Preparing for 2025: Navigating Key Sustainability Regulations
Next year will be a wild ride for corporate sustainability. The confluence of regulatory disclosures from California, Canada, the EU, and more, are driving widespread focus on getting the fundamentals in place to comply. Concurrently, a new Trump Administration has prompted many of our clients and partners to ask us how this will impact the road ahead. The expansion of regulated disclosure will increase scrutiny of corporate actions, ensuring companies show their work and prove they’re improving their impacts and reducing risk. With major rules like the EU Corporate Sustainability Reporting Directive (CSRD) and California’s Climate Accountability Package in effect, and the expected trickle-down compliance effect for suppliers to meet these requirements so their customers can, companies must ensure they are prepared for the changing landscape.
Here’s where companies should focus their energy next year to stay compliant and ahead of the curve:
1. Understand Key Sustainability Regulations
The regulatory environment is becoming more complex, and businesses must first ensure they fully understand the major regulations impacting their operations, as well as that of their customers. Key frameworks include:
EU Corporate Sustainability Reporting Directive (CSRD): Requires companies to identify and report qualitative and quantitative data on their sustainability impacts, risks and opportunities across ESG topics.
Expected to apply to 50,000 companies.
EU Corporate Sustainability Due Diligence Directive (CSDDD): Focuses on due diligence across the supply chain, requiring companies to identify and mitigate human rights and environmental risks.
Expected to apply to 5,000+ companies.
California Climate Accountability Package (SB 253 & SB 261): Mandates disclosure of annual emissions, including Scope 3, and biennial climate risk for companies operating in California.
Expected to apply to 5,000 (SB 253) and 10,000 (SB 261) companies, respectively.
These rules also reflect growing stakeholder demands for transparency, as customers and investors increasingly seek companies with strong sustainability credentials.
2. Assess Readiness and Close Gaps
Conduct a gap analysis of your current sustainability infrastructure and reporting processes against the specific requirements of each relevant regulation. This includes assessing your ability to meet the disclosure requirements themselves, as well as whether the internal infrastructure exists to enable compliance.
Develop a phased roadmap to close these gaps before the regulations take effect.
3. Identify Material Impacts, Risks, and Opportunities
Conduct a double materiality assessment (DMA) to identify the most relevant sustainability-related impacts, risks and opportunities applicable to your business. Through this process, assess how sustainability-related risks and opportunities may influence your company's financial performance, as well as how the company’s activities throughout the value chain impact people and the environment. DMA is now the standard for determining which sustainability topics your company should include in annual reporting.
4. Build Data Management Systems and Internal Infrastructure
The increased reporting regulations in the coming year call for robust data management systems. Invest in:
Emissions tracking systems to ensure consistency and accuracy across all emissions Scopes (1, 2, and 3).
Human rights due diligence tools for streamlined risk monitoring and data collection across your value chain.
Internal systems to support governance, including board oversight of ESG risks and opportunities.
Accurate data will be key, not just for compliance but also for building trust with stakeholders, including customers, investors, and regulators.
5. Map Your Company’s Value Chain
A clear understanding of your entire value chain is crucial for identifying both risks and opportunities. Under regulations like the CSDDD and CSRD, you’ll need to have visibility into the environmental and human rights practices of your suppliers and partners.
Mapping your value chain allows you to:
Pinpoint high-risk areas that need immediate attention.
Ensure that you can collect reliable data for Scope 3 emissions and supply chain risks.
6. Conduct Internal & External Communications and Change Management
As these regulations come into play, it’s critical to ensure that your company is not only compliant but also able to effectively engage and communicate with necessary internal and external stakeholders. Think about:
Internal change management: Train employees and key stakeholders on the new requirements and their roles in meeting compliance targets. Build a culture of sustainability, data collection and analysis within your organization.
External communications: Ensure that your ESG and sustainability claims are transparent and credible to avoid greenwashing accusations and maintain trust with your stakeholders. With the EU Green Claims Directive and U.S. FTC Green Guides, businesses must substantiate any environmental claims they make. Unintentional greenwashing can have significant regulatory and reputational risks so ensure your communications claims are reviewed and approved by expert sustainability team members or your sustainability consulting firm before they go public.
Final Thoughts: Act Now to Stay Ahead
2025 will be a pivotal year for businesses to align with major ESG, climate, and human rights regulations. By focusing on understanding the regulatory landscape, closing data gaps, building internal infrastructure, and communicating clearly, companies can not only ensure compliance but also enhance their reputation as sustainability leaders.
Reach out to discuss how our team can help your business be well-prepared for the regulatory changes ahead!
Avoiding Greenwashing Guide
Accusations of greenwashing aren't just a hit to reputation; they present a new area of measurable and material financial risk for companies. It's about ensuring your statements aren't just words but are rooted in accuracy, transparency, and backed by credible evidence.
Download our guide which will introduce you to evaluating your marketing, communications, and report materials for greenwashing.
Click here to download our Guidebook.
The Uplift Agency
Uplift builds strategies, programs, and communication campaigns that advance ESG in workplaces, supply chains and communities.
We know how to navigate the road ahead because we’ve already been down it – 90 percent of our team has led environmental or social programs in corporations or nonprofits. Because ESG is all we do, our services are more comprehensive and integrated than most firms.
