3. The Role of Institutions and Norms

This chapter covers the roles of institutions and norms in shaping the relevant regulatory framework, as graphically illustrated in the top-left part of the proposed theoretical framework in Chap. 5 of this book. Specifically, it discusses how regulations can pressure firms to adopt certain practices and help formalize sustainability criteria. This chapter includes a comparison between the North American, Chinese, and European approaches, both current and prospective. Since this book’s primary focus is on the European context, the chapter also provides an in-depth analysis of the region’s recent developments and their internal and external impacts from a corporate perspective. This content unit is relevant for analyzing accountability for three main reasons. First, as shown in Chap. 2, firm-level reporting is essential to understanding the dynamics that unfold at the meso level; this underscores the need to trace the evolution of regulations that mandated disclosure for certain companies to assess the historical and forward-looking consequences of those rules. Second, in most cases, the regulation has treated the firm (or corporate group) as the reporting entity and reference point for determining the scope of disclosure (see Sect. 2.3). In contrast, in the European context, we are witnessing the definition of a reporting process that directly involves the supply chain and the entire value chain. This distinctive feature justifies the deeper focus on the European framework developed in Sect. 3.3—specifically, the implications for reporting activities (see Sect. 3.3.3, dedicated to the CSRD) and for due diligence (see Sect. 3.3.4, dedicated to the CSDDD). Third, the representation of the regulatory context—in relation to the supply chain-related aspects—allows Chap. 4 to evaluate the evolution from the firm-level analysis to the meso-level one. Consequently, these analyses start with the exposure of drivers and barriers related to the sustainability reporting process, specifically on collecting data that can be used for sustainability performance monitoring.