ESG Reporting Evolution in 2025: Shift Towards Compulsory Disclosures and Artificial Intelligence-Powered Analysis
In the rapidly evolving business landscape, Environmental, Social, and Governance (ESG) reporting is set to remain a crucial factor in financial success. This interconnected relationship between ESG and financial performance is expected to persist in the future.
Dr. Tanushree Kain, an environmentalist with a Doctorate in Environmental Sciences and six years of experience as a guest faculty in Environmental Sciences, is playing a significant role in this transition. Her expertise is invaluable as businesses navigate the complexities of ESG reporting.
A notable development in this sphere is the shift of sustainability departments towards mainstream finance departments. This integration is expected to streamline ESG practices and make them an integral part of business strategy.
International investors are also playing a pivotal role in standardising ESG criteria across borders. By bringing ESG criteria closer to uniformity, they aim to create a level playing field for businesses operating globally.
Businesses that take early action in ESG are poised to gain a competitive edge. By demonstrating accountability and resilience, these companies are attracting investors who prioritise sustainability.
Technological advancements are revolutionising ESG reporting. AI-handled datasets from around the world minimise human bias and errors, providing real-time insights into ESG performance. Machine learning is also lessening the need for manual audits, making the process more efficient.
Small and Medium Enterprises (SMEs) contributing to larger firms are now required to declare their labor practices and emissions, even if they are not directly regulated. This move aims to ensure transparency and accountability across the entire supply chain.
The Corporate Sustainability Reporting Directive (CSRD), scheduled to take effect in 2025, will mandate companies to report on sustainability starting from the 2025 business year. Specific requirements and deadlines will be spread across different types of companies, ensuring a comprehensive approach to ESG reporting.
In the future, value creation will be the driving force in ESG, shifting the focus from mere compliance to demonstrable positive impact. ESG performance measures will not only be available to investors but also to consumers and employees, fostering a culture of transparency and responsibility.
The future of ESG reporting is one of integration, transparency, and accountability. As businesses embrace these changes, they are not only securing their financial success but also contributing to a more sustainable and responsible world.
