Latham & Watkins: 10 ESG Topics to Keep in Mind for 2025

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Latham & Watkins' list of 10 predictions for ESG in 2025 acts as an instructive guide for businesses | Credit: Latham & Watkins
Partners from global law firm Latham & Watkins give their insights into the 10 trends that will shape ESG 2025, spotlighting AI, US politics & much more

As one of the world's leading law firms, Latham & Watkins has long been at the forefront of advising on issues of ESG .

In fact, the firm received a great deal of praise from Chambers and Partners for its work in sustainability across 2024.

“Latham has significant international capabilities in environmental law, capital markets and private equity, and provides advice on ESG risk management and initiatives,” Chambers wrote in its 2024 Crisis & Risk Management Report.

With its global expertise spanning regulatory compliance, corporate strategy and sustainability integration, the firm is well positioned to offer advice on how the ESG landscape is evolving.

Towards the beginning of 2025, Latham & Watkins published a list of 10 things its team believes will shape the year to come.

The 10 items on the firm's list are not only a reflection of current trends but also a helpful guide for organisations attempting to navigate the ever-shifting landscape of ESG.

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1. US politics

The evolving political landscape in the US is influencing ESG priorities.

The incoming administration's stance on climate and sustainability initiatives, coupled with debates around "fair access" laws and scrutiny of ESG coalitions, creates a complex regulatory environment.

"Many observers are wondering how the incoming Trump administration may affect ESG and sustainability," says Betty M. Huber, Corporate Partner and Board Advisor at Latham & Watkins.​​​​​​​

Businesses must stay informed and agile to navigate potential shifts in federal and state policies.

2. EU directives

The EU's regulatory environment continues to advance, with initiatives such as the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Deforestation shaping Regulation ESG obligations.

Discussions around simplifying ESG frameworks aim to balance sustainability goals with economic competitiveness, but businesses must prepare for the possibility of significant regulatory changes.

Betty M. Huber, Corporate Partner and Board Advisor at Latham & Watkins | Credit Latham & Watkins LLP

3. Mandatory ESG reporting

The transition to mandatory ESG reporting under the Corporate Sustainability Reporting Directive (CSRD) represents a major milestone.

Companies must adopt robust governance mechanisms to comply with new reporting standards, including double materiality analysis and third-party assurance. This shift will redefine how ESG data is collected and disclosed.

4. Value chains

Geopolitical tensions and regulatory requirements are pushing companies to re-evaluate their supply chains.

Near-shoring and reshoring strategies are gaining traction as businesses seek to enhance resilience and comply with frameworks like the CSDDD and the Uyghur Forced Labour Prevention Act.

Tracing value chains to their origins remains a significant logistical challenge.

Uyghur people in China's Xinjiang region have been experiencing persecution and mistreatment (including enforced labour) for several years, and US regulations aim to stamp this out through supply chain management strategies

5. The rise in importance of “traditional” environmental topics

Issues such as pollution control, waste management, and chemical stewardship are regaining prominence. Heightened awareness of topics like PFAS and sustainable packaging is driving stricter regulations.

Businesses must invest in cleaner technologies and circular economy practices to meet these growing expectations.

6. A continued focus on net zero and transition plans

Net zero commitments are under increasing scrutiny, particularly around Scope 3 emissions. Companies are expected to disclose detailed transition plans and demonstrate progress toward 2050 targets.

Regulatory frameworks like the CSRD are compelling businesses to adopt pragmatic, measurable strategies to achieve their climate goals.

Regulatory frameworks like the CSRD are compelling businesses to adopt pragmatic, measurable strategies to achieve their climate goals | Credit: Novata

7. The importance of AI and its connections with ESG

Artificial intelligence is transforming ESG data management, enabling efficient data collection and analysis. However, ethical concerns such as algorithmic bias and energy consumption must be addressed.

Compliance with frameworks like the EU's AI Act will be crucial as companies integrate AI into their ESG strategies.

“As regulatory requirements and stakeholder focus develops in 2025, companies must ensure responsible AI governance, addressing these challenges while leveraging AI’s potential to drive ESG performance," says Paul Davies, Global Co-Chair of Latham & Watkins’ ESG Practice.

"This includes developing clear policies and frameworks for AI use, as well as engaging with stakeholders to build trust and transparency.”

8. The growing connection between anti-trust policies and ESG policies

The intersection of anti-trust enforcement and ESG is becoming more and more pronounced, and Latham & Watkins expects this to continue into 2025.

Regulatory bodies are examining whether sustainable collaborations violate competition laws.

Companies must balance their ESG goals with compliance to avoid regulatory challenges, particularly in jurisdictions like the EU.

Compliance with frameworks like the EU's AI Act will be crucial as companies integrate AI into their ESG strategies

9. ESG, greenwashing and DEI litigation

Litigation risks around greenwashing and diversity, equity, and inclusion (DEI) initiatives are increasing.

Companies must ensure transparency in their ESG claims and avoid misleading stakeholders. Enhanced verification processes and adherence to evolving legal standards are critical to mitigating these risks.

10. Biodiversity and natural capital

Biodiversity is emerging as a key focus in ESG strategies. Initiatives like the UN Convention on Biodiversity aim to mobilise substantial funding for conservation efforts.

Businesses are integrating natural capital considerations into their operations, aligning with frameworks such as the Taskforce on Nature-related Financial Disclosures (TNFD).

Initiatives like the UN Convention on Biodiversity aim to mobilise substantial funding for preservation efforts

ESG in 2025

The view from January is ambiguous. ESG may be set for a complicated, transformative year.

From navigating US regulatory shifts and EU initiatives to addressing critical issues like mandatory reporting, value chain transparency and biodiversity, stern challenges await businesses across the next 12 months.

Traditional environmental topics and net zero commitments are under greater scrutiny, while innovations like AI present both opportunities and ethical dilemmas.

Latham & Watkins' insights highlight the critical areas where organisations must focus to build resilience, meet compliance standards and drive meaningful sustainability progress in the coming year.


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