ESG trends to stay ahead in 2025
What’s on the cards for sustainability in 2025? Transformation and adaptability will be vital as businesses tackle new regulatory challenges, rethink their strategies and prepare for climate adaptation. In this blog, we share our ESG trend predictions for the new year to help you prepare and stay ahead.
Increased focus on human rights due diligence
In 2025, we can expect to see a shift in focus towards the social aspect of ESG. The adoption of the EU’s Corporate Sustainability Due Diligence Directive, or CSDDD, in July last year, marked a turning point in the climate conversation. Despite the historic focus on environmental matters such as emissions reduction and reaching net zero, social and environmental sustainability have always been connected and 2025 is set to strengthen our understanding of the link between the two.
As a business, you will have to demonstrate your commitment to human rights throughout your supply chain. Businesses will be required to conduct audits to identify and mitigate instances of abuse. With CSDDD coming into force from 2027, it’s better to get ahead of the curve and give yourself plenty of time to prepare ahead of future reporting requirements.
Green bonds and sustainable finance
One of the biggest ESG trends for 2025 is green finance. Adequately addressing the climate crisis will not be cheap. At COP29 in November last year, discussions around climate finance were tense with the new target falling trillions of dollars short of the $1.3 trillion needed by developing countries to adapt to the worst impacts of our changing climate. Despite not meeting global expectations, the new finance target of $300bn a year that was pledged at COP29 will likely come from a variety of public and private sector sources.
Catch up on the outcomes from COP29 and what they mean for your business in our COP29 debrief.
Sustainable investment is set to continue to grow as governments and businesses alike put climate concerns front and centre. Green bonds and similar finance initiatives are going to play a large role in the mobilisation of capital for investments in climate solutions. Money raised in these bonds will go towards green projects, such as renewable energy production, energy efficient buildings and efficient water usage, and will be a crucial element to provide financing for major projects around the world.
Innovative tech solutions
We can’t talk about upcoming ESG trends without mentioning innovative tech solutions such as AI, blockchain and big data analytics. Developments in artificial intelligence were high on the agenda at sustainability conferences and events throughout 2024 and the discourse doesn’t seem to be slowing down anytime soon.
There has been a lot of discussion about how AI can assist companies with data analysis, predict risks and inform future strategies. AI has the potential to increase the reliability and comparability of ESG data, however it’s not a silver bullet solution. Alongside a myriad of environmental concerns around the energy and water consumption of AI databases, there is a fine line between strengthening sustainability efforts and overreliance. Artificial intelligence cannot replace human judgement and oversight, and it must be used as a tool for enhancement rather than replacing human expertise.
Biodiversity & nature-based solutions
This year, we expect there to be a trend of looking at ESG more holistically. In addition to social issues, nature is dominating industry conversations as more businesses seek ways to include nature-based solutions in their sustainability strategies. For a long time, carbon emissions have taken centre-stage, but we need to look beyond traditional ideas of climate action. Nature-based solutions play a vital role in mitigating and adapting to climate change by helping to reduce greenhouse gas emissions, expanding carbon sinks and preserving ecosystems.
During COP16, the UN convention on biological diversity which took place in Colombia last year, discussions around biodiversity targets stalled over a lack of data. Without key metrics suitable for measuring the state of nature, and reliable data to understand the impacts, the conference came to an end still unsure how this decade’s progress would be measured.
This conundrum has led the Nature Positive Initiative to begin building consensus on a universal set of metrics. The initial consultation involved more than 100 stakeholders who helped define a list of metrics that can provide the “scale, diversity, credibility and completeness” required to paint an accurate picture of the changing state of nature. It is hoped that these new metrics will help drive action and transparency to shape the future of reporting on nature.
Mitigation and adaptation
Given the record number of extreme weather events we saw in 2024, businesses who have already started working on their adaptation strategies will be at a considerable advantage going into 2025. This year, we predict there will be more attention on both mitigation and adaptation, as businesses seek to protect their supply chains and workers from more frequent severe weather events like flooding, hurricanes and heat waves. ESG standards will become not only moral codes but also fundamental to sustainable success.
Strategies will be informed by qualitative data gleaned from consulting people in the field. Collaboration will be key when building your business’ adaptation strategy and insights from people working on the ground will be invaluable. In 2025, there will be an increased need for stakeholder engagement, through methods such as interviews, and accurate mapping of your entire value chain.
Struggling to accurately map your data? Our team of experts are on hand to help you see the bigger picture. Find out more.
How to stay ahead in 2025
Align strategy with sustainability
As we transition into 2025, more corporate leaders are realising the connections between a successful business strategy and putting sustainability at the heart of their organisation. Use the new year as a chance to review your strategy and take advantage of the opportunities presented by adopting sustainable business practices.
Leverage data for decision making
Collecting, mapping and analysing your data is going to be essential in 2025. Whether you’re assessing risks, reporting your progress, or setting new goals, data forms the foundation of informed decision making. If you haven’t already optimised your data management system, this is the year to take action.
Prepare for reporting now
Whether you’re an international corporation or an SME, it’s never too early to prepare for reporting requirements. Head into 2025 by aligning your strategy with regulatory expectations to avoid future penalties and give yourself plenty of time to perfect your reporting processes. Acting now can also help to boost your reputation and attract new business opportunities.
