Going with the Flow or Withstanding the Tide? Policy Feedback and Lobbying Coalitions in Corporate Sustainability Reporting in Turbulent Times

The implementation of the European Green Deal (EGD) is unfolding in an increasingly turbulent environment. Geo-economic competition, and rising populism have transformed the political context in which EU climate policies were originally adopted. This paper focuses on the regulation of corporate sustainability reporting (CSR), a central part of the EU’s sustainable finance agenda and crucial for steering private investment towards a just decarbonisation. The recent ‘Simplification Omnibus Package’ makes CSR regulation a compelling case for understanding the EGD’s resilience amid shifting political tides. Scholarship on CSR regulation has emphasised member state positions and civil society pressure but understudied the preferences of firms and investors. However, only by bringing business on board can capitalism and net-zero be reconciled. Understanding how business preferences for environmental policies are formed and how they change once a policy is in place is crucial. Building on policy feedback theory, we examine how preferences have evolved across three legislations: the 2014 Non-Financial Reporting Directive (NFRD), the 2022 Corporate Sustainability Reporting Directive (CSRD), and the 2025 Omnibus package. Tracing the evolution of preferences and lobbying coalitions across these acts provides a unique opportunity to test competing claims about whether feedback effects from environmental policies generate stabilising pro-regulatory coalitions, or whether rising politicisation and geopolitical pressures open windows of opportunity for deregulatory actors to weaken the EGD. Self-reinforcing policy feedback effects suggest stability in lobbying coalitions and an insulation from deregulatory pressures despite a turning tide. In contrast, politicization might create a window of opportunity for losers of green policies to water down existing regulation. Empirically, we combine theory-testing process-tracing with quantitative text analysis. We analyse consultation responses to map changes in lobbying coalitions over time and qualitative interviews with business representatives and policymakers to understand the mechanisms of change. We identify several mechanisms that created and sustain a strange bedfellow coalition of investors, large firms, and civil society supportive of CSR regulation: Internal capacity building, sunk costs, and business model adjustments in response to policies create firm-level support for CSR. Policy feedback also works through an outsider channel by increasing demand for CSR and raising the reputational costs of nonreporting. These mechanisms point to self-reinforcing dynamics that increase the resilience of sustainability regulation. However, hard-to-abate sectors and firms not yet covered by regulation, experience direct costs, some of which are unanticipated (fog of enactment). The looming phase-in of the CSRD has intensified these objections and the recent backlash against sustainability, concerns about Europe’s competitiveness, and geopolitical shifts, created a political climate that enabled them to get their voice heard. We contribute by examining how preferences on climate transition policies can change dynamically over time. This actor-based explanation shows how the resilience or erosion of the EGD depends not only on member-state politics or public opinion, but also on the power relations and green preferences of private actors. While policy feedback unleashes self-reinforcing dynamics, these dynamics take time to take root and are contingent on a receptive political climate.