ESG trends and challenges - or what awaits us in 2025?

The year 2025 will bring us further challenges, new requirements and even perhaps revolutions in sustainability. Increased public awareness, growing emphasis on corporate responsibility and rapidly changing regulations mean that businesses will have to adjust their strategies to meet the growing demands. I was tempted to make a forecast for 2025 on sustainability trends.

Trends in sustainability and ESG in 2025

1. Increasing transparency and ESG reporting. In 2025, the trend will continue with an even greater emphasis on transparency. Companies will be forced to share detailed reports on their environmental impact, social responsibility activities and corporate governance. ESG will become not only an obligation, but also a key element in building a company's reputation and earning consumer trust.

2. Sustainable finance and investment. The financial sector is expected to continue developing tools and strategies to support sustainability. In 2025, we will see an increase in investments in projects in line with the Sustainable Development Goals (SDGs) and more ESG investment products. Companies that do not meet ESG criteria may face difficulties in raising capital.

3. Integrating climate change into business strategies. Global warming and increasing risks from natural disasters will force businesses to take measures to reduce CO2 emissions, implement energy-saving solutions and invest in renewable energy sources. In 2025, companies that fail to adapt to these challenges could lose competitiveness.

4. Integrating climate change into business strategies. Global warming and increasing risks from natural disasters will force businesses to take measures to reduce CO2 emissions, implement energy-saving solutions and invest in renewable energy sources. In 2025, companies that fail to adapt to these challenges could lose competitiveness.

5. Digitizing sustainability. Technologies such as blockchain, artificial intelligence and big data will be used to monitor and optimize ESG activities. Digital platforms will make it possible to track CO2 emissions, manage supply chains, or assess the impact of companies on local communities. In 2025, tools for measuring and reporting the effects of ESG activities will gain importance.

6. A change in the approach to supply chain management. Businesses will begin to analyze their supply chains in greater detail to reduce negative environmental and social impacts. The pursuit of so-called “sustainable sourcing” will be important, and companies will rely on suppliers that meet high environmental and social standards.

Challenges for companies

1. Adapting to growing regulatory requirements. The increase in ESG-related regulations, both domestically and internationally, will require companies to invest heavily in reporting, auditing and monitoring processes. Regulatory changes may entail reengineering management processes and implementing new technologies.

2. Managing climate-related risks. Anticipated climate change and natural disasters create new operational risks. Companies will need to invest in technologies to minimize risks associated with extreme weather events and increase resilience to climate change.

3. Talent retention and social responsibility. In 2025, employers will be held more accountable for working conditions, wages, equality and inclusivity. Companies that do not give significant attention to labor issues and social activities may have difficulty attracting and retaining talent.

4. The costs of transitioning to sustainable operations. While the transition to sustainable operations may be beneficial in the long term, in the short term it may come at a high investment cost. Companies will need to invest in technological innovation, reengineering production processes and training employees to fully implement ESG policies and prepare trasformation plans.

New regulations and requirements

CSRD and ESRS reporting standards. In 2025, the European Union already has an updated CSRD, under which companies will be required to report ESG data in even greater detail. From now on, there are even more precise criteria for disclosing information about the environmental, social and corporate governance impacts of companies' activities. XBRL tagging of ESG reports will also come into effect starting in 2026 (applies to 2025 reports). Under EU regulations, sustainability reports will have to be prepared and published using XBRL tags. The use of this format in ESG reports will ensure uniformity, transparency and consistency of data, which will help both regulators and investors to analyze sustainability-related information more efficiently.

Carbon tax and emissions-related regulations. In many countries, including the European Union, we can expect the introduction of new carbon tax regulations, as well as a requirement for CO2 emission certificates. Businesses will have to implement technological solutions to reduce their emissions and avoid additional costs.

Greenwashing regulations. Increased regulations on greenwashing, or the dishonest presentation of pro-ecological activities, will become one of the key areas in 2025. Companies that try to use the ecological trend without real commitment will be exposed to financial penalties and a negative impact on their reputation. The European Union and other jurisdictions have planned to introduce regulations that will require companies to provide clear evidence of their implementation of sustainable development policies. Entrepreneurs must ensure that all pro-ecological activities are real and supported by appropriate certificates. The new regulations will come into force in 2026, so we should be fully ready for them in 2025.

Diversity & Inclusion regulations. Diversity in organizations will become one of the most important elements of ESG strategies. In 2025, at the global level and in the European Union, we can expect new regulations on increasing the representation of women, ethnic minorities and other groups on boards and in management positions. Companies will be required to present diversity action plans and report on progress in this area. Mandatory standards for equal pay in companies are also expected to be introduced, including a requirement to report pay inequalities.

Renumeration transparency. In 2025, companies should prepare for full transparency in pay. According to legislative plans in many countries, in 2026, the provisions of the directive (2023/970) on strengthening the application of the principle of equal pay for men and women for equal work or work of equal value through pay transparency mechanisms and enforcement mechanisms should be fully implemented by Member States. Entrepreneurs will be obliged to comply with them, i.e. to introduce full pay transparency in their organizations probably from 2027. The new regulations will require companies to publish information on employee pay by job title, gender and other factors in order to promote equality and eliminate pay gaps. This requirement should become an integral part of the ESG strategy, and companies that do not comply with these principles will be exposed to legal sanctions.

Regulations of the future - what else to prepare for?

Mandatory disclosure of climate-related risks. In the next few years in many countries, including the European Union, businesses will be required to disclose climate risks, both physical and transitional. Companies will have to implement climate risk management strategies and present them in ESG reports.

Plastic tax and waste. In 2025, regulations on taxes and fees related to plastic use can be expected to expand. Companies that manufacture or distribute single-use plastic products will be required to comply with new standards that promote recycling and reduce plastic use.

Omnibus project. This project aims to simplify the approach to sustainability reporting. It is intended to combine into a single regulation and at the same time simplify the requirements currently imposed by the CSRD, the EU Taxonomy and the CSDD. We will find out what the final wording of this regulation will be at the end of February this year.

Summary

The year 2025 will be a year of intense ESG and sustainability transformation. The increased importance of greenwashing, diversity and compensation transparency regulations, as well as reporting requirements, will force companies to implement more advanced ESG practices. The Omnibus Project, in turn, will change the approach to ESG data reporting. However, we do not know what its final wording will be hence we are still unsure what we should be preparing for.