Top ESG trends and strategic outlook for enterprise companies in 2025

ESG is now a core element of business and investment strategies, addressing challenges such as climate action, resource use, fair labour practices and leadership diversity. Stakeholders expect measurable progress and accountability, making ESG a key driver of corporate decisions.

Key factors driving the shift to ESG

Evolving regulatory environments

Governments worldwide are implementing stricter regulations to ensure companies follow sustainable practices, adhere to ethical norms and maintain transparency in their governance.

Changing consumer preferences

Today's consumers are more environmentally conscious and socially aware. They prefer products and services from companies that demonstrate responsible practices and values aligned with their own.

Financial performance and risk management

Companies realise that strong ESG performance can lead to better financial outcomes, while poor ESG performance can pose significant risks. Investors are increasingly integrating ESG factors into their decision-making processes to mitigate potential risks.

Societal pressure and activism

Increased activism from social movements and non-profit organisations is pressuring corporations to adopt responsible practices, further pushing ESG considerations to the forefront.

Employee expectations

Current and prospective employees want to work for companies committed to ESG principles, pushing businesses to improve their ESG performance to attract and retain talent.

The state of ESG in 2024

Last year, significant developments were made that highlight the growing importance of ESG. Notable milestones include:

• ESG has now become mainstream, with ESG issues being among the lead stories of most major newspapers every day
• over 80 countries have enacted laws or regulations governing ESG reporting
• worldwide, there are now more than 2,000 regulations requiring some form of ESG-related reporting
• individual countries and states are now proactively introducing their own ESG laws and regulations, independent of broader frameworks like those from the EU
• NGOs and international organisations continue to drive ESG by setting global standards for financial disclosures and reporting initiatives.

In recent years, governments and regulatory bodies worldwide have introduced a wave of new laws and standards to address ESG priorities. These regulations reflect a growing commitment to sustainability, transparency and accountability. Below is an overview of some of the most significant ESG developments, organised by region.

Americas

Forced and Child Labour in Supply Chains Act (Canada)

Introduced in 2023 and effective in 2024, this legislation obligates Canadian companies to identify and mitigate forced and child labour risks within their supply chains. While focused on Canadian businesses, the Act's impact extends to multinational supply chains linked to the region, driving changes in global corporate policies.

ESG disclosures (United States)

In March 2024, the United States Securities and Exchange Commission (SEC) adopted final rules requiring registrants to disclose certain climate-related information in registration statements and annual reports. The SEC rules mandate that companies provide detailed data on their ESG performance, emphasising transparency and accountability.

Climate risk disclosures (United States)

With growing attention on climate risk, companies must now report on how their operations and strategies are affected by climate change. Notably, in October 2023, California introduced three landmark climate disclosure bills (SB 253, SB 261 and AB 1305), setting a proactive precedent independent of federal regulations.

These developments highlight the Americas' growing focus on ESG accountability, not only shaping national policies but also influencing global supply chains and corporate strategies, driving accountability and transparency on an international scale.

EMEA

Taxonomy Regulation (EU)

The EU Taxonomy Regulation defines environmentally sustainable economic activities, providing a framework for guiding investment decisions. As of 2024, approximately 11,700 large companies across Europe were required to report their alignment with the Taxonomy. This classification system remains a cornerstone of the EU's strategy to channel investments toward achieving its climate and sustainability goals.

European Sustainability Reporting Standards (ESRS) (EU)

The ESRS, introduced under the Corporate Sustainability Reporting Directive (CSRD), mandates extensive sustainability disclosures for large and listed companies. By 2025, the CSRD will apply to thousands of organisations across the EU, ensuring compliance with detailed sustainability metrics to promote transparency and comparability.

Corporate Sustainability Due Diligence Directive (CSDDD) (EU)

The CSDDD, adopted in 2024, expands corporate responsibility by introducing mandatory due diligence obligations concerning human rights and environmental issues. While the directive is now in force, member states are working to transpose its provisions into national law, with full implementation expected by 2026. This directive is set to significantly influence corporate policies across the region.

German Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz – LkSG) (Germany)

Introduced on 1 January 2023, Germany's Supply Chain Due Diligence Act enforces stringent requirements for human rights and environmental protections across supply chains. The Act is considered a proactive measure aligned with broader EU sustainability goals, such as the above-mentioned CSDDD.

EU’s Sustainable Finance Disclosure Regulation (SFDR) (EU)

The SFDR requires financial market participants and advisers to make pre-contractual disclosures on how they integrate ESG factors into their risk processes, providing more transparency for investors. As of 1 January 2024, non-financial undertakings must disclose full KPIs on taxonomy alignment, and from 1 January 2025, financial undertakings must also disclose KPIs for additional activities and objectives.

Mandatory climate-related financial risk disclosures (United Kingdom)

The United Kingdom Government has made it compulsory for certain businesses to disclose their climate-related financial risks, in line with the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). These requirements were introduced in April 2022 and expanded in 2023, covering large companies and financial institutions.

Pension fund regulations (United Kingdom)

Pension funds in the United Kingdom are now required to consider ESG factors in their investment decisions. This regulation underscores the growing importance of ESG principles in investment management.

These developments reflect EMEA's proactive stance on ESG, with new regulations strengthening sustainability practices and corporate accountability. By aligning with international frameworks and setting ambitious regional standards, these measures position EMEA as a driving force in global ESG progress.

APAC

Climate-related disclosures (Singapore)

Singapore has introduced mandatory climate-related financial disclosures aligned with the TCFD recommendations for large corporations and listed entities. These requirements demonstrate the country’s growing commitment to combating climate change and fostering sustainable business practices. Starting from 2025, all listed companies must report annually on climate-related risks and opportunities.

Modern Slavery Act (Australia)

Australia’s Modern Slavery Act requires companies with consolidated revenue above AUD100 million to report annually on modern slavery risks in their operations and supply chains. As of 2024, over 3,000 companies were required to comply. In December 2024, the government accepted 25 out of 30 recommendations from the Act’s review, including a proposal to introduce penalties for non-compliance, though details are still under discussion.

These measures showcase APAC’s dedication to sustainability and ethical business practices, setting standards that influence corporate behaviour regionally and globally.

Cross-regional standards

IFRS S1 and S2

The IFRS S1 (General Sustainability-related Disclosures) and S2 (Climate-related Disclosures) standards, issued by the International Sustainability Standards Board (ISSB) in June 2023, are driving global harmonisation of ESG reporting. These standards require businesses to provide consistent, comparable and verifiable sustainability data, aligning ESG efforts across regions. As of 2024, over 3,000 companies were expected to comply with these standards, helping to promote transparency and consistency in sustainability disclosures worldwide.

ISO/UNDP PAS 53002:2024

The International Organization for Standardization (ISO) and the United Nations Development Programme (UNDP)’s newly introduced ISO/UNDP PAS 53002:2024 standard focuses on integrating sustainability principles into organisational management systems. Companies globally are increasingly adopting this standard to align their operations with international sustainability goals, fostering consistency in reporting and management practices.

These cross-regional standards are unifying ESG practices globally, providing a framework for consistent sustainability efforts and fostering collaboration across regions.

The rising focus on ESG has led to a significant increase in demand for ESG-related roles. Companies are actively seeking professionals to drive ESG initiatives and ensure compliance with evolving standards. Key positions include:

• ESG analysts – to assess a company's ESG performance and provide insights to guide decision-making ‍
• ESG consultants – to help companies develop and implement ESG strategies to improve their performance ‍
• sustainability officers – to oversee a company's sustainability initiatives, ensuring they align with ESG standards.

Essential skills required for ESG roles

To succeed in these roles, professionals need:

• an understanding of ESG methodologies – including ESG standards as well as frameworks ‍
• analytical skills – to analyse ESG data and draw meaningful conclusions ‍
• communication skills – to effectively communicate with various stakeholders, from employees to investors.

Demand for ESG roles is expected to grow further as businesses integrate more ESG into their core strategies.

Emerging software solutions for ESG management

Companies are exploring innovative tools and platforms and leveraging new technologies to assist with managing ESG.

ESG management and reporting platforms

These platforms streamline ESG management by consolidating data from various sources, simplifying tracking and reporting against key metrics. ‍

AI and machine learning

These tools help predict ESG risks and opportunities, enabling companies to make informed decisions.

How tech facilitates ESG management and reporting

Technology plays a pivotal role in managing ESG programmes within enterprises. From collecting and analysing ESG data to improving transparency through accurate reporting, technology can enhance a company's ESG performance in various ways.

Building ESG programmes

Companies leverage technology to design and implement effective ESG programmes using established frameworks.

Gathering data

Once an ESG programme is in place, integrated systems ensure data is collected accurately and in real time for reliable reporting.

Reporting

Technology enables companies to report once and align data across multiple ESG standards, such as ESRS (CSRD), IFRS (S1 and S2) and GRI, eliminating repetitive work and streamlining the process.

Incident management

Tech platforms facilitate the implementation of whistleblower systems, enabling confidential reporting of ESG-related issues and providing companies with tools to investigate and address concerns.

Survey and disclosure tools

Tntegrated survey and disclosure tools allow companies to engage with employees or partners, conduct surveys and collect disclosures as part of the information gathering that supports ESG programmes. ‍

Stakeholder engagement

Technology supports effective communication of ESG initiatives and progress to stakeholders.

As companies strive to enhance their ESG performance, they also seek solutions and services that complement their technology investments. The most sought-after areas of support include:

• building and managing ESG programmes using frameworks that align with global standards ‍
• data aggregation and reporting to seamlessly integrate ESG data and generate accurate, standard-compliant reports with ease ‍
• incident management to manage ESG-related incidents easily, ensuring confidential reporting and effective investigation processes ‍
• stakeholder engagement to ensure that ESG initiatives and performance are communicated clearly and effectively ‍
• sustainability performance tracking to monitor and measure sustainability performance, as well as align activities with corporate and global sustainability goals ‍
• ESG programme assessments to review current ESG practices, identify gaps and develop strategies to improve sustainability performance ‍
• ESG reporting and assurance to ensure compliance with international standards ‍
• supplier due diligence and risk management to assess supply chains for ESG risks, including human rights violations and environmental concerns ‍
• ESG training and awareness to provide training programmes tailored to different levels of the organisation, ensuring everyone is aligned with the company’s sustainability goals.

Companies of all sizes are more focused on ESG than ever before. This attention may be driven by legal or regulatory requirements, a recognition of ESG's value, or pressure from partners, customers or investors. Regardless of the reason, investment in developing ESG is on the rise.

Here are the top ten predictions for 2025.

1. Regulatory scrutiny and reporting standards. Expect heightened regulatory requirements for ESG reporting worldwide, with a focus on standardisation and transparency. Frameworks like the TCFD are gaining traction, necessitating companies to disclose their environmental and social impacts more comprehensively.

2. Holistic integration of ESG and sustainability into core business strategies. Expect businesses to further integrate ESG and sustainability into their core strategies. Companies will prioritise aligning ESG objectives with financial goals, embedding sustainability into decision-making and fostering collaboration across teams.

3. AI in ESG and sustainability practices. Digital technologies, including AI and the Internet of Things, are increasingly leveraged to advance ESG goals. These technologies enable companies to monitor emissions, enhance energy efficiency and improve transparency in supply chains and ESG reporting processes.

4. New technology for ESG and sustainability data. Expect continued adoption of technologies like AI, blockchain and the Internet of Things to improve ESG data management. Companies will leverage these tools to enhance data accuracy, enable real-time tracking and ensure transparency in reporting, helping them meet regulatory demands and stakeholder needs more effectively.

5. Enhanced assurance of ESG reporting. With the increasing emphasis on ESG reporting accuracy and reliability, companies are placing greater importance on obtaining third-party assurance for their ESG disclosures. This trend involves engaging external auditors or specialised assurance providers to conduct thorough reviews and verifications of ESG data, ensuring alignment with reporting standards and enhancing trust among stakeholders in the integrity of the information presented.

6. Supply chain transparency and sustainability. Supply chain sustainability remains a critical focus area, driven by the need to mitigate risks associated with climate change and ensure ethical labour practices. Companies are striving for greater transparency and resilience in their supply chains through sustainable procurement practices.

7. Social equity and inclusion. The ‘S’ in ESG will gain more prominence, with companies expected to prioritise issues such as diversity, equity and inclusion. This trend reflects a growing societal demand for fair labour practices, human rights protection and equal opportunities in the workplace.

8. Circular economy initiatives. The transition to a circular economy will gain momentum, with businesses adopting strategies to minimise waste and maximise resource efficiency. This involves redesigning products for durability, promoting reuse and recycling and exploring innovative business models.

9. Urgency in climate action. Businesses are under increasing pressure to accelerate their climate action initiatives. This involves a concerted effort to reduce carbon footprints, embrace renewable energy sources and commit to science-based targets for emissions reduction.

10. Sustainable finance and investment. The area of sustainable finance is expanding, with a rise in green bonds, sustainability-linked loans and ESG-focused investment products. Investors now frequently use ESG criteria to assess risk, driving companies to enhance their ESG performance.

ESG will continue to be a key priority for companies worldwide, shaped by evolving regulations, increasing stakeholder demands and technological advancements.  

Every company must develop a clear ESG strategy. A comprehensive approach that manages ESG performance not only adds value for the business and its stakeholders but also contributes to addressing the world’s most pressing issues. When executed effectively, ESG can drive revenue and create lasting value.