In 2025, companies are expected to undergo significant adaptations in their approach to ESG initiatives, including a shift in focus towards material risks and opportunities, increased importance of corporate governance, and increased legal risks
As the corporate landscape continues to evolve, significant adaptations in the way companies will approach environmental, social & governance (ESG) initiatives in 2025 are on the horizon.
Key developments such as companies narrowing the scope of ESG, the increasing importance of corporate governance, and the growth of collaboration within industries will all expand the aperture around how companies are evaluating risks, business opportunities, and impact.
Indeed, the European Union’s Corporate Sustainability Reporting Directive (CSRD) reporting deadline in early 2026 for multinationals and C-Suite decision-makers may help bring us closer to the day that sustainable practices are so commonplace in the corporate world that they’ll no longer need a separate label.
In that light, we look at several predictions for the coming year that may have a great impact on ESG and corporate sustainability issues.
Prediction 1: The term ESG fades, even as material risks, opportunities & impact endure
Corporate ESG initiatives have long been influenced by a combination of pressures from governments, investors, and other stakeholders. Recently, some companies appeared to be retreating from their ESG commitments, in response to an aggressive anti-ESG agenda.
Miriam Wrobel, Senior Managing Director of the ESG practice at FTI Consulting, said she sees it differently. “This movement from talk to action may look like a slowdown to outsiders, but it represents meaningful progress because it shows that companies are building internal capacity to measure and manage these issues,” Wrobel explains. “At its essence, ESG is a toolkit for companies to identify material risks and opportunities. Being smart about maximizing opportunity and minimizing risk will never go out of style.”
This evolution of the ESG label is causing companies to re-think their corporate approaches to sustainability and dramatically prioritize their material issues.
Prediction 2: Corporate governance is more critical in 2025
“Uncertainty leads to an indirect tax on companies,” says Matthew Sekol, author of ESG Mindset, adding that corporate governance is more critical than ever as uncertainty increases. Changes in political structures across the globe combined with the more extreme weather events — such as cyclones, hurricanes, or floods — mean that no company can know with certainty what the US new administration will do, what policies may come, or how federal government agencies will respond (or not) “This political-fueled poly-crisis may combine with other issues to tip over governance as the focus over the next four years,” Sekol says.
Similarly, Kristen Sullivan, Audit & Assurance Partner at Deloitte & Touche, says she sees robust governance being a key priority for 2025 for other reasons, which include assurance processes being used as a “strategic overlay to stress test and enhance internal confidence” in companies’ ESG data.
Prediction 3: ESG integration into core business strategy goes mainstream (finally)
ESG alignment with central business objectives will become the norm, thanks to CSRD reporting deadlines in 2026, growing awareness of climate risks and stakeholders’ ongoing interest in sustainability. Critical too is the involvement of key C-suite members in this process. For example, CFOs are central to the ESG reporting success, according to the Thomson Reuters Institute’s 2024 State of Corporate ESG Report.
Several drivers of this trend include the increasing requirements for assurance in ESG disclosure over the next few years and the expertise that corporate finance functions have in implementing rigorous processes to support assurance in financial disclosures.
Likewise, the role of the corporate general counsel (GC) in ESG is expanding because of the growing importance of governance across a larger set of risks, the necessity for reviews of corporate messages (including marketing content), and the need to amend supplier contracts with vendors to accommodate growing ESG regulation requirements across jurisdictions. Further, AI, big data, and other technologies also are making the chief information officer and chief tech officers more central to companies’ sustainability tech investments, which is further forcing integration of ESG into core business strategies.
Prediction 4: Reverse of federal ESG-related regulations & rules accelerates, leaving gaps
In the aftermath of the US election, anti-ESG rulemaking and legislation at the federal level in the US will expand while pro-ESG rulemaking and legislation will stall. Wrobel says she sees ESG transparency in doubt more than ever before. For example, climate risk regulation from the U.S. Securities and Exchange Commission is likely to be tabled permanently.
In addition, the President-Elect Trump has indicated a desire to ban diversity, equity, and inclusion initiatives in workplaces and educational institutions. Likewise, FTI’s Wrobel says she expects federal dollars earmarked for renewable energy will be scaled back, and domestic manufacturing and investment in under-served communities as part of the Inflation Reduction Act likely will be under attack.
To fill in the gap, some state and local governments are diving into action. Nicole DeNamur, of Climate Aligned Law states: “We are already seeing this as California appears to be moving ahead with its carbon disclosure laws, and state and local governments across the US continue to develop and implement new regulatory tools, including building-performance and emissions standards.”
Prediction 5: Growth in greenwashing litigation and industry collaboration continues
CSRD requires many multinational companies to report their 2025 data in January 2026. This is likely to prolong the risk of ESG-related litigation for several years. The EU’s requirements for disclosures on double materiality and the increased emphasis on supply chain practices offer more support for potential legal actions on greenwashing, including allegations of contaminants in consumer products, net zero statements, and forced labor in supply chains.
Likewise, corporate leaders increasingly are refocusing on issues that materially influence their businesses, which is expediting greater industry collaboration. “Collaborations can help bring some transparency from a product and commodity level, for example, in the chemicals industry,” says Deloitte & Touche’s Sullivan. “Leading companies are pushing for more technical specificity across the entire value chain of inputs and outputs to show how investments in lower carbon intensity materials translate to decarbonization goals.”
In 2025, businesses are expected to rigorously prioritize their ESG impact toward more material business issues. And an increasing number of companies are likely to adopt ESG as a strategic lens and use it as an opportunity to fundamentally reshape their business models.
These changes will lead to a widespread overhaul of product design, procurement, business, and the decision-making processes. However, expect opponents to work actively to hinder this progress.
For more, check out the Thomson Reuters Institute’s ESG Resource Center
