaffolding for genuine transformation – connecting disclosure requirements to L5 strategy and L1-L3 realities.
As a hybrid professional, we help clients navigate the framework landscape without losing sight of what matters: real outcomes for real ecosystems. We bridge the gap between governance requirements and on-the-ground implementation.