One of the biggest shifts in 2025 is the widespread adoption of the ISSB-aligned mandatory reporting. Designed to improve consistency and comparability in sustainability disclosures, ISSB-aligned reporting is gaining traction in markets across the world. Jurisdictions like the UK, Japan, Australia, and Canada are at various stages in their journeys to adopt ISSB standards in their corporate reporting frameworks, supporting companies to consider the financial implications of climate and the transition on their operations.

At the same time, the framework of the Global Reporting Initiative (GRI) remains important, though its role is shifting. The influence of the GRI can be seen in the topic-specific standards of the EU’s European Sustainability Reporting Standards (ESRS), as well as an important baseline for the development of ISSB. For companies, teams across the firm need to have an understanding of their expectations under multiple frameworks and regulations.

Europe has long been a leader in sustainable finance regulations, but 2025 is a pivotal year for its regulatory approach. The EU’s Omnibus Bill aims to streamline key reporting frameworks, including the Corporate Sustainability Reporting Directive (CSRD), the EU Taxonomy, and the Corporate Sustainability Due Diligence Directive (CSDDD). Policymakers are seeking to reduce duplication and increase efficiency in a push to boost Europe’s global competitiveness.

Despite these efforts at simplification, Europe is unlikely to relinquish its role as a sustainability reporting leader. Even if the changes proposed in the Omnibus Bill are adopted, the CSRD is likely to still remain the most comprehensive sustainability reporting framework globally. Firms operating in the EU should prepare for continued high standards.

See the table below for more information on what the proposed changes are:

In many jurisdictions, the era of voluntary net-zero commitments is over—2025 is about implementation. Many firms in the UK and Europe are being asked to develop credible, actionable transition plans, and these will be scrutinised by stakeholders, investors, and financial supervisors.

In the UK, the Transition Plan Taskforce (TPT) completed its work last year, with the IFRS Foundation having now taken over responsibility for its disclosure-specific materials. The IFRS Foundation is now developing a guidance document based on these materials to support application of transition plan related disclosure requirements in the ISSB standards. Meanwhile, the EU has included transition plan disclosures under its evolving reporting directives. The focus has shifted from just setting targets to demonstrating tangible decarbonisation actions.

Perhaps one of the key takeaways is that a robust transition plan is far more than a reporting exercise, it is a strategic endeavour. It is also being increasingly viewed as an indicator of financial and operational resilience. More and more, supervisors and investors are assessing whether firms have viable strategies to adapt to climate- and transition-related risks and opportunities. Companies that develop and execute strong transition plans can better position themselves to secure financing, manage regulatory expectations, and build long-term competitiveness. The UK’s Transition Finance Market Review, published last year, recognised high-quality corporate transition plans as integral to credible transition finance.

To explore the review more, read Chapter Zero’s briefing: Transition Finance: A strategic imperative for boards, created in partnership with the City of London.

Globally, regulators are intensifying their crackdown on misleading sustainability claims. The EU’s Green Claims Directive and the UK’s Green Claims Code are driving greater accountability in corporate communications. Investors are also demanding that firms back up environmental claims with clear, measurable, and verifiable data.

This shift is already influencing corporate behaviour. Companies are becoming more precise in their language, ensuring that sustainability claims are tied to impact metrics. Under new regulatory rules, such as the UK Financial Conduct Authority’s Sustainability Disclosure Requirements and investment labels regime, asset managers must be more careful about the use of terms like “green,” “sustainable,” and “impact.” The days of broad, feel-good statements without tangible substance are coming to an end.

Despite growing regulatory clarity in many markets, 2025 is also witnessing a political pushback against sustainability in certain markets. This has impacted voluntary alliances such as the Net-Zero Banking Alliance (NZBA) and the Net-Zero Asset Managers Initiative (NZAMI).

However, the impact of this pushback on firms’ regulatory burdens may prove to be limited. Large firms that do business in the EU will still need to comply with EU regulations, and those operating in California will still need to comply with California’s SB 253 and SB 261, required climate risk and emissions disclosures. Moreover, financial actors continue to recognise the materiality of climate risk—meaning firms cannot afford to ignore sustainability considerations because of shifting political winds.