2025 has been a year that forced businesses, regulators and investors to pause and reassess what sustainable progress really looks like. Expectations at the start of the year were high, with many anticipating clearer ESG regulations, stronger global alignment and the steady normalisation of sustainability reporting. Instead, 2025 became a year shaped by political shifts, regulatory rewrites and competing priorities across regions.
Yet, this period of recalibration has been useful. It has revealed where sustainability frameworks are resilient, where they remain fragile, and where organisations may find themselves needing to adapt in 2026. It also highlighted how closely sustainability is now tied to economic performance, supply chain resilience, risk management, and long-term competitiveness. Even when the politics of ESG slowed momentum, market expectations have remained. As have investor scrutiny, trade requirements and public pressure for transparency.
From evolving global disclosure standards to new approaches to due diligence, 2025 leaves us with a more honest picture of what the next phase of sustainability looks like: data-driven, internationally aligned, and increasingly shaped by supply chain accountability, reporting accuracy and digital solutions.
As we look ahead to 2026, things are becoming clearer. Mandatory sustainability disclosures are likely to accelerate. ESG and financial reporting will converge. Cybersecurity will emerge as a governance priority. And despite the political noise of 2025, sustainability will continue to be a defining factor for corporate strategy and global trade.
Here is a region-by-region recap of the key sustainability, ESG and supply chain developments that shaped 2025, and the signals they send for the year ahead.
Europe and the UK
Across Europe, 2025 has been defined by the “Omnibus Simplification” process, an effort to streamline, reinterpret and in several cases unwind elements of the EU’s sustainability regulatory landscape, including major ESG regulations and corporate sustainability reporting frameworks.
In practice, however, the exercise has been anything but simple. Following the “super election year” of 2024, where shifts in political power occurred across several EU member states, 2025 became a year of protracted negotiations. Industry associations warned of overregulation. National governments advocated flexibility. Civil society organisations insisted on protecting environmental and human rights commitments. The result has been a year of political wrangling that slowed the implementation of some of the most ambitious supply chain due diligence and corporate sustainability reporting requirements to date.
Delays, Dilution and Disillusionment
Multiple flagship pieces of EU sustainability legislation, including the Corporate Sustainability Due Diligence Directive (CSDDD), the Corporate Sustainability Reporting Directive (CSRD) and the EU Deforestation Regulation (EUDR) were either delayed, diluted or reconsidered entirely.
While none have been discarded outright, their scopes have been trimmed or implementation timelines delayed, leaving many companies facing yet another cycle of regulatory uncertainty. For businesses investing heavily in ESG transformation since 2020, the mixed signals have created frustration. For SMEs already struggling with compliance costs, the pause has provided temporary breathing space.
Lieferkettengesetz: A Legislative U-Turn
Germany provided a clear example following the election of a new coalition government. Formed of the conservative CDU and CSU parties and centre-left SPD, it took little time for the parties to agree to abolish abolish the German Supply Chain Due Diligence Act, considered Europe’s strongest models for human rights regulation. Its rollback was viewed by many as a retreat from legislative leadership, while others saw it as necessary to relieve pressure on German industry.
The UK: Slow but Steady Progress
In contrast to Europe, the United Kingdom took a more measured approach in 2025 as it sought to align with trading partners.
2025 marked ten years since the introduction of the groundbreaking UK Modern Slavery Act, legislation that has since been overshadowed by more robust frameworks globally. For the Labour government, now with a full year in office, the year provided an opportunity to update the UK’s human rights and sustainability frameworks. Committees reviewing the effectiveness of existing legislation acknowledged that the UK had fallen behind peers.
Progress was made with UK Sustainability Reporting Standards, alignment with EU Carbon Border Adjustment Mechanism (CBAM) and plans to enhance the UK’s position in global sustainability regulation.
Overall, 2025 revealed divergence across Europe as political pressures reshaped priorities. The UK, meanwhile, took careful steps to re-establish credibility as a regulatory partner.
Key Takeaways: Europe & UK
- EU sustainability legislation remains in flux, affecting ESG compliance planning.
- Companies should prepare for continued adjustments to CSRD, CSDDD and EUDR timelines.
- The UK is re-aligning with global standards, signalling a more stable approach to sustainability reporting and supply chain governance.
Middle East and Africa
Despite geopolitical complexities, 2025 has been a year of visible momentum in the Middle East and parts of Africa, driven by a recognition that sustainable development is both an environmental necessity and a strategic economic opportunity.
Middle East: Sustainable Economic Ambition
Countries in the region have continued aligning with sustainability initiatives with national economic transformation agendas such as Saudi Arabia’s Vision 2030. Several Gulf states ramped up their efforts in 2025 to demonstrate ESG leadership, especially around green finance, energy innovation and sustainable infrastructure.
Highlights in the region have included new national sustainability reporting standards in countries like Qatar and a surge in green financing, with more than £24 bullion raised regionally, more than double previous years.
The Middle East’s strategy has been clear. Here, sustainability is not just a reputational exercise; it is supporting economic diversification and driving technological leadership.
Africa: Alignment with Global Standards
In parts of Africa, 2025 has signalled a period of regulatory alignment, particularly in transparency and reporting.
Countries including South Africa, Nigeria and Kenya advanced consultations or adoption of IFRS S1 and S2, responding to investor expectations and a desire to deepen access to global markets. Implementation capacity remains a challenge, but sustainability reporting is becoming embedded in national economic governance.
Key Takeaways: Middle East and Africa
- The Middle East is emerging as a leader in green finance and sustainability reporting frameworks.
- African markets are moving toward ISSB-aligned reporting, improving interoperability with global trade partners.
- Regions see sustainability as a strategic economic tool, not only an environmental one.
Asia-Pacific (APAC)
The Asia-Pacific region continued its progressive shift, balancing economic competitiveness with rising pressures to address environmental and labour issues.
Increased Due Diligence
Several APAC jurisdictions have taken meaningful steps to look towards mandatory human rights and environmental due diligence. In Thailand, a draft due diligence bill was introduced earlier in the year which aligns closely with international standards and is not dissimilar to the EU’s CSDDD. Debates have also taken place in New Zealand and South Korea as both countries consider what their approach might look like.
Expanding Disclosures
In addition to due diligence, mandatory climate and sustainability reporting has accelerated dramatically. Based on either national frameworks or ISSB-aligned standards, countries including Australia, Japan, China and New Zealand have sought to develop or expand existing reporting standards.
APAC’s approach reinforced a clear trend: while Western jurisdictions debated ESG rollbacks, APAC focused on modernising sustainability regulation and embedding it beyond traditional capital market reporting.
Key Takeaways: APAC
- APAC is becoming a leader in mandatory sustainability reporting and supply chain due diligence.
- ISSB-aligned disclosures are now widespread across the region.
- ESG regulation in APAC is moving forward, even where others have slowed.
Latin America (LATAM)
Latan America has experienced a significant increase in sustainability-related activity in 2025, largely driven by trade needs, investor expectations and an increasingly vocal domestic demand for corporate accountability.
Recognising Global Standards
Countries including Brazil, Chile and Colombia advanced consultations to adopt the ISSB IFRS S1 and S2 standards as a basis for national sustainability reporting frameworks. This alignment supports improved trade interoperability, as many Latin American economies continue to rely heavily on exports to the EU and North American markets.
Human Rights Due Diligence Enters the Conversation
Public pressure has continued to grow in 2025 for a more proactive approach to human rights due diligence, fuelled by longstanding concerns about labour exploitation, deforestation and land rights. In Brazil and Colombia, debates have taken place on the introduction of mandatory human rights due diligence. The year has also seen similar conversations in Peru, Mexico and Argentina, albeit at the early stages.
EU Exports
As major exporters of soy, beef, coffee, cocoa, timber, and cattle-derived products, many Latin American producers, particularly smallholders, faced increasing uncertainty due to shifting EUDR import requirements, prompting concerns around compliance costs and readiness.
Key Takeaways: LATAM
- LATAM economies are moving toward ISSB-aligned sustainability reporting to support global trade.
- Legislative discussions on mandatory human rights due diligence are expanding.
- Exporters must prepare for evolving EUDR compliance, especially in agriculture and forestry.
North America
No region demonstrated the political shaping of sustainability more clearly than North America.
USA Policy Reversal
Under the new Republican administration, federal sustainability priorities shifted rapidly. Previously agreed SEC climate disclosure rules were abolished early in the year, creating a regulatory gap at federal level and increasing reliance on state-level climate and ESG laws.
New York, Illinois and Colorado advanced sustainability measures, while California continued developing SB 253 and SB 261, despite legal challenges.
The result: a fragmented and unpredictable regulatory landscape.
Canadian Stability
Canada delivered a more consistent sustainability narrative. Expansions to existing legislation such as the Competition Act and the implementation of a national carbon pricing system have all been worked on throughout the year.
In alignment with economic trading partners, several initiatives have been introduced, including a commitment to adopt the ISSB-aligned sustainability disclosure standards and a reaffirmation via the 2024 Fall Economic Statement that the Canadian government will seek to introduce a robust modern slavery and supply chain due diligence regime.
Key Takeaways: North America
- The US faces a fragmented ESG environment, driven by state-level climate disclosure laws.
- SEC climate rules have been reversed, but investor expectations for sustainability data persist.
- Canada continues to offer policy stability, moving forward with ISSB reporting and supply chain due diligenceplans.
2026 Outlook: Five Themes to Watch
If 2025 revealed anything, it’s that sustainability, despite political turbulence, remains fundamentally important to the public, investors, trade partners and regulators. The political discourse may have been polarised, but demand for integrity, transparency and accountability has not diminished.
The closing stages of the EU’s Omnibus negotiations have been particularly telling. The European Commission’s press release referenced a mechanism to review and potentially expand the scope of sustainability legislation in the future. Despite the rhetoric of simplification, the long-term direction still points towards deeper integration of sustainability into core business strategy.
Looking to 2026, several global trends are already clear:
Mandatory, Data-Driven Reporting
Whether under a legal obligation or pushed by client requirements, companies will face increasing pressure to provide verifiable, audit-ready sustainability data, aligned to interoperable frameworks such as IFRS S1 and S2. Manual processes will become unsustainable and digital sustainability management will become increasingly relied upon.
Supply Chain Accountability
Regulations like EUDR, CSDDD, CBAM and their regional equivalents will require companies to have a greater understanding of the environmental and human rights impacts across their supply chains. A company’s own business operations and those of it’s value chain are becoming increasingly linked.
Circular Economy as an Economic Catalyst
Echoing recommendations in the Draghi Report, the EU’s Competitive Compass emphasises circular economy innovation as a pathway to economic security. Regenerative industries; recycling, repurposing and re-manufacturing will grow rapidly as companies look to reduce waste and take advantage of gaps in the market.
Corporate Sustainability as a Business Strategy
The CSRD’s Double Materiality framework capturing Impacts, Risks and Opportunities has expanded the conversation beyond “ESG”. Sustainability is now embedded in risk management, strategic planning and long-term financial sustainability. Embedding economic performance into broader sustainable practices is only set to deepen in 2026.
Cybersecurity as a Core Governance Metric
Cybersecurity has traditionally existed adjacent to ESG frameworks, but 2025’s record number of prominent cyberattacks has forced a rethink. Information security and operational resilience are set to become essential governance issues with share prices, customer trust and regulatory compliance all at stake.
Turning Insight Into Action for 2026
2025 was not the year sustainability reached maturity. Instead, it was a year of recalibration, marked by political contests, regulatory rewrites and shifting expectations. Yet beneath the turbulence, one message cut through: sustainability continues to influence global markets, supply chains and long-term business resilience.
As 2026 approaches, sustainability is no longer something happening around organisations, it is something shaping them. Regulatory complexity will continue, but the direction is steady, with growing emphasis on reliable data, transparent supply chains and accountable business practices.
If 2025 brought the crossroads, 2026 is the moment for organisations to move with purpose. Achilles can help you do that. From interoperable reporting to supply chain assurance, due diligence, and real-time sustainability insight, Achilles supports organisations ready to strengthen compliance, increase visibility and build resilience across their value chains.
