ESG 2025: Trends to Watch, Emerging Innovations, and Practices Falling Out of Favour

Executive Summary

As we enter 2025, the ESG landscape continues to transform, influenced by technological innovation, regulatory developments, and shifting stakeholder expectations. Five key trends are shaping the future of ESG, including increased corporate accountability, advanced reporting tools, and a move towards niche consulting firms. At the same time, emerging trends like biodiversity-focused investments and sustainable financing innovations are gaining momentum. Conversely, outdated practices such as greenwashing and reliance on traditional consultancy models are declining.

This article explores these developments, offering insights into the trends that will dominate, emerge, or diminish in 2025.

Continuing Trends

These trends represent the evolving foundations of ESG and are expected to remain significant in 2025:

1. Corporate Accountability for Climate Action Companies face increased pressure to adopt measurable, science-based targets for reducing carbon emissions, particularly Scope 3 emissions. Stakeholders demand accountability and transparent progress reporting.
2. Technological Integration in ESG Reporting Innovations like AI, blockchain, and IoT sensors are enhancing the accuracy, accessibility, and reliability of ESG data reporting, enabling companies to address gaps and predict risks proactively.
3. Diversity, Equity, and Inclusion (DEI) Initiatives DEI remains a priority for organisations striving to create inclusive workplaces and equitable supply chains, with measurable KPIs becoming standard in reporting.
4. Circular Economy and Waste Reduction Companies are investing in closed-loop systems to minimise waste, reuse materials, and support the circular economy, aligning with broader sustainability goals.
5. Integration of ESG into Core Business Strategies ESG is no longer a standalone effort but a core component of corporate strategy, driving long-term financial performance and resilience.

Emerging Trends

These new trends are reshaping ESG practices and creating fresh opportunities in 2025: 

1. Specialised ESG Consulting Services Companies are shifting away from traditional Big Four firms in favour of niche ESG experts who offer tailored, innovative, and cost-effective solutions.
2. Focus on Biodiversity and Nature-Positive Investments Biodiversity loss is now seen as a critical ESG issue. Investors and businesses are prioritising nature-positive practices and conservation projects to address ecological impacts.
3. Sustainable Financing Innovations Green bonds, sustainability-linked loans, and tokenised ESG assets are gaining traction as companies explore diverse financing methods tied to measurable ESG outcomes.
4. Intersection of ESG and Artificial Intelligence AI is being deployed to optimise ESG strategies, identify risks, and track performance, enabling real-time insights and enhanced decision-making.
5. Greater Emphasis on Social Impact and Community Engagement Companies are prioritising projects with measurable social outcomes, focusing on uplifting underserved communities and addressing global social inequities.

Declining Trends

These trends are falling out of favour as stakeholders demand greater authenticity and efficacy in ESG efforts:

1. Greenwashing and Superficial Commitments With increasing scrutiny, companies are abandoning performative sustainability claims and are instead investing in tangible, transparent initiatives.
2. Overreliance on Traditional Consultancy Models The dominance of Big Four firms in ESG consulting is waning as companies seek flexible, sector-specific expertise offered by boutique firms.
3. Neglecting Scope 3 Emissions Organisations can no longer ignore the complexity of Scope 3 emissions. The trend of focusing only on operational emissions is being replaced with holistic value-chain accountability.
4. Short-Term ESG Initiatives Businesses are moving away from short-term, one-off ESG projects to adopt long-term, systemic changes integrated into their strategic planning.
5. ESG as a Public Relations Tool ESG is shifting from a PR function to a governance and operational imperative, focusing on genuine value creation rather than image management.

Conclusion

The ESG landscape in 2025 is defined by a blend of continuity, innovation, and evolution. Established practices like climate accountability and circular economies continue to grow, while emerging trends such as biodiversity-focused investments and niche consulting services are reshaping priorities.

Simultaneously, outdated approaches like greenwashing and superficial ESG efforts are rapidly losing relevance. Companies that embrace these trends and integrate them into their core strategies will not only meet stakeholder expectations but also secure long-term resilience and success in an evolving global market.

About ESG&I.

ESG&I is a leading purpose-driven consultancy dedicated to empowering businesses with practical and innovative Environmental, Social, and Governance (ESG) solutions. We specialise in ESG strategy development, reporting, training, and bespoke consulting services tailored to organisations of all sizes. Leveraging AI and cutting-edge technology and a team of niche experts, we help our clients navigate complex sustainability challenges, enhance transparency, and drive meaningful impact.

Discover how ESG&I can support your sustainability journey in 2025.

Website: esgandi.com.au Email: hello@esgandi.com.au Phone: +61 428 317 387