Six ESG forces that will shape 2025

As we enter 2025, corporate professionals tasked with steering their organisations through the evolving ESG landscape will face a year of complexity and change.

With a looming federal election in Australia, heightened global political and trade tensions, and the introduction of new climate reporting legislation—alongside a wave of emerging ESG disclosure requirements—businesses must be prepared to adapt.

Our annual ESG outlook highlights six key ESG forces that will shape the year ahead:

1. Legislated requirement to complete detailed climate scenario modelling in line with ASRS
2. Preparedness for new packaging regulation
3. Increasing modern slavery reporting requirements
4. Broadening of sustainable procurement practices for government entities
5. Emerging imperative to understand your impact on nature
6. New national policies to further integrate greening in urban planning

We share insights into how these developments may impact your organisation and, most importantly, how you can proactively respond.

A note from Alison Rowe

CEO, Edge Impact

As we move into 2025, companies across Australia and beyond are preparing for a year of significant ESG shifts. While 2024 was largely about laying the groundwork for climate reporting, 2025 will require a broader, more integrated approach. 

This year, the focus will shift to understanding how the different elements of ESG—climate, governance, nature, and human rights—intersect. 

But just as importantly, it will be about asking the question: So, what? 

As the volume of ESG data and risk assessments continues to grow, businesses will need to move beyond simply collecting information to leveraging the insights from all the work.

2024 marked the hottest year on record, a stark reminder that climate change is no longer a distant concern. According to the Copernicus Climate Change Service (C3S), it was the first calendar year where the global average temperature exceeded 1.5°C above pre-industrial levels. This escalating trend will intensify pressure on businesses to address both the physical impacts of climate change and the transition risks associated with decarbonisation. 

As we move into 2025, mandatory reporting will no longer focus solely on carbon. While emissions disclosures remain critical, there is a growing emphasis on climate scenario analysis. 

Businesses will need to assess and quantify both the physical risks—such as extreme weather events—and transition risks tied to evolving regulations and market shifts. Events like the devastating 2024 wildfires in Los Angeles highlight the urgency for companies to strengthen their climate resilience and adaptation strategies. 

Impact 

This shift will impact companies across industries, particularly those with complex operations that are vulnerable to climate-related disruptions. By 2025, businesses will need to go beyond compliance and integrate climate risk assessments into their core strategies to navigate both immediate and long-term risks effectively. 

For organisations preparing for upcoming regulatory changes, our Mandatory Climate Disclosure page provides essential insights into disclosure requirements, timelines, and compliance strategies.

Tips for Preparedness 

• Conduct comprehensive climate scenario analyses to assess both physical and transition risks specific to your industry. Our ASRS Readiness Assessment Guide can help you evaluate your preparedness for evolving reporting standards.
• Invest in tools and systems that enhance climate risk assessments and ensure transparency in reporting. Explore how our Decarbonisation and Climate Resilience services can support your organisation in navigating climate-related risks.
• Strengthen resilience by embedding climate risks into decision-making, business strategy, and supply chain management. 

Need Support?

Navigating climate risks is complex, but with the right partner, you can stay ahead of regulatory changes and build long-term resilience.

At Edge Impact, we bring decades of expertise and a deep understanding of the evolving landscape, from risk assessment to embedding climate resilience in your operations.

Contact Mark Siebentritt, our Global Practice Lead for Climate or get in touch here.

In 2025, Australian businesses will face increasing pressure to adapt to stricter waste management and circular economy expectations as government policies and frameworks evolve. 

The 2024 Circular Economy Framework and the updated National Waste Policy Action Plan will guide the transition to a more sustainable economy by prioritising resource recovery and waste minimisation.  

Looking ahead, the introduction of National Packaging Regulations (changes expected in 2026) will make it mandatory for businesses to meet the National Packaging Targets, which aim for 100% of packaging to be recyclable, reusable, or compostable. 

For more insights on how to prepare for these upcoming packaging regulations, check out our detailed guide on The Future of Packaging Regulations. 

Impact

These developments will primarily affect Australian manufacturers, retailers, and supply chain managers who rely heavily on packaging, but will be felt by all businesses operating in Australia. 

Businesses failing to meet targets for recyclability, resource efficiency, or phasing out problematic plastics could face compliance risks, consumer backlash, and potential penalties when the regulations take effect in 2026. 

Additionally, consumer demand for transparency and sustainable practices continues to grow, making it essential for businesses to act proactively.

Tips for Preparedness 

• Audit your packaging portfolio: Evaluate current packaging against the 2025 targets and begin aligning with the requirements expected in 2026. 
• Plan for innovation: Collaborate with suppliers to explore alternative materials and redesign products to reduce waste. 
• Engage early: Work with government and industry bodies to stay informed about upcoming regulations and actively participate in consultations. 
• Upskill your team: Train staff and suppliers on circular economy principles and compliance strategies. 
• Measure and communicate progress: Implement tracking tools to monitor progress and share successes with stakeholders and consumers to build trust and reputation. 

Further Considerations

Product Stewardship Expansion

The Australian Government is likely to expand product stewardship schemes across various industries, building on successful programs like those for e-waste and batteries. 

Businesses may be required to take greater responsibility for the lifecycle of their products, including end-of-life disposal or recycling. 

Tips for Preparedness: 

• Investigate if your sector has (or is likely to have) product stewardship obligations. 
• Design products with their full lifecycle in mind, including ease of repair, reuse, and recycling. 
• Collaborate with recycling and recovery partners to establish take-back programs. 

Mandatory Reporting and Circular Economy Metrics

With sustainability reporting becoming more stringent (e.g., through frameworks like the ISSB standards), companies should expect pressure to disclose their circular economy performance. 

This could include metrics on waste diversion, resource efficiency, and recycled content in products. 

Tips for Preparedness: 

• Begin tracking circular economy KPIs, such as material circularity or waste reduction. 
• Invest in tools or software to improve data collection and reporting capabilities. 
• Be transparent with stakeholders about your circular economy efforts and challenges. 

Market Shifts in Recycled Materials

Demand for recycled materials is increasing due to consumer pressure and corporate commitments, creating both risks and opportunities. Prices for recycled inputs (like plastics, glass, and metals) are likely to fluctuate as markets mature. 

Tips for Preparedness: 

• Secure contracts with suppliers of high-quality recycled materials to ensure future availability. 
• Explore innovations in material use or alternative inputs. 
• Monitor policy developments around recycled content requirements for your industry. 

Get in touch

Edge has circular economy and packaging experts who can support you through these changes. Contact Mike Twemlow, Managing Consultant, Circular Economy, or get in touch here.

Human Rights Governance 

In late 2024, the Australian Government released its response to the review of the Modern Slavery Act 2018 (Cth), including a commitment to explore the introduction of penalties for non-compliance and enhanced due diligence requirements (Australian Government, 2024). 

The appointment of Chris Evans as Australia’s first Anti-Slavery Commissioner—alongside early team members Heather Moore and Laura McManus—signals increased support for businesses managing modern slavery risks and improving transparency. 

Globally, legislation such as the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) is setting new benchmarks, influencing the expectations for Australian companies operating internationally, and offering valuable insights for Australian businesses on what is possible in human rights due diligence. 

Impact 

These changes will primarily affect large Australian companies and those with complex supply chains. In 2025, investor and consumer expectations for stronger human rights governance will continue to rise. 

Tips for Preparedness 

• Strengthen due diligence processes: Conduct a gap analysis of your modern slavery risk management systems against expected and proposed regulatory changes. 
• Engage stakeholders proactively: Build partnerships with suppliers and civil society to enhance supply chain visibility and credibility. To build trust through modern slavery reporting, companies should consider these 5 focus areas for effective and transparent communication with stakeholders.
• Leverage upcoming regulatory guidance: Actively engage in consultations with the Anti-Slavery Commissioner and monitor how similar companies in the EU respond to international regulatory trends. 

The Environmentally Sustainable Procurement (ESP) Policy, commencing in July 2024, requires government entities to prioritise procurement practices that reduce emissions, support circular economy principles, and enhance resource recovery. Additionally, the National Waste Policy Action Plan 2024 aims to increase the use of recycled content and expand product stewardship schemes—developments likely to influence private sector procurement as well. 

Internationally, frameworks such as the EU’s Ecodesign for Sustainable Products Regulation (ESPR) and the rise of Digital Product Passports (DPPs) are expected to drive traceability and sustainability expectations across supply chains. 

To ensure compliance with evolving sustainability expectations, businesses should consider updating their Supplier Code of Conduct. This update ensures that suppliers are aligned with sustainability goals, promoting better resource use and a commitment to reducing environmental impacts throughout the supply chain.

Impact 

These policies will influence procurement teams by requiring them to incorporate sustainability criteria in supplier selection and to focus on reducing embodied carbon, improving resource efficiency, and increasing the use of recycled materials. Export-oriented businesses may face additional pressures to comply with international standards on product sustainability and traceability. 

Tips for Preparedness 

• Explore circular procurement models: Prioritise procuring products that are durable, repairable, reusable, and made from recycled materials. 
• Collaborate for scale: Consider industry-wide sustainability collaborations. The ACCC’s recent guidance clarifies how businesses can work together on sustainability goals without breaching competition laws. 
• Pilot traceability and digital tools: Investigate technologies such as Digital Product Passports to enhance transparency, traceability, and compliance reporting.

Need Support?

To learn more about how Edge Impact can support your efforts in strengthening human rights reporting or refining sustainable procurement strategies, contact Nick Dexter, our Modern Slavery and Human Rights Principal or get in touch here.

Australia’s approach to nature-related governance is evolving beyond regulation, with a growing focus on voluntary frameworks for assessing nature-related risks and opportunities. 

The Taskforce on Nature-related Financial Disclosures (TNFD) has released new sector-specific guidance, refining key metrics, data sources, and risk and opportunity assessments for industries such as finance, agriculture, energy, and infrastructure. These updates provide businesses with clearer pathways to integrate nature into risk management and reporting. 

Additionally, corporate accountability is coming into focus, with discussions around strengthening directors’ duties to explicitly include nature-related risks. As investor and regulatory expectations shift, businesses should review their existing environmental data and assess their readiness to conduct a TNFD-aligned LEAP assessment—a structured approach to identifying dependencies, impacts, risks, and opportunities related to nature. 

Impact 

Businesses with direct environmental interactions—such as agriculture, forestry, mining, construction, and energy—will face increasing scrutiny around biodiversity loss, land degradation, and water use. Supply chain dependencies will also come under the spotlight, pushing companies to demonstrate how they manage and mitigate nature-related risks. 

Beyond compliance, addressing these risks presents an opportunity: businesses that integrate nature into their strategy can strengthen resilience, improve investor confidence, and enhance long-term value. The shift towards nature-positive operations isn’t just about avoiding penalties—it’s about securing business viability in a changing regulatory and market landscape. 

Tips for Preparedness 

1. Understand Nature-Related Risks: Assess your business’s environmental impact and identify areas for improvement to avoid non-compliance. 
2. Consider the Nature Repair Market: Look into opportunities for restoring and protecting natural ecosystems as part of your sustainability strategy. 
3. Get Ahead with Environmental Data: Establish robust environmental data and reporting practices to align with future regulatory requirements. 
4. Stay Updated on Legislation: Keep up with changes to environmental laws and ensure your business is prepared for new compliance frameworks. 
5. Understand your fiduciary duties Company Directors have a fiduciary duty to understand and manage nature risk, just like Climate risk. We know climate and natures risks are intrinsically linked. 

Ready to take the next step?

To learn more about how your business can integrate nature-positive strategies explore our nature-positive strategy and solutions to get started, or for tailored advice on your nature-related risks and opportunities, contact Jess Braun, Managing Consultant, Nature.

Australia's urban landscapes are undergoing profound transformation, driven most recently by two landmark policies: the National Urban Policy (NUP) launched-on November 29, 2024, and the Strategy for Nature 2024-2030. 

These initiatives mark a pivotal shift towards sustainable urban development and biodiversity conservation in our cities and towns. 

The NUP sets a comprehensive framework for creating liveable, resilient, and sustainable urban environments. Simultaneously, the Strategy for Nature sets an ambitious roadmap to halt biodiversity loss and establish nature-positive cities by 2050. 

These policies respond to critical challenges such as rapid urbanisation, housing affordability, climate change impacts, and ecosystem degradation. 

As we move into 2025, the focus is shifting from isolated sustainability efforts to integrated urban planning that prioritises both human well-being and ecological health. Cities will need to balance development with nature conservation, creating green corridors and implementing nature-based solutions to enhance urban resilience. 

Impact 

This paradigm shift will affect various stakeholders: 

• Urban residents will experience improved access to green spaces, sustainable housing, and eco-friendly public transport. 
• Local governments face the challenge of implementing these policies, balancing development needs with environmental conservation. 
• Businesses and developers must adapt to new regulations and seize opportunities in green innovation and sustainable urban solutions. 
• Indigenous communities will play a more significant role in urban planning and nature conservation, integrating traditional knowledge into modern city design. 

In 2025, cities will need to go beyond compliance, integrating ecological considerations into their core development strategies to effectively navigate both immediate urban challenges and long-term sustainability goals. 

Tips for Preparedness 

1. Conduct comprehensive urban ecology assessments to understand your city's unique environmental assets, challenges, and opportunities. 
2. Invest in green infrastructure and nature-based solutions to enhance urban resilience and biodiversity. 
3. Develop skills in sustainable urban planning, biodiversity sensitive urban design (BSUD), green building technologies, and ecosystem restoration. 
4. Strengthen community and First Nations' engagement in urban planning processes, fostering a collective approach to creating sustainable cities. 
5. Integrate climate adaptation and biodiversity conservation strategies into all aspects of urban development and management. 

As we move towards more sustainable and nature-positive cities, proactive engagement with these new policies and adoption of ecological urban practices will be crucial for creating resilient, liveable urban environments. 

For expert advice on building sustainable, nature-positive cities and integrating ecological strategies into your projects, contact Dr. Jenni Garden, Edge Impact's Ecology and Sustainable Cities Lead.

As we move through 2025, sustainability remains a critical priority for businesses. From decarbonisation strategies to adopting circular economy principles, the steps companies take today will shape their future in a rapidly changing regulatory landscape.

By acting now, aligning with new standards, and prioritising transparency, businesses not only contribute to a healthier planet but also position themselves for long-term success in an increasingly conscious market. 

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