ESG trends for 2025

2024 was a pivotal year for ESG - environmental, social and corporate governance issues.

But 2025 is set to be a different story.

It's been a landmark year in terms of increasing professionalism in the quantification of carbon footprints and extra-financial reporting. These two aspects were hastened by the implementation of the CSRD, the European directive that requires companies to publish extra-financial reports describing the impact of their activities on the environment. From 2025, companies with more than 500 employees or a turnover of more than €50 million will have to undertake this reporting task for the very first time.

2024 has also been a milestone because HR departments in both small and large businesses have integrated these ESG considerations within their workforce, by introducing CSR or ESG managers - who often report directly to the executive team - as an indispensable part of the company's strategy.

Lastly, financial departments have been able to kick-start efforts thanks to various grants and schemes.

2025, however, is likely to be quite different. The major emerging trends demonstrate that the environmental component of ESG is now a mature one, and that it must go further to achieve a lasting result. 3 aspects stand out:

going beyond carbon when considering environmental impact
climate change adaptation as an operational approach, and not just from a risk management perspective
burden of proof for CSR and ESG departments, so they can keep going further

Talking about 'environmental footprint' rather than just 'carbon footprint'

Carbon emissions have become the yardstick for environmental impact in the past years. This is mainly because it ticks all the boxes required for an indicator: it is quantified, with a scientific and international consensus on how to account for it, which makes this measure useful because it is understandable and comparable. It does, however, have its limitations, and there is some talk of the ‘carbon tunnel’ vision masking all the other environmental aspects: water, resources, pollution and so on.

Therefore, carbon is just a very convenient metric. But it shouldn't overshadow a bigger picture: biodiversity, planetary boundaries and climate. Water, as a resource or as a climate hazard, will be a major issue in 2025, and the extreme weather events of 2024, such as the most recent floods in Spain, are there to remind us of this.

Biodiversity has also become a critical concern, particularly for landowners.

Some projects are subject to mandatory environmental assessment: an impact study is then required, including a description of the initial state of the natural environment as well as an impact assessment of the project. Would you expect that priority would be given to sites with a poor biodiversity rating? It's quite the opposite! In order to increase effectiveness of actions implemented at company level, it is recommended that preference be given to preserving existing good biodiversity rather than recovering a deteriorated one.

Jan Konietzko

Adapting to survive

Climate change adaptation is a topic that organisations are getting to grips with. But the methodology of a climate change adaptation plan sometimes runs against conventional corporate strategy - with little input data and the need for transparency regarding the times that the company has fallen short. The ‘move along, nothing to see here’ mindset is simply not an option when dealing with adaptation.

Unlike carbon, the starting point for climate change adaptation is not just a matter of data. In this relatively new field, data is to be sought informally, by consulting people in the field. From the beginning, the challenge is to pick up all the tell-tale signs of what has already happened, and that only those working on site know about. For instance: "this machine crashed during the heat wave", "this room needs to be air-conditioned, otherwise IT will break down", or a flooded car park, employees experiencing unwellness, and so forth.

Based on these interviews and mapping of the value chain, it is now possible to pinpoint the challenges, the supply chain's degree of vulnerability, the critical nodes and any measures put in place to secure those particular nodes (redundancy, resilience). A parallel can be drawn here with the GHG protocol, for which it is wise to think in terms of corporate dependency, to make sure that all dimensions of the footprint are included in the assessment.

This adaptation aspect should help highlight a firm's sensitivity and exposure to hazards. When an organisation combines both sensitivity and exposure to hazards, its risks are identified.

So what's the point of a climate change adaptation plan? Well, the ability of a business to adapt is what will determine its degree of sensitivity. In these uncertain times, and given the record number of extreme weather events in 2024, this ability will be an advantage for organisations that have started working on their adaptation strategy.

To take things a step further, the Climate Vulnerability Fresk, inspired by the Climate Fresk, can be used to work out the direct and indirect links and retroactions. Still a bit hazy? Let's talk about it later!

Providing evidence for results

Lastly, in 2025, the "burden of proof" will extend. Whether it's about obtaining funding from banks, opening up capital to investors, benefiting from grants, being eligible for insurance or complying with non-financial requirements, businesses will have to prove their credentials. Without immediate results, they will have to demonstrate that these issues have been addressed, with strategies adopted, with targets and a timeframe set, and that they have introduced metrics to monitor performance.

Besides, in 2021 and 2022, many companies had launched their first decarbonisation pathways. In 2025, they will have to be able to demonstrate to their staff that the quick wins from the first environmental impact mitigation roadmaps are actually happening, so they can keep using this framework as a compass. If not, they will have to update it to ensure that it is practical, realistic and that it takes into account climate change adaptation and resource issues.

Finally, 2025, because of its political context, is likely to bring its share of surprises when it comes to financing these climate change and decarbonisation plans.

What subsidies will be allocated and under what conditions? The next few months should provide some answers.

About the author

Lucie Raty

Lucie is Urbanomy's co-founder and Deputy CEO.
While at Veolia, Dalkia, and within EDF's International Department, she carried out a number of operations related to CSR and ESG, as well as change management projects and the development of new services.
Lucie takes pride in briniging together matters that may not seem obvious at first. This is how she pictures business transformation for organisations from the public and private sector alike.