Across jurisdictions, markets, and institutions, sustainability expectations shifted while the work was already underway. Regulatory timelines stretched, collapsed, or overlapped. Political rhetoric sharpened even as investor and insurer expectations largely held. Technology advanced faster than most organizations could comfortably absorb. Very little stopped. But it became much harder to pace, prioritize, and describe with certainty.
This article sits inside that tension. It brings together what we saw across client work and the judgment calls behind it, and includes personal reflections from members of our sustainability team on what 2025 felt like from within the work. We also look ahead, because many of the patterns that defined 2025 are likely to shape how sustainability work evolves in 2026.
Rather than treating 2025 as a tidy timeline or a set of definitive answers, we trace the forces that shaped day-to-day decision-making within the organizations we worked with. Here are eight forces our team saw unfold over the past year.
1. Regulatory Uncertainty Increased, but the Work Did Not Disappear
ESG regulatory uncertainty increased in 2025. EU CSRD and CSDDD “simplification,” repeated delays to the EU Deforestation Regulation, the continued stay around the U.S. SEC climate disclosure rule, and uneven movement in California’s climate disclosure laws all reinforced the same lesson: plan anyway, but build flexibility as the compliance map keeps shifting.
Europe: “simplify + delay” without stepping away
In Europe, 2025 felt less like retreat and more like recalibration. The European Parliament approved an Omnibus amending directive in December 2025 that reshapes the scope and timing of sustainability reporting and due diligence requirements. The headline was “burden reduction,” but the lived reality for many companies remained the same: build systems that can hold up.
Meanwhile, the EU Deforestation Regulation was delayed again. The revised compliance dates (late 2026 for larger operators and mid-2027 for smaller ones) were primarily driven by implementation readiness rather than by a change in ambition. Additionally, CBAM quietly kept moving forward: the European Commission continues to frame 2023–2025 as the transitional phase, with the definitive regime starting in 2026. Even when public debate focused elsewhere, product-level emissions data work still crept into procurement, trade, and finance teams.
Taken together, these shifts led to a kind of planning whiplash. Many companies continued to build CSRD-level systems but focused more on getting the basics right and keeping things flexible rather than trying to optimize for any specific regulatory outcome.
United States: disclosure stalled, pressure persisted
In the U.S., the SEC climate rule stayed on hold. In March 2025, the SEC voted to stop defending the rule, and later the Eighth Circuit paused the related litigation, leaving the outcome largely dependent on what the SEC ultimately decides to do next.
In California, momentum was uneven but not gone. During a late-2025 CARB SB 253/SB 261 rulemaking workshop, a lawyer interjected to announce that the Ninth Circuit had issued an injunction, a moment that our team on the call quietly described as feeling somewhat Netflix-like in its timing. CARB remained focused and continued answering questions, signaling that implementation work was still moving forward despite the legal uncertainty.
CARB subsequently posted draft proposed rulemaking documents on December 9, 2025, for the implementation of SB 253 and SB 261, while noting the Ninth Circuit’s temporary injunction on SB 261 enforcement pending appeal. The practical impact was similar to what we had experienced with the CSRD delay. Some organizations paused work, but the majority continued to develop inventory methods, governance structures, and data pipelines because customers, investors, lenders, and internal risk owners continued to request the underlying information.
United Kingdom: credibility and enforcement took center stage
In the UK, attention shifted from expanding disclosure to strengthening its foundations. The FCA set out proposals to bring ESG ratings providers under oversight, focusing on transparency, governance, and conflicts of interest. In parallel, the CMA’s consumer enforcement powers expanded in April 2025 under the Digital Markets, Competition and Consumers Act framework, raising the stakes for misleading environmental claims. That enforcement shift changed behavior. More teams became cautious about public claims, and more effort moved upstream into internal evidence, controls, and review processes.
Across regions, the message of 2025 was consistent, even if the signals were not: regulation did not get lighter. It got harder to read. The organizations that kept moving built flexible systems, documented assumptions, and focused on credibility over certainty.
2. Global Standards Consolidated Quietly, Even as Regulations Stayed Uneven
While timing and enforcement of regulations remained uncertain, the underlying content of sustainability requirements moved in a more consistent direction. More jurisdictions continued to adopt or align with the ISSB standards, and the IFRS Foundation continued to support the framework through ongoing stewardship and refinements.
In practice, that quiet consolidation mattered. Even where formal rules were delayed, stayed, or contested, many companies used ISSB and TCFD-style architecture as a lowest-regret foundation: a structure that could satisfy investors while remaining adaptable across jurisdictions. One caveat persisted. ISSB incorporated TCFD’s disclosure recommendations into IFRS S2, but TCFD continues to be referenced in regulation and practice because laws often cite frameworks long after standards evolve. California’s SB 261 is a clear example: its reporting expectation is built around TCFD (or a successor/equivalent standard), meaning many companies must operate across both legacy and emerging frameworks simultaneously.
3. COP30 Pushed Finance and Adaptation Closer to the Center
COP30 reinforced a shift that has been building for years: the focus moved away from announcing new pledges and toward implementation, finance, and delivery. One clear signal was the renewed emphasis on adaptation finance, with COP30 outcomes calling for efforts to at least triple adaptation finance by 2035 as part of the broader climate finance trajectory. The point was not that COP30 “solved” adaptation finance; it did not, but it did sharpen expectations around delivery and real-world outcomes.
That same shift has been evident in our work supporting California’s SB 261 climate-risk disclosure requirements. Much of our focus has been on building capacity and shared understanding with clients, helping them see how their existing processes, GHG inventories, and climate risk assessments can serve as tools for resilience and adaptation rather than just disclosure requirements. Internally, this has meant identifying risks and modeling climate scenarios at a level that aligns with clients’ climate maturity, from initial risk identification through more detailed scenario analysis to support operational planning, continuity, and long-term adaptation decisions.
4. Technology Narrowed to What Actually Works: Measurement, Energy, and Removals
In 2025, technology conversations became more focused and more consequential. A few years ago, much of this space felt exploratory. This year, it looked more like infrastructure decisions.
Digital MRV and traceability moved from optional to foundational
Digital measurement, reporting, and verification (MRV) systems, alongside traceability tools, became harder to treat as “nice-to-have.” Expectations for compliance-grade data are rising, and organizations increasingly need systems that can withstand audit-style scrutiny and multi-framework reporting. For us as consultants, this also changed the work: clients increasingly requested assistance with evaluating tools, integrating platforms, and determining what should be in-house versus outsourced. To advise well, we had to educate ourselves quickly across a crowded and uneven software landscape.
Carbon dioxide removal matured fast, but unevenly
Carbon dioxide removal followed a similarly uneven path. Corporate interest has been expanding, and the menu of pathways has become more real: biochar, BECCS (bioenergy paired with carbon capture and storage), other CCS-linked approaches, and enhanced weathering that accelerates natural mineralization. At the same time, debates around MRV, accounting treatment, and claims governance intensified, underscoring that the market is scaling faster than consensus about how to measure and communicate impact.
Internally, this led to deeper learning and research, particularly on biochar as a pathway (including how feedstock, pyrolysis conditions, and end-use affect permanence and co-benefits). We are careful here: this is not a claim about published “GSI biochar research,” but rather about the reality of what we needed to understand to advise credibly.
Energy constraints stopped being a background issue
Overlaying both trends was a broader energy reality check. Electrification ambitions collided with grid constraints and reliability concerns, while data center demand became a material planning variable in many regions. That combination pushed more pragmatic conversations about efficiency, flexibility, and clean firm power, and it pulled sustainability discussions closer to operations, facilities, and energy procurement teams.
5. Voluntary Carbon Markets: Integrity Became the Product
Voluntary carbon markets continued to shift away from volume toward credibility. The core question increasingly became: what does this credit represent, and what claim does it support?
Integrity initiatives continued to raise the bar. The Integrity Council’s Core Carbon Principles are explicitly designed to increase transparency and quality differentiation in the voluntary carbon market. In parallel, VCMI’s Claims Code of Practice continued to shape expectations for credible claims linked to real emissions reductions and transparent reporting.
This credibility shift is also evident in how standard-setting bodies are evolving. For example, the GHG Protocol launched public consultations in 2025 on revisions to its Scope 2 Guidance and consequential accounting methods for electricity-sector actions, reflecting the broader push toward tighter accounting rules and clearer claims discipline. In practice, the direction is consistent: participation now requires stronger governance, clearer claims frameworks, and greater tolerance for scrutiny than in prior years.
6. Business Opportunities that Accelerated in 2025
Looking at 2025 through a services and operating-model lens, one thing became clear. Uncertainty didn’t slow sustainability work down; it changed where time and investment were spent. As regulatory timelines blurred and companies became more careful about public positioning, demand shifted toward strengthening internal systems, governance, and decision-making. The areas that moved fastest were not tied to any single framework, but to building capabilities that enable organizations to operate credibly across a range of scenarios. Below are a few examples of how this played out in the organizations we worked with:
- Regulatory readiness and adaptable reporting systems
EU “simplification” did not reduce workload so much as change priorities and order in which companies mature their sustainability programs to comply. The companies that moved forward built modular systems, so data and controls could adapt as requirements evolve. - Assurance readiness and ESG data controls
Companies are increasingly focused on maturing their internal systems so that boards and audit committees have clear policies to rely on, and ESG data have defined owners, controls, and documentation that can withstand scrutiny, especially when regulation is imminent or investor expectations remain high. - Supply chain data and product-level traceability
Even with delays, CSRD, CBAM, deforestation, and due diligence requirements pushed sustainability work deeper into procurement, making supplier data, traceability, and engagement core operational needs rather than side tasks. Those pressures quickly flowed down the value chain, driving greater demands on suppliers and keeping tools such as EcoVadis and Assent relevant, alongside newer platforms focused on lower-tier supplier data and traceability. - Climate risk and resilience planning tied to capital decisions
Climate risk continued to shift away from disclosure and toward capital planning, insurance, and business continuity, and client conversations increasingly centered on a practical what’s in it for me lens, translating climate risk into financial materiality at different levels of the organization. This shift helped ground sustainability in real business value and decision-making. - CDR procurement strategy and claims governance
As removal options expanded, companies increasingly needed formal procurement rules: what qualifies, what evidence is required, what claims are permissible, and what contract guardrails protect credibility.
7. ESG Politicization Continued to Chill External Positioning
Companies became more conservative in branding and public claims, not necessarily because the work stopped, but because the risk of overstatement rose and because ESG politicization continued to chill external positioning. As greenwashing enforcement tightened, especially in the UK, more companies shifted from communications-first to evidence-first approaches. With ESG politicization, investor pressure became more fragmented across regions, such that global companies had to manage differing expectations across European and U.S. stakeholders.
In practice, this showed up in very real ways. For example, we supported clients’ policies and governance structures to focus on transparency and process rather than specific goals or commitments. Likewise, our work drilled down on tangible impacts and business continuity.
8. What “Won” in 2025: Operationalizing Sustainability
Across sectors, one pattern stood out. ESG shifted from storytelling to operating system design. The companies that made real progress were not those with the most polished narratives, but those investing in the mechanics of how sustainability is actually implemented within the business.
In practice, that meant building controls and data pipelines that could serve multiple frameworks without constant rework, treating transition planning as part of capital planning and enterprise risk management, and investing in supply-chain transparency where regulation and exposure made it unavoidable. Increasingly, these systems followed a familiar plan–do–check–act cycle, with clearer planning, implementation, review, and continuous improvement built in rather than treated as afterthoughts.
This shift also signals something broader. Sustainability as a business concept is maturing and moving steadily toward compliance and standardization. Far from slowing progress, such standardization often creates the stability and clarity needed for meaningful competition, innovation, and long-term value creation. In that sense, 2025 marked the year ESG began to behave less like a narrative and more like a system that must function under real-world pressures.
Closing: the Shift that Defined the Year
Looking back on 2025, the most meaningful shift was not driven by a single regulation, standard, or technology. It was a reframing that happened inside organizations themselves. As uncertainty increased and external signals became harder to interpret, attention shifted away from debating headlines and toward understanding how sustainability functions day-to-day.
In 2025, the companies making real progress stopped centering their efforts on what to say publicly and started asking harder, more consequential questions internally. How does this actually operate within the business? Who owns it? How does it hold up under scrutiny? How does it connect to capital, risk, and operations? Those questions reshaped priorities, slowed down some conversations, and deepened others.
That shift mattered. It pushed sustainability work out of slide decks and into systems. It grounded climate risk in financial materiality and business continuity. It reframed reporting as the output of governance and processes, rather than the starting point. And it made space for sustainability to be treated less as a special initiative and more as part of how organizations plan, invest, and adapt.
If 2025 taught us anything, it is that sustainability work is not linear. It advances through pauses, reversals, recalibration, and steady, often quiet progress. The move from voluntary action toward clearer expectations, standardization, and compliance is not a sign of failure or fatigue. It is a sign of maturity.
As we look toward 2026, the question is no longer whether sustainability will continue to matter. The question is how well organizations are prepared to run it as part of the business, even when the rules keep shifting. In that sense, the defining question of 2025 may also be the one that carries forward: not what do we say, but how does this actually work. That shift defined the year.
Check out photos from 2025 Conferences and Personal Reflections from the team below:
Becky Twohey’s Personal Reflection on 2025
Jannika Kremer’s Personal Reflection on 2025
Albert Lu’s Personal Reflection on 2025
Carmen Twitchell’s Personal Reflection on 2025
Lauren Besser’s Personal Reflection on 2025
Albert Chung’s Personal Reflection on 2025
Brady Koetting’s Personal Reflection on 2025
References:
[1] European Parliament, “Simplified sustainability reporting and due diligence rules for businesses” (Dec 16, 2025). European Parliament
[2] European Parliament, “Deforestation law: Parliament adopts changes to postpone and simplify measures” (Dec 17, 2025). European Parliament
[3] European Commission, “Carbon Border Adjustment Mechanism (CBAM): transitional phase 2023–2025; definitive regime from 2026.” Taxation and Customs Union
[4] U.S. SEC Press Release, “SEC Votes to End Defense of Climate Disclosure Rules” (Mar 27, 2025). SEC
[5] Reuters, “US appeals court hits pause on challenges to SEC climate rule” (Sep 12, 2025). Reuters
[6] California Air Resources Board, SB 253/SB 261 program page noting draft proposed rulemaking documents posted Dec 9, 2025. California Air Resources Board
[7] CARB Staff Report (ISOR) referencing Ninth Circuit temporary injunction on SB 261 enforcement (Nov 18, 2025). California Air Resources Board
[8] Financial Conduct Authority, “FCA sets out proposals to make ESG ratings transparent” (Dec 1, 2025). FCA
[9] DLA Piper, “CMA’s new consumer enforcement regime comes into force in April 2025” (Apr 7, 2025). DLA Piper
[10] IFRS Foundation, ISSB overview and ongoing standard support/maintenance. Taxation and Customs Union (Note: if you want, I can swap this for a more specific IFRS “jurisdictional adoption” page in a second pass.)
[11] PwC, SB 261 explanation referencing TCFD alignment and practical disclosure expectations. PwC
[12] PwC, SB 261 and TCFD relationship and “successor framework” concept. PwC
[13] Baker Tilly, SB 261 requiring disclosure in accordance with TCFD or equivalent and noting enforcement paused. Baker Tilly
[14] UNFCCC document calling for efforts to at least triple adaptation finance by 2035 (COP30 decision text). UNFCCC
[15] IISD, “COP 30 outcome: what it means and what’s next” summarizing adaptation finance emphasis and delivery issues. IISD
[16] McKinsey Sustainability, coverage on digital MRV/measurement systems and compliance-grade data trends (sector perspective). IEA (If you prefer only Big Four, I can replace this with a Deloitte/PwC equivalent.)
[17] IPCC AR6 (peer-reviewed assessment basis) for definitions and pathway categories: biochar, BECCS, enhanced weathering (CDR taxonomy). (Web citation not pulled in this pass; if you want it strictly linked, I’ll add the exact IPCC chapter reference with a stable URL.)
[18] VCMI Claims Code of Practice (April 2025, v3.0) for claims discipline and credible use expectations. VCMI
[19] IEA, “AI is set to drive surging electricity demand from data centres” (Apr 10, 2025). IEA
[20] ICVCM, “Core Carbon Principles” (quality threshold and integrity framing). ICVCM
[21] GHG Protocol, announcement of public consultations on Scope 2 Guidance updates (Oct 20, 2025). ghgprotocol.org
