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Introduction

For the past five years, we have written about the sustainability trends that S&P Global expects to drive business strategies in the year ahead.

This year, we’re taking a slightly different approach.

In 2025, we widen our view to reflect on the megatrends that will impact sustainability strategies. We’re doing this by asking: What is happening in the world that will affect sustainability? This shift reflects the sea changes we’re witnessing in sustainability conversations around the globe.

The question is how organizations can advance their sustainability strategies while navigating an increasingly fragmented world where the rules of engagement are changing.

Geopolitical unrest is reshaping trade, supply chains and international relations

 

Companies and countries are seeking to craft sustainability strategies that will succeed in this evolving landscape. Policymakers are well-aware of the impacts of climate change, but energy security, affordability and economic growth often take precedence. Although the general direction puts an increasing emphasis on sustainability — including in supply chains — we may see strategies reframed to account for these competing priorities in 2025.

Climate change is accelerating and is indifferent to politics
 

The physical impacts of climate change and the linked challenge of biodiversity loss are increasingly evident around the world — creating risks for global economies and populations. These impacts also create opportunities for those seeking to quantify, manage and solve these problems.

The energy transition is advancing, albeit unevenly


A decade after the Paris Agreement on climate change was signed, many companies in hard-to-abate sectors are not on track to meet their long-term net-zero targets, and some countries are prioritizing economic development over energy transition goals. At the same time, new technologies are emerging to facilitate the transition to a low-carbon economy and we are seeing conversations move from high-level goal-setting to action and implementation. 

Many companies continue to dedicate resources to sustainability and climate strategies even as others walk back their messaging or pull back on their goals
 

Sustainability efforts have faced pushback in parts of the world even as some regulators and investors continue seeking increased disclosure of factors that will impact the long-term success of a business.

S&P Global surveyed sustainability, climate and energy transition leaders and analysts from across our business about the key trends that will drive strategies in 2025. The research that follows lays out the 10 trends that stood out — along with links to datasets, research, and further reading and listening to learn more.

1. Policy

Companies and countries will navigate a challenging new policy landscape and continued geopolitical uncertainty as they implement sustainability, climate and energy transition strategies.

2024 has been called the year of elections as people in over 60 countries headed to the polls. In 2025, these election outcomes will reshape the global landscape for sustainability, climate and the energy transition — with more elections on tap.

In the US, President-elect Donald Trump has promised a slate of deregulatory actions centered on "energy dominance," with plans to dismantle laws and regulations supporting climate change mitigation and environmental protection. However, we may see a strengthening of state and local policy alongside industry-led sustainability and climate initiatives, akin to what occurred during Trump’s first term.

2. Energy Transition

In 2025, the energy transition will be defined by a struggle between policy and market forces.

While clean technology continues to make significant inroads in the global energy system, 2025 looks set to present new challenges to growth. Greater geopolitical uncertainties are drawing some of the focus from decarbonization efforts toward energy security and affordability. Political agendas are increasingly hinting(opens in a new tab) at an easing of clean energy targets in the face of continued economic pressure and geopolitical risks. And expectations for rapid growth in power demand, driven by data center expansions, have opened the door for an increasing rather than decreasing contribution from fossil fuels to electricity supply.

This tension between policy and market forces will be on display in the US, where the Inflation Reduction Act has led to an uptick in clean investment even as the country is the world’s largest oil and gas producer.

3. Physical Climate Risks

Worsening climate hazards alongside more stringent disclosure standards will shine a light on adaptation needs.

Climate hazards are worsening in many regions and the impacts on economic growth will vary, and rise, without investments in adaptation. Countries, local and subnational governments, and companies face the prospect of more frequent and severe climate shocks.

Companies in particular face tightening disclosure standards globally and challenges associated with assessing and reporting the potential impacts from physical climate risks. Integrating these considerations into financial risk assessments can help companies protect assets, navigate regulations and build resilience to climate hazards. We expect that companies will increasingly shift their attention to addressing worsening climate hazards as disclosure standards and public scrutiny push companies to disclose their management of physical climate hazards and the inevitable gap between those reported exposures and the limited progress on actions being taken.

4. Climate Finance

The climate finance gap is huge, but a focus on practical solutions coupled with increasing ambition levels could unlock meaningful private capital mobilization.

We see renewed pressure on stakeholders to find ways to address the widening climate finance funding gap. Among these efforts is the push to scale up blended finance by addressing well-known roadblocks. To attract institutional investors’ deep pools of capital with a generally lower tolerance for risk, the broader market view is that solutions could include the following:

5. Carbon Markets

Global carbon markets will gain momentum in 2025.

International carbon trading will be boosted by agreements on Article 6 of the Paris Agreement reached at COP29 after several years of negotiations. These developments will offer the market clearer rules and will open the door for a mobilization of investments in carbon markets from countries around the world. They will also provide countries with mechanisms to cooperate to reduce carbon emissions to help achieve Nationally Determined Contribution goals.

6. Nature

Companies will increasingly incorporate nature into their sustainability strategies as they recognize the links between biodiversity loss and climate change.

The UN’s biodiversity-focused COP16 gathering in Cali, Colombia, in October 2024 put biodiversity in the global spotlight. In 2025, we expect companies, policymakers and other stakeholders to take more concrete measures to tackle nature in tandem with climate. We also expect to see an expansion of financial instruments supporting biodiversity, including blue bonds — debt that finances marine and ocean-based projects — as well as nascent efforts to create a biodiversity credit market and an increasing role for biodiversity in nature-based carbon credits. The compounding risks that entities face from biodiversity loss and worsening climate hazards highlight the importance of nature-based solutions (NbS).

7. Supply Chains

Amid growing geopolitical, regulatory and climate challenges, companies will face increased pressure on sustainable supply chain management practices.

Election results from 2024 in the US and around the world have prompted new political uncertainties, including the potential for a ramp-up in protectionist trade practices that could test the sustainability of companies' supply chains. Changes in trade policies may require companies to pivot to new suppliers or have fewer suppliers to choose from, which could complicate due diligence and engagement efforts. Moreover, supply chain constraints could drive up the cost of products and make it harder for companies to ensure access and affordability, including in emerging markets.

8. Just Transition

Tension over what constitutes a just and equitable energy transition — and who pays for it — will continue to play out on the global stage in 2025

A just transition can mean different things to different stakeholders, but at its core is the acknowledgement that climate change and the efforts undertaken to combat it have real impacts on people in developed and developing countries, and those impacts can be outsized for people with limited means, resources and income. Managing negative impacts on people — for instance, job displacement or increased energy costs — is therefore a crucial element to maintaining the policy momentum required to advance a fair and inclusive transition to a low-carbon future.

9. AI

The need to balance AI’s energy use against its utility as a climate tool will grow more urgent.

As AI becomes more integrated across different industries in 2025, the debate around the pros and cons it brings to sustainability will grow more urgent. AI has the potential to radically improve energy efficiency and resource use, and it has become a key tool in emissions and land-use measurement and climate scenario analysis — use cases that show its potential benefits from a sustainability perspective.

On the other hand, the datacenter infrastructure that AI computing workloads rely on represents an already-large and quickly growing source of electricity demand, and much of that power will come from fossil fuel-burning power plants. As a result, even as companies, scientists and policymakers explore how to use AI to make progress on climate goals, doing so may come at the cost of increasing emissions.

10. Sustainability Reporting

Jurisdictions around the world will continue to push for consistent and comparable sustainability reporting, but concerns about heavier reporting burdens for companies may slow adoption.

In 2025, momentum will be strong for global harmonization in sustainability reporting as an increasing number of jurisdictions adopt sustainability-related disclosure standards. The two leading standard-setters — the Global Reporting Initiative (GRI) and the International Sustainability Standards Board (ISSB) — are focusing on interoperability and collaboration. Such initiatives to improve disclosure will likely enhance the quality and the comparability of climate-related information and other sustainability topics globally.

2025 also marks the first time that certain companies will report under the EU’s Corporate Sustainability Reporting Directive (CSRD).

This initiative is aimed at harmonizing companies' sustainability reporting by requiring them to publicly disclose information about sustainability issues according to the concept of “double materiality,” which considers financial materiality and impact on society or the environment.

Authors:
Lindsey Hall, Global Head of Thought Leadership, S&P Global Sustainable1, Co-Head, S&P Global Sustainability Research Lab
Harald Francke Lund, Global Head of Sustainability Methodology and Research, S&P Global Ratings, Co-Head, S&P Global Sustainability Research Lab

Co-authors:
Bruno Bastit, Beth Burks, Terry Ellis, Roman Kramarchuk, Jennifer Laidlaw, Rick Lord, Matt MacFarland, Paul McConnell, Paul Munday, Zoe Parker, Bruce Thomson, Esther Whieldon

Special thanks to our contributors: Atul Arya, Alexandra Dimitrijevic, Liz Bachelder, Kevin Birn, Erin Boeke Burke, Christa Clapp, Patrice Cochelin, Dan Daley, Florence Devevey, Jaspreet Duhra, Chris Frank, Pierre Georges, Lotte Griek, Betty Huang, Conway Irwin, Bertrand Jabouley, Xavier Jean, Chris Johnson, Paul Kurias, Cathy Lai, Hsin-Ying Lee, Sophia Lin, Nicole Lynch, Matt Mitchell, Anna Mosby, Hiroyuki Nishikawa, Alejandro Rodríguez Anglada, Francesca Sacchi, James Salo, Christina Sewell, Cornelis theunis Van der lugt, Carina Waag