Sustainability at a Crossroads
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Executive Summary
The 2025 annual retrospective of ESG policy developments highlights a global shift toward standardizing disclosures while simultaneously introducing "simplification" measures to manage the reporting burden on companies, financial institutions, and other market participants in the sustainable finance ecosystem.
Throughout the year, sustainability regulations – like the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) – shifted towards ‘downsizing’ measures to reduce the reporting burden on corporates. Conversely, central banks intensified requirements and highlighted the critical need for ESG data for the risk management of financial institutions. Financial institutions are facing increased pressure from regulators such as the European Banking Authority (EBA), the Basel Committee on Banking Supervision (BCBS), the European Central Bank (ECB) and the Bank of England (BoE) to provide granular, evidenced disclosures on transition risks and supply chain decarbonization.
In 2025, there emerged a dual landscape where banking regulators are requiring more ESG information from banks, while some broader corporate ESG requirements are facing rollbacks, particularly in the EU. In terms of sustainable finance, this has created a widening data gap between portfolio level and counterparty level data.
