In the fast-evolving world of ESG, 2025 stands ahead of us as a pivotal turning point for businesses everywhere.
Regulatory frameworks are consolidating, global standards are emerging, and data-driven insights are transforming the way organisations report on and manage sustainability.
At ESGpedia, we see these shifts not merely as new rules to follow but as powerful catalysts for innovation, transparency, and competitive advantage.
We have put together a comprehensive look at the critical ESG regulations, updates, and trends shaping 2025, along with strategic actions that businesses can take to thrive in this new era.
A Shifting Regulatory Landscape
Regulatory bodies worldwide are rolling out tighter requirements that make ESG readiness a necessity rather than an option.
In Europe, the European Securities and Markets Authority (ESMA) will enforce stricter guidelines on ESG fund naming and ensure that funds labeled as “sustainable” or “green” must allocate at least 80% of their investments to environmental or social objectives.
This push is designed to combat greenwashing, a widespread issue where sustainability claims are exaggerated to win over investors.
To comply, fund managers will need more rigorous documentation, transparent investment strategies, and verifiable ESG claims.
At the same time, the Sustainable Finance Disclosure Regulation (SFDR) is moving toward a simplified categorisation, dividing financial products into sustainable, transition, and non-categorised.
Such a system aims to make it clearer for investors to evaluate exactly how “green” or “sustainable” a fund truly is, and the changes underscore a broader global movement toward standardisation.
Similarly in Asia-Pacific, 57% of investors are concerned about political pressure or legal action if they fail to act on climate change and other ESG issues, with 79% of global investors taking action by having sustainable investment policies in place.
Additionally, with jurisdictions representing over half of global GHG emissions aligning their reporting requirements with International Sustainability Standards Board (ISSB) Standards, the momentum for globally-aligned sustainability reporting regulations is picking up steadily.
The introduction of IFRS S1 and S2 by the International Financial Reporting Standards (IFRS) Foundation also creates a common baseline for sustainability disclosures, addressing long-standing fragmentation in reporting practices.
While ESG has historically been guided by an alphabet soup of frameworks — Global Reporting Initiative (GRI), Task Force on Climate-related Financial Disclosures (TCFD), Sustainability Accounting Standards Board (SASB) — there is now a clear push to unify these approaches.
Companies worldwide will find themselves meeting both global benchmarks and navigating local nuances, particularly in regions such as Asia-Pacific where jurisdictions like Singapore, Malaysia, and Hong Kong are layering country-specific requirements on top of internationally recognised standards.
Expanding Corporate Sustainability Reporting Obligations
The Corporate Sustainability Reporting Directive (CSRD) is set for a significant expansion in 2025, broadening its scope to include entities like Undertakings for Collective Investment in Transferable Securities (UCITS) and Alternate Investment Funds (AIFs) that were previously exempted.
Managers of these funds will find themselves subject to new sustainability reporting obligations under Europe’s Accounting Directive.
Crucially, this will require companies not only to disclose ESG metrics but also to tag their data digitally using the EFRAG XBRL Taxonomy by 2026.
While this might introduce additional layers of complexity, it also presents a unique opportunity to boost transparency and accessibility.
Businesses that implement robust, tech-driven reporting systems will be better positioned to attract investors who place a premium on credible, verifiable ESG data.
In many ways, this mirrors a global trend toward digitisation and automation, as manual processes for data collection are quickly becoming obsolete, replaced by AI-powered platforms capable of real-time tracking and analysis.
ESGpedia’s integrated one-stop platform, for instance, allows organisations to harmonise ESG data across disparate standards, formats, and platforms.
With these technologies, companies can respond promptly to both regulators and market pressures, ensuring their ESG disclosures are not only compliant but also insightful and actionable.
The Rise of Supply Chain Due Diligence
The Corporate Sustainability Due Diligence Directive (CSDDD) further cements ESG as a core consideration in corporate strategy.
Though the directive’s direct implementation for financial institutions begins in 2027, business partners in high-risk sectors will feel the effects sooner.
CSDD requires companies to identify, prevent, and mitigate human rights abuses and environmental impacts within their supply chains.
While banks and financial institutions are not the primary targets, they will need to adjust their lending and investment strategies to ensure clients and portfolio companies meet these due diligence standards.
Given that non-compliant partners pose both reputational and regulatory risks, businesses must build enhanced due diligence frameworks as a protective measure.
With an increased sense of urgency regarding the climate crisis and only 15% of companies reporting on Scope 3 emissions currently, authorities are starting to clamp down on Scope 3 emissions reporting, with many countries in Asia-Pacific such as Singapore, Malaysia, and Australia announcing phased approaches for mandatory Scope 3 reporting in the coming years.
This marks a new era for supply chain sustainability – large companies must now ensure transparency and proper engagement with their suppliers and stakeholders in order to successfully green their supply chains, which account for the majority of their Scope 3 emissions, so as to comply with reporting regulations.
Digitalisation plays a central role here as well; technology-enabled supply chain tracking, for example, can give unprecedented transparency into how goods and services are produced, shipped, and delivered.
Organisations and suppliers that proactively adopt these solutions will not only keep regulators satisfied but also gain a competitive edge in green procurement and build trust with investors, customers, and the wider public.
Find out more about Scope 3 emissions and supply chain sustainability here.
Turning Compliance into Strategic Advantage
For many companies, these changes may at first feel like a burden, yet it is precisely this new reality that opens doors to innovative growth strategies.
Regulatory compliance often leads to data collection that is more comprehensive and more accurate, giving businesses deep insights into operational inefficiencies, resource dependencies, and market opportunities.
By framing sustainability as a core aspect of business strategy rather than a mere compliance exercise, organisations can unlock new revenue streams, particularly in the realm of sustainable finance.
Demonstrating transparent ESG practices can lower the cost of capital and open access to green bonds, sustainability-linked loans, and other financial instruments favored by ESG-conscious investors.
This is especially pertinent for SMEs – these smaller and medium-sized businesses must adopt ESG reporting to stay competitive, as a demonstration of commitment to ESG goals can lead to securing the necessary sustainable financing as well as tenders or business from large companies, which are increasingly prioritising sustainability in their core business decisions and supply chains.
Forward-looking firms also recognise that robust ESG credentials appeal to a broad range of stakeholders — from employees and consumers to regulators and the broader community.
The race to attract top talent in particular is increasingly influenced by organisational commitments to sustainability and responsible corporate citizenship.
Companies that embed ESG goals into performance metrics and compensation structures are more likely to foster a workforce aligned with long-term, purpose-driven objectives.
Consolidating and Automating ESG Data
Disconnected spreadsheets and manual reporting processes create delays, inaccuracies, and a higher risk of non-compliance.
An integrated, AI-driven solution is becoming indispensable, especially as regulatory bodies demand real-time reporting and greater detail on areas such as Scope 3 emissions and climate risk analyses.
ESGpedia’s technology offers a one-stop ESG solution that integrates data collection, analytics, carbon accounting, and reporting, streamlining the end-to-end process for businesses in a manner that is both cost and time efficient.
Automating emission calculations and mapping them to both local and international sustainability standards allow organisations to reduce manpower spent and administrative overhead, allowing resources to be directed to more strategic tasks, such as reviewing existing operations to improve resource efficiency, ensuring regulatory compliance, optimising operations through improved supply chain transparency, or developing innovative green products.
This consolidation of ESG frameworks also makes it easier to communicate a consistent story to investors and the public, reinforcing trust in the numbers behind your sustainability claims.
Building Capacity for Long-Term Success
The best technology stack in the world is only as effective as the people who use it, and many organisations still face internal skill gaps that hinder effective ESG execution.
In 2025, capacity building will become a critical focus, with companies implementing training programs and workshops designed to raise ESG literacy across all levels of the workforce.
This education not only ensures regulatory compliance but also fosters a culture of sustainability in which employees actively identify and implement improvements.
Embedding ESG into corporate culture often involves rethinking incentive structures so that employees are rewarded for advancing sustainability goals.
It also includes active stakeholder engagement — bringing investors, suppliers, customers, and community members into the conversation.
Being transparent about risks, challenges, and progress, means businesses can better create partnerships that bolster resilience and mutual trust.
A Proactive Mindset for 2025 and Beyond
With deadlines looming and new regulations emerging, the time to act is now.
Early movers who align with ESG mandates not only satisfy regulatory obligations but also build distinctive advantages in a competitive market.
These organisations will stand out to investors seeking reliable ESG performance, as well as to consumers who increasingly prioritise brand values in their purchasing decisions.
Whether it’s recalibrating fund portfolios to meet ESMA guidelines, aligning sustainability reporting with international or local standards, or leveraging IFRS S1 and S2 to gain clarity on climate-related risks, an integrated, proactive approach is essential.
By embracing digitised reporting, robust due diligence, and dedicated capacity building, businesses can transform 2025 from a regulatory checkpoint into a milestone for sustainable growth.
At ESGpedia, our mission is to equip enterprises with the digital tools and insights needed to navigate the intricate ESG landscape, effectively levelling the playing field for all businesses to achieve their sustainability goals.
Our platform digitally integrates the many sustainability reporting frameworks across the Asia Pacific region, enabling businesses and SMEs, regardless of which country they are based in, to achieve ESG excellence and deliver transparent, data-driven disclosures that meet and exceed the demands of regulators, investors, and customers. Contact us to begin your sustainability journey.
The road to 2025 may seem challenging, but with the right preparation, it becomes an extraordinary opportunity to lead, innovate, and help shape a more sustainable global economy.