The last couple of years have seen ESG policy and regulation across the globe develop at a frenetic pace. But with many economies concerned about competitiveness and energy costs, questions are now being asked about the private sector’s ability to cope.
We expect the pace of change going forward will slow and that there will be a pause for thought and increased focus on practical implementation, giving businesses some much-needed breathing space.
2024 was a record year for elections across the globe, including in the US, EU and UK. This is expected to have an impact on global ESG policy and regulation, although the size and shape of this is not yet certain. Nonetheless, the global momentum on transition towards a lower carbon economy is expected to continue.
Transition plans and transition finance coming into sharper focus
There is growing international momentum around climate transition plans, coming from both the private sector and policymakers, with investors increasingly demanding more detailed disclosures on business strategies for decarbonisation and adaptation to a low-carbon future and a number of countries considering mandatory transition plans.
Sustainability disclosure regimes: where the rubber hits the road
2025 will be a big year for sustainability disclosure regimes, although uncertainties remain including on whether there will be changes to the EU CSRD and EU Taxonomy under the Omnibus proposal. Regulators have said they appreciate that new requirements present a steep learning curve but they also warn that the market needs to be get comfortable with being uncomfortable in the early stages of disclosure.
Supply chain due diligence regimes: preparation stage and trade frictions
The EU is still leading the way with its ground-breaking CSDDD regime along with a Deforestation Regulation (both of which are now entering a key preparatory phase) and a new Forced Labour Ban Regulation. The new regimes have significant implications for EU and non-EU companies doing business in the EU, as well as being a point of significant friction for trade relations with international partners.
As sustainable finance regulations evolve, 2025 will be a pivotal year for transparency and compliance, with regulators in various jurisdictions including the EU and UK focusing on fund labelling rules and anti-greenwashing rules. The sustainable bond market is also expected to see continued momentum.
2024 once again saw a number of significant legal challenges against governments in respect of their climate and environmental policies (including on the international stage) or in relation to projects with significant ESG impact, as well as legal challenges and regulatory enforcement against corporates including in respect of greenwashing, and 2025 is likely to promise more of the same.
In our recorded Q&A discussion, key members of our ESG team delve into some of the key global themes outlined in our ESG Legal Outlook publication. They offer practical insights on global ESG regulatory shifts, sustainable finance, greenwashing, and sustainability disclosure and due diligence regimes.
You might also be interested in
Key global ESG contacts
For more information on how our ESG team can support you, please get in touch with one of the contacts below.
