Top sustainability themes for 2025

2025 will see the release of the first wave of CSRD reports and these will be subject to a high level of scrutiny for their inaugural submissions. The heaviest critique will likely lie with the methodologies behind Double Materiality Assessment approaches due to several updates and amendments being released by the European Financial Reporting Group (EFRAG) since the conception of CSRD.

For the second wave of reporting organisations this year, there will be ample opportunity to learn from these initial Sustainability Statements; however, it is critical that any previous materiality exercises are aligned with the new DMA concept. We expect that organisations will face challenges with the level of detail required by the various data points prescribed by the CSRD, as well as setting up the appropriate data collection and management systems for reporting.

As such, businesses should not underestimate the level of work required for CSRD alignment and reporting and are expected to begin working on this in early 2025.

While many corporates have felt compelled in recent years to announce high level decarbonisation commitments, a significant number of these were arbitrary or made without credible plans to achieve them. 

The advent of CSRD has changed this, with regulation now forcing corporates to back up these commitments with detailed, credible climate transition plans which will allow stakeholders to assess and monitor progress over time.  Given CSRD implementation timelines, we expect a wave of such transition plans to be developed & published through 2025.

Increased scrutiny on greenwashing last year led to numerous legal battles, particularly within the oil and gas, airline, and fast fashion industries. Companies faced accusations of unsubstantiated net-zero claims and misleading marketing campaigns. This backlash has prompted a new wave of 'greenhushing,' in which organisations under-communicate their sustainability efforts and quietly scale-back commitments to avoid public scrutiny and reputational damages.

The crackdown on greenwashing is a double-edged sword with the rise of ‘greenhushing’ having negative implications for climate action; however, across the EU greenwashing incidents are decreasing and in 2025, this trend will continue with incoming regulations like the CSRD, the EU Green Claims Directive and the Enhanced Product Labelling Directive.

These regulations will enforce transparency and accountability, and ban the use of vague environmental claims, thereby enabling truly sustainable businesses to be fairly represented and allowing consumers to make informed purchasing and investment decisions. 

As businesses begin to prioritise mandatory ESG reporting and address the rising complexity of ESG regulatory compliance, we believe there is a short-term risk that these regulations (such as the CSRD), could change the role of dedicated sustainability teams into reporting and compliance functions.

This trend also carries the risk of losing a culture of innovation and transformation with regards to sustainability efforts in the long-term. In 2025, we believe there is strong merit in delineating internally between sustainability and reporting teams. This will enable continued capacity for driving sustainable change.

ESG faces significant headwinds in 2025, with a new administration in the White House has pulled back on the green agenda, alongside a wider politicisation of sustainability. We have already observed several large corporates retrenching on their sustainability actions, removing ESG roles from their boards, pulling out of Net Zero pledges and revising down ambitious sustainability goals.  We expect more of this through 2025.

This trend isn’t surprising and reflects an inevitable “green fatigue” creeping in among corporates. Climate action require short-term effort for long-term reward and makes it remarkably challenging for often short-term focused politicians and corporates to prioritise and adopt. The fact that the EU has introduced mandatory sustainability reporting isn’t a coincidence – the EU recognises that legislation is the only way to encourage widespread adoption of robust ESG strategies and ensure that ESG continues to grow in importance at pace throughout EU mandated entities. 

There is also an economic reality – renewable energy is now the lowest cost option for new electrical generation globally, so it’s not surprising that China has massively scaled up its renewable capacity, with two-thirds of global utility-scale solar and wind power currently under construction located in China.  The green agenda is here to stay.

Following another year of global temperature records being surpassed, in 2025, we expect businesses to mobilise more ambitious climate adaptation and resilience efforts as extreme weather events become more frequent and intense.

New regulations like the CSRD and increased financing options are pushing companies to analyse climate scenarios, develop strategies to manage risks, and integrate adaptation measures into their core operations. Failure to act now will jeopardise long-term sustainability and resilience. 

In 2025, we expect Chief Sustainability Officers (CSOs) to have enhanced awareness and strategic use of AI technology, following the AI exposure and experience gained in 2024. CSOs are expected to leverage AI to significantly improve ESG practices, focusing on genuine enhancements rather than adopting AI for its novelty. We expect AI to play an important role in automating sustainability reporting (data analysis, extraction, and interpretation), as well as creating predictive models for assessing future climate risks and managing carbon emission projections.

Moreover, AI is already being employed in a regulatory capacity to interpret and address data points in the CSRD, Taskforce on Nature-related Financial Disclosures (TNFD) framework, and forthcoming directives. 

For many Irish businesses in 2025, integrating nature and biodiversity impacts and dependencies into their decision-making processes is no longer optional. This year, the introduction of nature-related EU regulation such as the Nature Restoration Law will place pressure on corporates to perform nature-based disclosures, which is also expected to increase momentum behind voluntary nature-based disclosure frameworks such as the TNFD and target setting through the Science Based Targets Network (SBTN).

2025 will also see an expansion in efforts to define a set of universal ‘state of nature’ metrics, an increase in the integration of climate and nature transition planning. and continued calls to close the nature finance gap and redirect nature-harming subsidies. 

From this year, companies that are in scope of the EU Taxonomy will be required to report on both eligibility and alignment across all six environmental objectives and provide independent assurance of their disclosures. The number of Irish companies falling into scope will further widen. The Taxonomy legislation has impacted many aspects of sustainable finance and investment, providing clear green requirements as a signal to investors.

However, the level of ambition and the stringent requirements across certain themes and sectors has resulted in some pushback from the market. For example, the requirements for insurers are ambitious - requiring the development of innovative insurance products covering climate-related perils and new calculation methodologies.

Furthermore, corporates who intend to disclose the activities associated with their sustainability strategy as part of their EU Taxonomy KPI’s must closely monitor the ever-evolving requirements to ensure efforts are directed effectively and in line with alignment criteria.