As we look ahead in 2025, the journey toward a sustainable future is being shaped by a web of complex geopolitical dynamics, evolving regulations, and the increasing importance for data-driven decision-making. While challenges such as political confusion, regulatory complexity, and data quality assurance continue to complicate the journey, there are also opportunities to be seized.
We asked sustainability experts to discuss the key trends expected to define the sustainability landscape in 2025. Our global panel provided invaluable insights on how to navigate the complex regulatory and geopolitical landscape of ESG.
Our panel included:
Nancy Mancilla, VP of Data & Reporting at Environ Energy, North America's leading provider of sustainability and ESG disclosure services. Mancilla has directly contributed to the rise of the sustainability profession providing training and advising experts since 2008.
Thierry Lotrain, CEO & Founder of Climate & Decisions, a consulting firm dedicated to integrating ESG and climate considerations in every organizational decision. Lotrain is a seasoned sustainability expert, with over 20 years of experience in climate and sustainability, and works closely with C-Suite leaders to help the organizations navigate the complexities of climate and compliance while driving responsible and sustainable growth.
Sydney Straver, CEO & Founder of &BLOOM, a company that assists investors and businesses in seizing opportunities where sustainability and value creation go hand in hand. Staver has a strong track record of assisting European firms in advancing their ESG agendas and now aims to bring this expertise and experience to the Pacific.
Tim Siegenbeek van Heukelom, Chief Impact Officer at Socialsuite, a sustainability technology company that helps companies reimagine, streamline and embed their annual materiality assessment in their business. Tim serves as the company's domain expert on ESG and sustainability, bringing over a decade of sustainability experience driving ESG strategy, programs, reporting, and measurement for organizations in public, private, and social sectors.
1. Uncertain Geopolitical and Investor Dynamic
The US political climate is one of the key factors creating uncertainty in sustainability efforts. The constant shifts in policy and regulatory priorities make it difficult for companies to chart a clear course forward. As Mancilla puts it, "The world is very confused... practitioners don’t know which way to turn." This confusion is particularly evident in the ongoing challenges companies face in relation to the SEC’s compliance.
Yet, despite the paralysis at the federal level, certain states such as California, New York, and Colorado are taking the lead on climate disclosure regulations, often looking to Europe for best practices. These progressive state-level initiatives “will make a difference,” according to experts, and could influence corporate strategies, especially for multinationals who continue to push forward with their sustainability commitments.
Investor demand for reliable, comparable ESG (Environmental, Social, and Governance) data remains strong, regardless of the political climate. “There is a need for trust,” says Straver, emphasizing the importance of transparent and dependable ESG reporting. “Sustainability is not merely a regulatory obligation; it’s really becoming a business imperative.”
2. Global Momentum vs. US Slowdown
While the US may be facing a regulatory slowdown, momentum is building in other parts of the world, particularly Europe. The Corporate Sustainability Reporting Directive (CSRD) is emerging as the benchmark for sustainability regulations, offering a comprehensive and sophisticated framework for organizations. Lotrain notes, “CSRD has 1,000-plus regulatory requirements compared to SASB, which is a bit lighter with about 200-plus regulatory requirements. So, if you comply with CSRD, my view is that you will be fine with SASB.”
Efforts are also underway to simplify the CSRD, particularly for smaller businesses. The Omnibus Bill is expected to provide clearer guidance, making implementation easier. However, the exact nature of these simplifications remains uncertain.
One of the most significant challenges companies face is navigating the patchwork of regulatory requirements across different jurisdictions. As Lotrain highlights, there’s a growing push for harmonization and interoperability in reporting standards to avoid redundant efforts. States, too, are increasingly keen on aligning their own legislation with global standards.
3. Sustainability Reporting as a Strategic Tool
ESG reporting is no longer just about compliance—it’s a strategic tool for driving innovation, building trust, and creating long-term value. The growing focus on supply chain transparency means that companies must take responsibility not just for their own operations but also for the activities of their suppliers and customers. “The walls of the company have changed… you now have responsibility for your suppliers and your customers,” says Lotrain, emphasizing the shift toward a more holistic approach to sustainability.
For companies to build investor trust and avoid accusations of greenwashing, the quality of ESG data is critical. Accurate, reliable data is needed to ensure the credibility of sustainability efforts. As Straver points out, “A single source of material data” is key to streamlining third-party verification and ensuring consistent, trustworthy ESG reporting.
With the incorporation of double materiality—the concept that companies must report not only on the financial impact of sustainability on their operations but also on how their activities affect the environment and society—companies can integrate these new reporting frameworks that accurately report materiality.
Moreover, companies must undergo an “internal evolution” in order to transform their sustainability efforts into a core part of their business strategy. This shift requires companies to foster innovation, optimize resources, and mitigate risks. As Mancilla suggests, it’s about “sparking innovation efficiencies” that will set companies apart in the long run.
4. AI’s Role in Sustainability Reporting
Artificial Intelligence (AI) is also playing a dual role in sustainability. On one hand, AI has the potential to accelerate sustainability efforts and improve regulatory compliance, but on the other hand, it can contribute to increased emissions if not properly managed. Lotrain suggests that organizations must “consider IT missions” carefully to ensure that AI is used in a way that contributes to sustainability goals.
AI can positively impact sustainability efforts in countless ways. For example, AI can monitor energy usage patterns or analyze supply chain data. Models can be built for predictive analysis and performance data. When used properly, it can provide invaluable data and efficiency.
On the other hand, AI can have negative impacts on sustainability efforts. It’s no secret AI can lead to an increase in energy consumption, carbon emissions, and water usage. In some instances AI poses data privacy concerns and can perpetuate biases. It’s crucial to use AI in moderation, being careful to not become too reliant on it.
AI can be used to identify, monitor, and predict future environmental degradation while analyzing optimal solutions for mitigating these issues. However, due to the potential for unethical usage and negative environmental impact, companies must ensure that they utilize AI in a way that is in alignment with the company’s sustainability goals and strategy. As AI systems emerge in sustainability reporting, remember, AI is only a tool in the sustainability toolkit. In order to develop a sustainability strategy and vision, educate and engage your stakeholders, and integrate sustainability into your company, you will need more than AI—you will need people.
5. Rise of DEI Issues
Diversity, Equity, and Inclusion (DEI) remains a key issue, especially in the US context. Mancilla highlights the challenges surrounding diversity, equity, and inclusion (DEI) in the US political climate, noting that companies are fearful of how they speak about these issues. She emphasizes that it is essential for US companies to “create value for the company, address risks, and focus on multinational organization guidelines.” The focus should be on addressing DEI issues in a way that aligns with a company’s sustainability objectives.
As the US political climate continues to create uncertainty in DEI and sustainability efforts, it is difficult to chart a clear course forward. Lotrain emphasises that "regulation is not going away," but rather being challenged due to the political climate. Companies should remain vigilant of shifts in regulations and policies in areas of operation.
Internationally, DEI is widely accepted as a priority, but programs can vary regionally based on the regional differences. Companies can balance global strategies with local adaptation by defining a broad DEI vision while allowing flexibility for local teams to address specific needs and contexts. By understanding local contexts, companies can create more inclusive and equitable workplaces for all employees, regardless of their location.
Emerging Opportunities
While the road ahead is fraught with challenges—such as the ever-changing US political landscape, complex regulatory requirements, and the need for better data quality and assurance—there are significant opportunities for companies that are willing to lead the charge toward a more sustainable future.
Opportunities:
- Leveraging state-level initiatives and global momentum to drive sustainability efforts forward.
- Adopting CSRD as a benchmark for comprehensive sustainability reporting.
- Transforming ESG reporting into a strategic tool that drives innovation and value creation.
- Harnessing the potential of AI to accelerate sustainability efforts and improve compliance.
- Streamlining reporting frameworks and questionnaires to reduce complexity and create efficiencies.
Looking into the Future
The sustainability landscape in 2025 will be shaped by a delicate balance of navigating geopolitical uncertainties, adapting to evolving regulations, and embracing data-driven decision-making. With increasing investor demand, growing regulatory pressures, and the potential for innovation, businesses that commit to sustainability can not only meet the challenges of the future but also create long-term value in the process. The key to success will be the ability to embrace sustainability as a strategic asset that drives positive change across industries and societies.
