ESG Outlook 2025: Key trends and what they mean for businesses

The ESG landscape continues to evolve, with new regulations, political debates, and industry expectations shaping corporate sustainability efforts. As climate reporting laws take effect in Australia and global attention on ESG intensifies, one thing is clear: businesses must stay ahead of these changes. 

Five key ESG trends to watch in 2025 

Global ESG adoption amid US resistance 
While ESG remains a contentious topic in US politics, international regulations are advancing. The UK and EU are setting the pace with the Corporate Sustainability Reporting Directive (CSRD) introduced in 2023 and the Corporate Sustainability Due Diligence Directive (CSDDD) following in 2024. The influence of ESG in investment strategies is also growing. A survey by Russell Investments shows that 97% of investment firms managing $20 trillion in assets now factor ESG into their decisions, a significant increase from 72% in 2020. 

Climate-related financial disclosures gain momentum 
Australia’s AASB S2 climate reporting rules are now in effect, aligning with climate reporting requirements in multiple jurisdictions, including Singapore, New Zealand, and Japan. Despite federal opposition in the US, several states are implementing their own climate disclosure laws, reinforcing the trend towards mandatory global climate reporting. 

Increasing focus on scope 3 emissions 
Under the AASB S2 regulations, companies have a one-year grace period before they must disclose Scope 3 emissions, which encompass their entire supply chain. Even businesses not directly required to report may still face pressure from customers who need emissions data from suppliers to fulfil their own reporting obligations. 

Strengthened measures for modern slavery compliance 
Australia's first Anti-Slavery Commissioner, appointed in 2024, is driving new reporting reforms requiring companies to assess modern slavery risks more comprehensively. As compliance becomes more stringent, tech-driven solutions are increasingly vital for effective risk management and transparency. 

Growing importance of nature-related financial disclosures
With $900 billion of Australia’s GDP linked to natural resources, investors are prioritising financial disclosures related to nature, similar to the growing emphasis on climate risk reporting. Businesses should start by evaluating their reliance on natural ecosystems and assessing how their operations impact biodiversity and sustainability. 

Stay ahead in the evolving ESG landscape 
As regulatory requirements and investor expectations continue to shift, staying informed is essential for businesses looking to remain compliant and competitive. If you want to explore how these ESG trends will impact your company, get in touch with our ESG team or register your interest here.