Sustainability trends for business 2025

Introduction 

In 2025, many elements will influence corporate sustainability goals for businesses, their capital providers, and insurers. Geopolitical events, conflict and the Trump US government will challenge international progress on meeting climate change targets and the green transition more generally. However, for businesses based in Ireland, the EU and UK regulatory pressures continue and will dictate the priorities across environmental, social and governance (ESG). Key trends to watch include the following. Each is summarised in more detail in the insight below.  

• Climate risk and severe weather impacts: 2024 was the warmest year in global temperature records going back to 1850 and is the first calendar year that has reached more than 1.5°C above the pre-industrial levels1. High global temperatures, coupled with record global atmospheric water vapour levels, meant unprecedented heatwaves, wildfires, and heavy rainfall events, causing misery for millions of people. Ability to mitigate, adapt and insure for climate risk are in the spotlight for business and finance.  

• Sustainability reporting, disclosure and benchmarks: The first reports under the Corporate Sustainability Reporting Directive (CSRD) for listed large corporates being published from 2025 will bring more clarity for corporates and auditors on what good looks like. Pressure for credibility and traceability on ESG data will grow as CSRD Assurance requirements and Green Claims bed in. To support business competitiveness, potential simplifications in reporting obligations to avoid duplication across CSRD, EU Taxonomy and the upcoming Corporate Sustainability Due Diligence (CSDDD) expected to be announced in the EU’s ‘Omnibus’ package in Q1.  

• Transition finance: As corporates aim to fund sustainability improvements and capture opportunities, emerging initiatives in transition finance should be availed of. Unlike traditional green finance funding specific sustainable products, transition finance aims to provide broader financial support for decarbonisation. Examples include loans or bonds to companies with SBTi-validated reduction targets and credible climate transition plans where interest rates are tied to meeting ESG performance targets. Updates to SFDR, new ESG ratings law, credit ratings agency ESG requirements and a new EU Green Bond Standard will further refine investor requirements.   

• Governance, accountability, and competence: Under CSRD formalising and providing transparency on competence and governance is required across boards and sustainability teams. This is driving boards to grow sustainability expertise on boards and provide ongoing capacity building to enable meaningful accountability. 

• Supply Chains: Engaging suppliers to provide solutions and traceability on Scope 3, environmental protection, and human rights continues to grow. CSRD, EU Taxonomy and green claims laws are driving a requirement for credible data to substantiate supplier ESG performance. Setting Scope 3 supplier targets using shadow Carbon pricing is a related growing trend in the EU.  

• Digital tools for ESG data collection, management and applications like CSRD reporting continue to grow and present opportunities. Within AI, the opportunities of fast-tracking sustainability data needs while balancing its high embedded Carbon Footprint continue.  

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