Workiva (WK -13.27%) stock saw big sell-offs in Wednesday's trading. The cloud software company's share price ended the daily session down 13.3% despite the S&P 500 index gaining 0.6% and the Nasdaq Composite index climbing 1.2%.

Workiva fell today following reports that Germany and France are interested in changing the European Union's (EU's) sustainability reporting standards. This category of data tracking and reporting has been a significant part of Workiva's growth outlook, and changes in government policy could impact sales and earnings performance.

Workiva stock falls on potential EU policy shift

The EU's Corporate Sustainability Reporting Directive (CSRD) went into effect in January 2023 and requires companies to submit data and performance tracking across a wide variety of non-financial metrics. Workiva is providing a platform that makes it easy to track this information and submit it in the necessary formats.

If the EU were to shift its reporting requirements, it could wind up resulting in a significant sales shortfall for Workiva. A trend among governments toward easing some regulations is taking shape, and investors sold Workiva stock on Wednesday amid concerns that one of the software-as-a-service (SaaS) company's anticipated growth drivers could be softening.

What's next for Workiva?

Workiva announced today that it will be publishing its fourth-quarter earnings and hosting a conference call after the market closes on Feb. 25. There's a good chance the company will share some information about its performance outlook in the EU and potential shifts in the CSRD reporting requirements.

While the business could wind up facing some growth setbacks if significant changes to reporting standards are made, it's also possible that the market is overreacting to reports of possible shifts today. It's still not clear to what extent the EU will make policy shifts, and it's possible that Workiva's exposure to policy changes will be relatively limited.