Regulatory Fragmentation and Compliance Arbitrage Dashboard (2025)

Visualizing the impact of divergent ESG disclosure regimes, compliance risk, and portfolio strategy in a fractured global landscape.
Data: EU CSRD/SFDR, SEC, ISSB, Canada CSDS, S&P Global, PwC, Deloitte, Anthesis, Regulatory and Compliance (2025)
Jurisdictions Aligning with ISSB
50%+ GDP
Global economy now referencing ISSB[3][7]
EU Double Materiality
Mandatory
CSRD/SFDR, ESRS in force[4][5][6]
US Scope 3
Optional
SEC rule, legal challenge pending[4][7][8]
Greenwashing Litigation
Rising
US, Australia, Canada, EU[1][4][6][8]
Global ESG Regime Divergence
Share of global market by disclosure regime (2025)[3][4][7]
Key Compliance Divergence Triggers
Relative impact of regulatory divergence triggers[4][6][7][8]
Portfolio Allocation: Fragmented vs. Aligned
Strategic tilts to reduce arbitrage/compliance risk[4][6][7][8]
Major ESG Disclosure Regimes: Comparison (2025)
RegimeMaterialityScope 3AssuranceTaxonomy
EU CSRD/SFDRDoubleMandatoryReasonable (2028)EU Taxonomy
US SECFinancial OnlyOptionalLimitedNone
ISSB/IFRS S1/S2Single (Enterprise)RecommendedLimitedNone
Canada CSDSSingle (w/ local mod.)RecommendedLimitedNone
Portfolio and Governance Actions
  • Reduce: Cross-border ESG funds with label arbitrage or misaligned disclosures
  • Reduce: Multinational issuers lacking third-party verification or taxonomy alignment
  • Increase: Domestically compliant, verified ESG products (Article 9, CSRD ETFs)
  • Increase: National green vehicles and single-jurisdiction, taxonomy-aligned infra/green bonds
  • Adopt dual-reporting and jurisdictional scoring matrices for cross-listed equities
  • Revise mandates to include regulatory alignment thresholds and legal defensibility
[1] Odgers Berndtson, [2] PwC, [3] Deloitte, [4] Anthesis, [5] EC, [6] Aligned Incentives, [7] Regulatory & Compliance, [8] S&P Global (2025)

Regulatory Fragmentation and Compliance Arbitrage