The future of ESG in 2025: a world divided

The future of ESG in 2025 is uncertain. If you’re one of many corporate leaders who have given it considerable attention and are now wondering where things stand, this article will clarify things for you. 

Publicly, the battle over Environmental, Social, and Governance (ESG) principles is heating up, and 2025 is shaping up to be a make-or-break year. Donald Trump’s 2024 victory, buoyed by agendas dedicated to combatting so-called “woke capitalism,” has thrown a wrench into the ESG movement in the United States. But while some parts of the world are doubling down on anti-ESG sentiment, others—like Europe and Asia—are charging ahead with ambitious sustainability plans—unfazed, so far, by angry rhetoric elsewhere. 

The conundrum around ESG is that, for many people, it’s all about politics. Much of the media will reinforce that viewpoint because it’s the juiciest angle, filled with conflict – the makings of a good story. 

But ESG goes much deeper than politics. The real decisions are made on quieter levels, where investing patterns continue, and corporate strategies align with investor priorities. Although it may not be as juicy, it’s the main factor fuelling success or failure in ESG. 

So, let’s examine the practicalities. Where do things stand with ESG, and where might they go next?

We’ll divide this into two categories, reflecting the two main viewpoints on ESG in 2025: investing and politics.

When it comes to investing, there’s one main conclusion: ESG isn’t going anywhere. 

You may have read many news articles—particularly in the last 18 months—discussing divestment from ESG assets and the decreasing popularity of ESG among stakeholders. These stories are true, and they signal that ESG is taking a beating in some quarters, but if we zoom out, the numbers tell a different story. 

As of late 2024, the global value of ESG assets is still expected to hit somewhere between $35 and $50 trillion by 2030, according to University of Chicago lecturer and Impact Engine Chief Investment Officer Priya Parrish, writing for Fortune last October. 

In other words, the recent setbacks for ESG investing are small backflows, but the much more significant wave of overall ESG investing still exists. 

Why the continuing surge? Investors are likely convinced that ESG-related investments are smart, long-term bets. Many of today’s ESG pillars involve adaptation, which is essential in governance thinking and good news for investors who always want clarity on how a company will succeed in five, ten, or twenty years. 

Even as critics argue that ESG is overhyped, woke, or restrictive, a colossal chunk of capital remains, especially in Europe and Asia, where ESG investments are firmly entrenched. 

Investors in the US will be much more cautious about ESG, but again, this is on the public political side, which we’ll explain more about below.

The other firm conclusion we’re drawing is that the debate over ESG will not simmer down any time soon. Trump’s return to power in the United States means that everything related to ESG will face even more backlash and legal headaches. These can range from limiting ESG considerations in federal contracts to questioning corporate motivations. The critics are loud and emboldened, and they’ll motivate anti-ESG movements elsewhere. 

Will they succeed? It’s very iffy. 

You might have heard that the bulk of the world’s population went to the polls in 2024, including the UK, the EU (as a whole and within certain member states like France), and India. New governments with fresh mandates now exist in these places; many will remain until around 2030, and most remain committed to ESG-related principles in some form. 

The European Union is doubling down, rolling out regulations like the Corporate Sustainability Reporting Directive (CSRD) that demand more transparency and accountability than ever. In Asia, governments are leaning into sustainability to future-proof their economies. 

The result? A fragmented world where ESG is thriving in some places and under siege in others.

So, where does it all leave us, governance professionals trying to make key strategic decisions around ESG?

Unfortunately, there’s no clear answer because each company’s ESG strategy depends on its goals, industry, national stakeholder mood, and so on. However, we can make a few more general predictions right now:

1. Regional divides will deepen. Europe and Asia remain ambitious about ESG, and new regulations in this area are coming into force. Meanwhile, the U.S. and some emerging markets are grappling with political resistance. Expect the gap between these regions to widen, which is bad news for the boards of trans-Atlantic companies. Suddenly, they need to ensure their business pleases two very different political regimes. 
2. Transparency will require upskilling. Many companies, particularly in Europe and Asia, will realise the need for new expertise on boards and executive teams. It’s the only way they can hope to comply with the new reporting regulations they face. Because of that, ESG-related-training will become more crucial. 
3. Tech will lead the charge: AI and blockchain are set to revolutionise ESG reporting. Think real-time monitoring of supply chains and automated sustainability audits. The future is digital because digital can make massive tasks more manageable, enabling companies to report with great depth and confidence. 
4. “Hushing” will be the new ESG language in the US: How does a company pursue ESG investment without angering its anti-ESG government? The answer is hushing, which essentially means being quiet on a particular issue, no matter how devoted you are to it, for fear that being public will attract too much unnecessary criticism.
5. Corporate activism will rise: Whether companies and politicians like it or not, the most polarised attitudes around ESG will mean more activism among investors. Boards need to be prepared for this because aggressive activism can sometimes threaten their entire agenda.

The story of ESG is being rewritten in real time. The loud political pushback in the media starkly contrasts with the continuing investment in sustainability, accountability, and transparency. 

Navigating all this is a considerable challenge for businesses, but there is also an opportunity for those who adapt quickly, embrace innovation, and stay ahead of evolving regulations.

The future of ESG in 2025 – The Corporate Governance Institute