The Evolving Landscape of ESG Reporting Regulation
Expectations for 2025
14th January 2025
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Table of Contents
- New Reporting Requirements
- Harmonising ESG Reporting Standards
- Increased Reporting at Country-level
- Need for Digital Solutions
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As environmental, social, and governance (ESG) standards continue to evolve, businesses worldwide face a transformative period of regulatory changes. 2025 promises to be a pivotal year, with new reporting requirements, harmonisation of standards, and increased accountability reshaping the ESG landscape.
Here, Anthesis’ regulatory and reporting experts share insights into expectations and their implications for businesses globally for 2025 and beyond.
New Reporting Requirements Come into Effect
The impending implementation of new reporting requirements will have a profound impact on businesses worldwide. Some of the most influential changes expected in 2025 include:
Corporate Sustainability Reporting Directive (CSRD)
In 2025, a new cohort of companies will come under the scope of the EU’s Corporate Sustainability Reporting Directive (CSRD), with large, listed EU companies now required to report (FY 2024) and all large EU companies required to collate 2025 data ahead of reporting in 2026 (FY 2025). However, at the date of writing this article, Germany has proposed changes to reporting thresholds that could significantly reduce the number of companies required to comply. While this isn’t confirmed and is arguably unlikely to manifest, it may cause market uncertainty through the first part of the year. Other member states are still yet to implement the CSRD into national legislation and are operating under an enforcement notice from the European Commission. Early 2025 is likely to be a turbulent period as companies navigate uncertainty while awaiting the implementation of some of these changes across the EU.
International Sustainability Standards Board (ISSB)
In 2025, the influence of the ISSB sustainability disclosure standards (IFRS S1 and S2) will be felt globally, helping to drive consistent and transparent sustainability reporting across jurisdictions in line with global ESG expectations. Some recent announcements regarding the ISSB standards include:
- Canada launched its first Canadian Sustainability Disclosure Standards (CSDS) in December 2024, aligning with IFRS S1 and S2 but with modifications on reporting deadlines. Companies can voluntarily adopt these standards.
- In December 2024, China unveiled the Chinese Sustainability Disclosure Standards for Businesses-Basic Standard, based on the Exposure Draft issued earlier in 2024. The Basic Standards’ core contents are aligned to those of IFRS S1.
- In Australia, the new Australian Sustainability Reporting Standards (ASRS) came into effect on the 1st of January 2025, mandating comprehensive reporting on climate-related financial information including climate risks, opportunities, and Greenhouse Gas (GHG) emissions.
- The UK Government announced in December 2024 that it is on the pathway to implementing the UK Sustainability Reporting Standards (SRS). The draft UK SRS is expected to be endorsed in Q1 2025, followed by public consultation, with the final SRS potentially effective from FY27.
- Singapore will align its sustainability reporting with the ISSB standards, requiring Scope 1 and 2 GHG disclosures for listed companies in 2025, Scope 3 by 2027, and emissions assurance starting in 2027 for listed companies and 2029 for large non-listed companies.
- Hong Kong has embraced the ISSB framework, starting with mandatory GHG emissions disclosures in 2025 and full adoption for large entities by 2028.
Other jurisdictions, including Malaysia, Japan, Brazil, Costa Rica, Bolivia, South Korea, Kenya, and Nigeria, are also exploring the adoption of ISSB standards to enhance sustainability reporting and align with global best practices.
California Regulations
Companies operating in California may need to comply with the Voluntary Carbon Market Disclosures Act (AB 1305) by meeting the disclosure requirements by the 1st of January 2025, the first compliance date. Additionally, the California Air Resources Board will publish regulation details by July 2025 regarding the implementation of SB 253 on GHG disclosure. Meanwhile, the due date for issuing the first compliance report for climate-related financial risk disclosure under SB 261 remains unchanged as of today.
Harmonisation of ESG Reporting Standards
The push for global alignment of ESG frameworks will culminate in more standardised reporting protocols. This is crucial for companies that operate in multiple jurisdictions, as it will simplify compliance and reduce the administrative burden associated with navigating a patchwork of regulations.
The European Union is discussing an ‘Omnibus simplification package’, to align the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), and the EU Taxonomy, representing a significant step toward harmonisation. With further updates expected in February 2025, the Omnibus package aims to streamline compliance requirements and reduce redundancy in data points, fostering consistency across sustainability initiatives.
In parallel, the theoretical interoperability between the CSRD and ISSB standards will further support a unified approach, enabling stakeholders to make direct comparisons across sectors and regions effectively.
Increased Combination of Voluntary and Mandatory Reporting at the Country Level
The landscape of sustainability reporting is increasingly characterised by a blend of voluntary and mandatory frameworks at the country level. Some jurisdictions, such as China, are transitioning previously voluntary reporting practices into mandatory requirements, reflecting growing recognition of the importance of transparent sustainability disclosures. This shift often includes a transitional period, typically ranging from two to three years, during which organisations are encouraged to engage in voluntary reporting as they prepare for the eventual compliance with mandatory standards. During this phase, governments and regulatory bodies aim to build capacity, foster familiarity, and address challenges before full enforcement.
Additionally, some aspects of sustainability reporting remain voluntary, while others, such as climate-related disclosures or human rights impacts, are prioritised as mandatory due to their urgency and global significance. This hybrid approach allows for flexibility and incremental progress while advancing accountability and standardisation in sustainability practices.
Increased Accountability and Need for Digital Solutions
As the requirement for limited assurance becomes more widespread, companies will face greater pressure to ensure the accuracy and reliability of their ESG data. The scale, scope and complexity of new disclosure requirements, along with the need for greater accountability, will necessitate implementation of robust data management systems, such as Anthesis’ ESG Data Management Platform, Mero, enhancing the credibility of reported information.
Investors and stakeholders will demand transparency not only in what is reported but also in how data is collected, analysed, and assured, meaning that organisations will not only need to implement enhanced data systems to handle the greater complexity, but also robust internal controls.
Global ESG reporting regulations continue to advance with 2025 set to be a pivotal compliance year. Companies that proactively adapt to these changes will not only enhance their compliance and reporting practices but also strengthen their reputational capital and stakeholder trust. The shift towards more unified and rigorous ESG reporting standards will ultimately drive more sustainable business practices, aligning corporate behaviours with the broader goals of sustainability and social responsibility.
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