2024 was a defining year for Environmental, Social, Governance (ESG), with the introduction of the CSRD and the increasing focus on corporate sustainability.
We expect 2025 to be just as dynamic and boundary pushing in regards to ESG and sustainability developments. Stricter regulations, rising investor expectations and rapid technological advancements are poised to put ESG at the top of the agenda in 2025.
In this article, we’ll explore what you should be expecting from ESG in 2025, and how regulations are set to reshape corporate responsibility practices and the sustainability landscape.
Regulations: Continuing and Expanding
2025 will be a crucial year for ESG regulations and disclosures, as it’s the first year of mandated reports for the EU’s CSRD.
The CSRD now applies not only to large European companies but also to non-EU businesses that have significant operations or sales within the EU. This expansion means that more companies globally will need to comply with its rigorous reporting requirements.
The ESRS, which are the reporting standards made by the EU Commission to help companies comply with the CSRD, requires detailed reporting on supply chain practices. This means that businesses in other regions that supply to the EU will need to enhance their ESG practices to meet these new standards.
The ESRS requires businesses to report on the potential risks and benefits related to social and environmental issues, as well as the effects of their operations on society and the environment. Assurance is necessary for all disclosures.
The CSRD and ESRS are establishing new standards for sustainability reporting, prompting companies globally to respond to growing demands from investors and markets for compliance with these benchmarks.
This moment marks a transition from optional ESG and sustainability disclosures to compulsory, data-focused reporting methods.
Moreover, companies will also focus on meeting additional reporting requirements, including the expanded introduction of national reporting mandates related to the standards established by the International Sustainability Standards Board (ISSB).
Sustainability and the Supply Chain
In 2025, the sustainability of supply chains will be a priority for companies. Businesses face growing pressure to show the environmental and social impacts of their supply chains, and improve them.
This involves tackling concerns like greenhouse gas emissions, working conditions, resource consumption, and effects on local communities. The CSRD and ESRS are a clear regulatory example of this priority.
Companies that can showcase accountability and transparency across their supply chains will achieve a competitive advantage, fostering trust among consumers and investors alike. They must consistently reassess their supply chains to improve resilience, minimize risks, and adhere to changing regulations.
An essential part of this is an understanding of supply chain dynamics, particularly regarding the environmental and social impacts of sourcing and production, as regulatory trends are increasingly demanding transparency in tracing supply chains to their origins.
Tensions Abroad: U.S. and E.U.
The potential divergence in ESG regulatory regimes between the U.S. and Europe will be a key issue for companies to consider going forward.
There is considerable curiosity about the potential impact of the Trump administration on ESG and sustainability. Despite the uncertainties, these issues will remain a focal point in developing business resilience as the year progresses.
We can expect continuing congressional efforts to scrutinize climate member organisations, with the Republican-led Congress. Trump has already vowed to leave the Paris Climate Agreement within mere hours of becoming President.
However, since numerous US organisations function on an international scale, it is important to remember there are possible reputational and operational risks with not aligning with global ESG practices that these companies and the U.S. Government itself will need to consider.
For many corporations, wherever they are operating, they will need to keep an eye out for the changing dynamics in the ESG landscape. Even in the EU, there is tension about the status of ESG-related legislative initiatives.
At the start of 2024, there was still uncertainty surrounding the implementation of the Corporate Sustainability Due Diligence Directive (CSDDD). Although the CSDDD was ultimately enacted, the discussions surrounding its implementation have created a potential place for later resistance against ESG regulations.
Refocus on Net Zero and Impacts of Climate Change
A central issue for 2025 will be addressing the unequal impacts of climate change, and how companies can mitigate the social and environmental impact of their operations throughout the supply chain.
This year also promises a refocus on the critical goal of net zero and reducing emissions for corporations.
Companies should actively tackle these environmental issues, not only to adhere to regulations but also to meet the expectations of their stakeholders.
This may involve investing in cleaner technologies, improving waste management practices, enhancing resource management processes and adopting the use of sustainable materials.
There is also a growing recognition of the challenges that measuring and reducing Scope 3 emissions introduce, as this includes indirect emissions from a company’s supply chain.
In 2025, Companies are developing more pragmatic strategies to address Scope 3 emissions, collaborating with suppliers and customers to drive meaningful reductions.
Technology and AI
The role of technology and innovation in ESG reporting is evolving to exceed mere compliance. In 2025, advancements are expected to enhance ESG management significantly. The incorporation of AI into sustainability practices is changing the way organisations assess, track, and disclose their ESG performance.
AI is becoming increasingly more significant in ESG approaches, providing new insights into gathering, analysing, and presenting data. These AI solutions can improve the precision and effectiveness of managing ESG data, allowing organisations to more effectively tackle their environmental and social impacts.
Companies that prioritise technology are enhancing their internal operations while delivering real benefits to stakeholders, ensuring they meet global market standards.
However, the use of AI is not without challenges from an ESG perspective. Alongside the considerable energy demands of AI systems, ethical and social factors must be addressed, including possible biases in algorithms and concerns regarding user privacy. All this needs to be considered with AI tools, especially those developed to assist with ESG practices.
Despite this, as reporting requirements become more complex, companies will adopt automated tools to streamline the reporting process. This means that it will be easier for organisations to comply with regulations like the CSRD and ESRS.
How Convene can help you with ESG in 2025
ESG in 2025 underscores this urgency for companies to align with current environmental and social priorities. From the consolidation of ESG standards to the sustainability of supply chains, there are clear opportunities for businesses to lead the way with positive change.
Companies that adopt a forward-thinking and strategic method for incorporating these changes into their operations will be more equipped to handle the intricacies of the global marketplace.
Instead of merely reducing risks, they will have the opportunity to create enduring value, foster stakeholder trust, and promote significant advancements towards a sustainable future.
Here at Convene, we understand the important role that technology plays in this sustainable future, and how software can help you achieve your ESG goals.
That’s why we created Convene ESG, our own end-to-end platform that collects data, tracks progress, compares with industry peers, aligns with frameworks and produces ESG reports.
We want to ensure efficiency, compliance, and strategic ESG insight, aiding you in your ESG journey.
In order to ensure you maximise your ESG potential in 2025, choose a sustainable future with Convene ESG.
