Key Impact Points:
- Evolving ESG Compliance: 2025 will bring challenges in ESG compliance as companies adapt to new regulations and stakeholder expectations.
- Anti-ESG Momentum: Anti-ESG sentiment will intensify globally, influencing regulations and corporate strategies.
- Regulatory and Litigation Focus: Key areas include climate disclosure, extended producer responsibility, and greenwashing enforcement.
Megatrends in ESG
ESG isn’t going anywhere. Despite challenges, 2025 will see continued evolution in regulations and stakeholder expectations. Anti-ESG sentiment will gain traction in the U.S. and Europe, with debates shifting from binary legitimacy to balancing economic and environmental goals. Social media will amplify pressures on companies to choose sides on contentious social issues.
“2025 will be another year of significant evolution as companies struggle to meet new compliance requirements and evolving stakeholder expectations.”
Regulation, Litigation, and Enforcement
New ESG-related regulations will stabilize in 2025, but compliance will remain demanding. The EU Corporate Sustainability Reporting Directive will dominate efforts, alongside California’s climate disclosure laws and other key mandates.
“2023-2024 will, in hindsight, be the peak for new ESG-related regulation.”
Greenwashing litigation will increase as anti-greenwashing laws and prescriptive disclosures expand globally.
Stakeholder Engagement
The pendulum on ESG shareholder proposals will swing, with the U.S. SEC providing more latitude to exclude proposals. Social media will drive rapid campaigns on ESG-related controversies, increasing their reach and impact.
Voluntary Initiatives
Glossy ESG reports will peak in 2025 as structured, mandatory disclosures gain prominence. U.S. companies will lag in adopting frameworks like the Task Force on Nature-related Financial Disclosures.
DEI Challenges and Human Rights Focus
Anti-DEI sentiment will lead to reduced initiatives and disclosures, though some companies will publicly hold their ground. Enforcement of the Uyghur Forced Labor Prevention Act will remain vigorous, with bipartisan support in the U.S.
The Path Ahead
Legal and compliance professionals will lead ESG efforts, supported by growing roles like ESG counsel and data analysts. Collaboration across teams will be critical to navigating risks and requirements.
“Managing ESG regulation and legal risk will increasingly be a shared responsibility that extends beyond the legal and compliance teams.”
