Six trends to watch: a Blurred view on sustainability in 2025
By Jeremy Cohen, Senior Partner
With a knowing nod to our agency’s name, the best way I can sum up the outlook for ESG and sustainability in 2025 is ‘blurred’.
In a polarized world, tensions pulling one way and the other will be felt within the sector, with regulation pulling one way and the populist agenda pulling the other. Political, economic, and social pressures are where we will see the greatest blurring of the lines.
Let’s look at a few trends to clarify what this all means for 2025:
1) Resetting sustainability targets: the time of setting long-term targets in order to get a short-term reputational bump is far in the rearview mirror. Companies are realizing that setting targets is easy, making progress against them less so. With the realization that 2025 targets are impossible, 2030 targets are uncomfortably impractical, and anything beyond is a hopeful punt, more and more companies are choosing to take some pain and redefine the art of the possible. This is not all bad. Companies that focus on short- and medium-term impact, focusing on those things in their direct control, and demonstrating-by-doing, will ultimately end up doing more and getting there faster. What will initially be described as “walking back” ambitions, may ultimately be a much more meaningful force for good than anything that a “Net Zero 2050” tagline can realistically deliver.
2) The wave of anti-wokism: across Europe and the U.S. many citizens are looking to MAGA Republicans (or populist equivalents) to wind back the slew of policies, regulations, rules and laws that are seen as being “woke”. There’s a lot to go after here, from heat-pump subsidies, EV adoption and combustion engine phase out, to DEI programs, and environmental protections. But while Trump’s White House will lead the way (backwards), the reality here is that businesses know that a majority of Americans still want environmental and climate change action (for example 58% in a 2024 Yale survey were either “alarmed” or “concerned” about climate change). And the second reality is that there are only two years until the mid-terms and then less than two years before a new president. Expect a lot of “declared action” in the early days of the administration but limited change in actual legally mandated regulation. And whilst business may go quiet on some related issues, do not expect to see them moving “backwards” on Sustainability and ESG – the legal (state-level), reputational, and employee (recruitment and retention) risks are simply too great.
3) Changing Climate for Climate Change: On the back of COP29 at Baku, and previously Dubai and Sharm El Sheikh, expect to see more pressure on the COP process since it was first initiated in 1995. It has become evident that COP is not going to be the mechanism that protects humanity from global warming its effects on humanity – effects that are already being felt in the shape of flash floods, forest fires, global heatwaves, and the meeting of climate tipping points. The past decade was the warmest for 125,000 years, greenhouse gas emissions are around the highest levels in human history and coal, gas and oil emissions are at or near to peak historical usage levels. And meanwhile we are zooming through the 1.5-degree threshold and heading who-knows-where with increasing rather than decreasing momentum. COP itself is now focused on adaptation and compensation, reflecting an unusual level of self-awareness of the futility of battling the lobbyists who vastly outnumber the actual delegations. Expect to see COP under fire and the proposal of viable alternatives as mechanisms to addressing climate change.
4) The Impact of Systemic Solutions: As indicated on the issue of target setting, it’s tough for individual corporates to make meaningful impact on sustainability issues. There are competing commercial pressures, costs, non-core activities pulling at focus and resources, and not a little risk, especially in being a leader. One of the solutions to the above is tackling issues in a systemic way – bringing together players from across the supply chain, creating coalitions of competitors, suppliers, NGOs, regulators and civil society. Done well, systemic solutions reduce risk, costs, and reputational exposure, whilst increasing impact and advocacy. Systemic solutions are increasingly delivering impact in areas including transportation, education, health, electricity grid renewal, and AI. As companies look for alternative strategies for sustainability, look at the growing role of systemic solutions in 2025.
5) Regulation: Whilst populists look to unwind regulation, regulation with teeth will simultaneously start to bite in 2025. The impact of the Corporate Sustainability Reporting Directive (CSRD) will start to be felt beyond the EU, for foreign-owned entities with a significant EU presence or even supply chains that run through the continent. CSRD and other frameworks will focus a spotlight on human rights issues with enhanced responsibility for proper due diligence. And alongside CSRD, the International Sustainability Standards Board (ISSB) and other frameworks, in development for years, will become fully operational and adopted in a growing number of geographies. There will be – put simply – fewer places to hide from transparency.
6) The Rise of Social Movements: Finally, and as both a response to much of the above, as well as riding the wave of populism, expect to see a greater level of citizen participation and protest in the world. People will become (even) more skeptical about elected and non-elected decision makers. Economic, environmental, and social issues will lead to real existential crises across the globe. Social media and AI have the power to inform and misinform people to bypassing and abandoning the existing structures and “norms” that govern and control them. Some movements will look to replace these norms, others to bypass them, and others to create meaningful influence on them. Some will be a force for good – channeling energy for impact. Others will be designed to drive chaos. Understanding the role for business can only be determined on a case-by-case basis, and subject to a myriad of factors, but understanding this trend and the implication for your brand or business will be critical in managing both the risks as well as seizing the opportunities.
As always there will be much more. The role of AI, a greater focus on biodiversity, (another) attempt to regulate plastics globally, and other social issues. The constants are that we see some forces pushing for more, others pulling back for less, regulations that might be unpopular but are impossible to stop or delay in the short term, the power of populism but the counterbalances of reality, and the power of information and perversion of it. That’s why 2025 is set to be a blurred time for sustainability and a bumpy road ahead.
Navigate it carefully, with purpose at the core, and impact as an outcome.