"How does Baufritz navigate the withdrawal of CSRD obligations and the evolving regulatory landscape, and what influences the decision to continue sustainability reporting voluntarily"

In early 2025, the European Union reversed course on sustainability reporting obligations for small and medium-sized enterprises, withdrawing anticipated CSRD requirements and recommending voluntary disclosure through the VSME standard instead. This regulatory shift raises a fundamental question: what motivates organizations to continue sustainability reporting when legal obligations are removed? This thesis examines this question through an in-depth case study of a German medium-sized enterprise with over 25 years of voluntary environmental reporting. Despite being released from mandatory compliance, the company decided to adopt the VSME framework, offering a rare opportunity to study organizational responses to deregulation in real time. Drawing on Neo-Institutionalism, Empathic Engagement, and Imagined Futures, the analysis reveals that these theoretical perspectives do not operate as separate mechanisms but overlap and reinforce one another. Institutional expectations persist even without coercive enforcement, as firms anticipate future regulatory tightening and position themselves proactively. Deeply embedded values and stakeholder relationships provide the relational foundation that sustains commitment beyond formal requirements. Importantly, anticipatory reasoning plays the dominant role: organizations prepare for expected future developments by voluntarily adopting emerging standards, treating regulatory withdrawal as temporary rather than permanent. However, the research also uncovers significant tensions. While sustainability reporting is strategically framed by leadership, operational actors experience it as resource-intensive and bureaucratically burdensome. These divergent perspectives reveal that voluntary reporting emerges not from organizational consensus but from ongoing negotiation among actors with different responsibilities and constraints. The findings contribute to institutional theory by demonstrating that institutionalization is inherently temporal and relational. Organizations do not merely respond to existing pressures but actively anticipate and enact emerging norms, while empathic engagement provides the affective infrastructure that stabilizes voluntary practices. For practitioners, the study shows that proactive engagement with voluntary frameworks can build legitimacy, though resource constraints and hierarchical tensions must be acknowledged. For policymakers, it demonstrates that voluntary standards can sustain sustainability efforts when designed to balance flexibility with credibility. By examining a moment of regulatory reversal as it unfolds, this thesis provides timely insight into how firms construct legitimacy and navigate stakeholder expectations under institutional uncertainty.