For years, Environmental, Social, and Governance (ESG), a framework used to evaluate a company's or project’s sustainability, has been a key topic of discussion. But a combination of evolving regulations, technological innovation, and rising expectations around transparency will make the coming year critical. More than just a framework, ESG is becoming the foundation for how businesses and investors align profitability with sustainability.

Here’s why 2025 is shaping up to be a transformative year.

The Rise of Mandatory and Voluntary Disclosures

Disclosures have been a point of focus in ESG for some time, but I expect that we’ll see real progress as businesses are compelled to up their game. The European Union’s Corporate Sustainability Reporting Directive (CSRD) and Sustainable Finance Disclosure Regulation (SFDR) demand unprecedented levels of detail from companies and investors, especially for the latter managing so called “Article 9” funds focused on deep environmental and social impact. These frameworks require organisations to not only identify their negative impacts but to also measure and articulate how they will deliver positive change.

Meanwhile, voluntary standards like the Taskforce on Nature-related Financial Disclosures (TNFD) continue to gain traction, with early adopters now setting the tone. For those of us working on nature-focused projects, TNFD represents a major step forward, establishing how businesses and private finance can contribute to global nature goals.

It’s no longer enough to claim sustainability—organisations must demonstrate it with robust data and transparency.

The Push to be Nature Positive

A standout trend for 2025 will be the “nature positive” movement, the global goal of halting and reversing nature loss by 2030 with a full recovery by 2050. Stemming from the Kunming-Montreal Global Biodiversity Framework, this approach challenges businesses and investors to go beyond simply minimising harm to actively contributing to the restoration of nature.

Organisations like WWF are leading the charge, offering practical guidance on how companies can align their activities with biodiversity goals. But the bar is set high. It’s not enough to make vague commitments—businesses and investors are increasingly being pushed to demonstrate measurable results related to ecosystems and biodiversity.

To meet these demands, businesses will need to embrace cutting-edge monitoring, reporting, and verification (MRV) tools which are evolving at breakneck speed. Technologies like geospatial mapping, eDNA sampling, and AI-driven analytics are enabling deeper and more precise measurements.

For us and our many global partners and clients working on nature projects, this represents an exciting opportunity to catalyse action by making these tools more accessible and practical for businesses and investors alike.

Carbon Market Integrity

The past few years have been tough for carbon markets, which were rocked by scandals over integrity and poor governance. However, the market is poised for recovery, thanks to stronger standards such as the iCVCM (Integrity Council for the Voluntary Carbon Market), Core Carbon Principles, SBTi (Science Based Targets initiative), and others which aim to restore trust by defining what constitutes a credible carbon credit, both on the supply and demand sides.

These improvements are heavily based on better ESG practices and increased transparency, and their mainstreaming is reflected in the strict criteria of carbon credit buying groups such as the big tech Symbiosis coalition.

However, complexity remains a barrier. While stronger compliance frameworks are necessary, there is a risk they could dissuade uptake if they become overly burdensome. Yet the broader momentum is clear: businesses understand that their long-term success is tied to a healthy planet, and this fundamental reality will drive investment into impactful projects.

ESG Meets Technology

Despite its critical role, ESG remains surprisingly analogue. Current processes are often slow and cumbersome, relying on questionnaires, trawling through documents. But 2025 could mark a turning point as technology is increasingly integrated into ESG practices.

AI and machine learning offer immense potential to streamline data collection, analyse risks and impacts, and enhance transparency. For example, AI systems can quickly process large volumes of data from impact assessments, reports and news articles, rapidly identifying key risks and opportunities for improvements, and enhancing decision making. In addition, complex reporting requirements can be automated, greatly freeing up the administrative burden.

These innovations promise to make ESG reporting faster, cheaper, and more reliable, bringing greater clarity to both investors and regulators.

From Compliance to Action

Ultimately, ESG is about more than compliance—it’s about creating the conditions for achieving meaningful impact. ESG and impact go hand in hand: ESG sets the foundation by ensuring businesses “do no harm,” while impact builds on that foundation to “do good.”

In our work across several natural capital funds, this approach has delivered real results. Whether it’s restoring wildlife corridors or supporting local communities, these projects start with rigorous ESG processes.

By identifying risks and mitigating them, we enable positive outcomes that benefit people and the planet.

Why 2025 Brings Hope

While there has been a frustrating lack of action in recent years, I believe 2025 will finally see capital flowing into businesses and projects that deliver tangible benefits on the ground. The complexity of ESG frameworks alongside the alphabet soup of compliance requirements, while sometimes daunting, has created a foundation of integrity and transparency that investors can trust.

Once the cork is out of the bottle, I expect to see significant investment in to business models that restore nature, enhance biodiversity, and uplift local communities.

What gives me hope is the growing recognition that businesses and investors cannot afford to ignore ESG. The health of the planet is directly tied to the health of the global economy, and this reality is driving change at every level. More than ever, there is a willingness to embrace innovation, collaborate across sectors, and focus on solutions that work.

2025 has the potential to be a landmark year for ESG—not just a year of frameworks and reporting, but one of real-world impact. If we can harness this momentum, we can build a future where economic growth and environmental stewardship go hand in hand.

The time for action is now, and I am optimistic that next year could mark the beginning of a truly sustainable future.