1. Sustainable supply chains: the pressure on SMEs increases
Due to European directives such as the CSRD (Corporate Sustainability Reporting Directive), the CSDDD (Corporate Sustainability Due Diligence Directive) and the EUDR (EU Deforestation Regulation), large companies are increasingly focusing on more sustainable supply chains. They encourage their suppliers and other partners to reduce their carbon emissions, but also act sustainably in areas such as working conditions, resource extraction and impact on local communities.
Although SMEs are not legally obliged to adopt specific sustainability standards, the pressure from the big companies that they supply is increasing. To support SMEs, in 2024 the EU introduced the VSME Directive, a simplified version of the CSRD. These lighter reporting requirements make it easier for SMEs to integrate and report on sustainability in their business operations. By investing in their own ESG report, SMEs avoid having to answer each individual customer question separately.
2. Carbon markets come to fruition
Global carbon markets are expected to evolve at a faster pace by 2025. Companies are under growing pressure to become climate neutral, both due to stricter legislation and increasing stakeholder expectations. The transition has begun, and brings with it significant challenges for businesses, but also plenty of opportunities.
The European carbon market remains a trendsetter thanks to its emissions trading system (ETS), which encourages companies to reduce their CO2 emissions by allocating a decreasing amount of tradable emission allowances. Besides Europe, the United States, Canada, China, Japan, New Zealand, South Korea and Switzerland have also introduced CO2 emissions trading schemes. Companies that proactively commit to renewable energy, reforestation and other decarbonization solutions will begin to feel increasing returns as the carbon price rises. Thus, investing in sustainability also provides a competitive advantage in markets that increasingly value low emissions. Due to the structural decline and increase in demand, CO2 emission rights are also highly attractive to investors.
3. Geopolitical uncertainty fragments ESG policy
The global sustainability landscape will become even more complex in 2025. While regions such as China, India, Singapore and Australia are introducing reporting legislation, the United States’ climate ambitions are likely to be sharply scaled back under President Trump. It will become increasingly complex for multinational companies to add value globally while complying with diverse ESG regulations.
The EU is already working on an Omnibus Directive that will streamline and simplify the CSRD, EU taxonomy and CSDDD. Streamlining and simplifying these legislations will make it less complex for companies to comply with European reporting requirements. European Commission President Ursula von der Leyen stressed that the simplification will not compromise the Green Deal objectives nor Europe’s ambition to become climate-neutral.
4. Technology and AI transform sustainability management
By 2025, technologies such as AI, blockchain and big data analytics will become indispensable tools for companies looking to achieve their sustainability goals. These advanced tools offer support on multiple fronts:
- Managing impacts and risks: companies can more accurately predict, measure and transparently report their environmental impacts and risks.
- Making supply chains sustainable: thanks to tracking technologies such as blockchain, companies achieve better visibility of the entire value chain of their products.
- Streamlining internal processes: AI and big data make it possible to optimize business processes and design them in a more sustainable way.
- Engagement of external stakeholders: technologies help companies work better with customers, suppliers and investors, and actively involve them in their sustainability strategy.
With these tools, companies can not only better respond to increasing demands around ESG, but also seize opportunities to gain a competitive advantage and drive innovation.
5. The fight against greenwashing intensifies
By 2025, the fight against greenwashing will have further intensified. Public attention to misleading sustainability claims continues to grow, and companies should prepare for stricter regulations. The Green Claims Directive, which comes into force within a year, will impose minimum requirements for environmental and climate communications, and also result in the execution of strict controls.
To avoid risk, authentic communication is crucial. Companies need to back up their ESG stories with clear facts and figures. This is essential not only to avoid fines, but above all to avoid reputational damage. Pantarein helps companies develop accurate and credible ESG stories. By focusing on transparency and honesty, we contribute to a positive and credible positioning of our clients.
6. CSRD compliance becomes a pivotal moment in sustainability reporting
Last but not least, 2025 will be the year of sustainability reporting. This spring, listed companies will for the first time publish CSRD-compliant reports (for the 2024 financial year). Among others, Vandemoortele Group and Proximus, two of our clients, will soon publish their CSRD reports. Together, we went through all the essential steps to document and transparently report on the required ESG datapoints.
Large, unlisted companies are also headed for CSRD compliance in 2025. Pantarein supports companies in this respect in several areas. For instance, we conduct double materiality analyses to identify sustainability priorities, and use gap analyses to identify any shortcomings. We also help companies implement policies, action plans, data management and monitoring tools. Finally, we guide the publication of reports that meet all legal requirements while at the same time having a strong communicative impact. In this way, a sustainability report also serves as a communication tool to customers, investors and other stakeholders.
Follow our website to check out the brand new reports of all these companies over the coming months!
