So, you care about our planet—that’s fantastic! Maybe you’re a Millennial, or perhaps Gen Z. Regardless of your generation, our shared concern is backed by surveys like Deloitte’s, which show growing climate anxiety across all demographics. Climate change is urgent, and well-rounded ESG (Environmental, Social, Governance) compliance is one of our best routes toward a sustainable future.
While we won’t always align on every detail, it’s crucial to acknowledge that ESG compliance has become a complex global regulatory web. Below is a refined overview of ESG compliance across leading economies, with a forward look toward the landscape by 2025.
ESG Compliance Overview
ESG compliance isn’t just corporate buzz—it reflects crucial standards for responsible operations that investors and regulators increasingly demand. The three pillars:
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Environmental: Includes impact on climate, natural resources, pollution, biodiversity, and energy use.
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Social: Focuses on labor practices, human rights, diversity, community engagement, and customer relations.
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Governance: Addresses board structure, ethics, anti-corruption, executive pay, internal controls, and shareholder rights.
This mosaic of requirements varies by jurisdiction—and is shifting fast.
United States 🇺🇸
Federal Level
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SEC Climate Disclosures: The 2024 rules were paused; the SEC under new leadership is unlikely to defend or reintroduce aggressive climate disclosure mandates.
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State-Driven Momentum: California is leading with SB 253 (Scope 1/2 emissions reporting by 2026 and Scope 3 by 2027), SB 261 (climate-related financial risk disclosures), and AB 1305 (offset claims reporting).
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Voluntary Carbon Market Reforms: Legal scrutiny of offset claims is increasing, with frameworks like the Carbon Data Open Protocol (CDOP) and SBTi 2.0 demanding improved transparency.
Social & Governance
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Uyghur Forced Labor Prevention Act, Dodd-Frank, FCPA, Sarbanes-Oxley, etc., maintain strong legal expectations for supply chain ethics and corporate governance.
European Union 🇪🇺
CSRD & CSDDD (Due Diligence)
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CSRD expanded to ~50,000 entities in 2024; implementation for medium-sized firms has been delayed until 2028 under the EU’s “Omnibus” simplification package.
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CSDDD, which mandates environmental and human rights due diligence, is similarly postponed by one year.
ESG Rating Transparency
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The EU ESG Ratings Regulation (2023/0177) is awaiting final approval to mandate transparency and supervision of ESG rating providers under ESMA.
Germany 🇩🇪
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The Supply Chain Due Diligence Act is fully effective. Reporting on human rights and environmental risks must be submitted since 2023, with compliance now mandatory.
France 🇫🇷
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Loi de Vigilance continues to require large firms to publicly assess and prevent social and environmental risks in supply chains—including updates to align with EU standards.
United Kingdom 🇬🇧
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SDR (Sustainability Disclosure Requirements): A new mandatory framework expected from January 2026 .
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CBAM-aligned Reports: IFRS S1 and S2 will become globally relevant, reinforcing double materiality and making greenwashing harder to get away with.
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Modern Slavery Act and Consumer Duty remain compliance pillars.
Japan 🇯🇵
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The Corporate Governance Code and Companies Act are seeing deeper integration of climate risk assessment.
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Enhancements to the Green Bond/Loan Guidelines and collaboration with the EU push Tokyo toward stronger global ESG alignment.
China 🇨🇳
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The CSRC encourages voluntary ESG disclosures aligned with frameworks like GRI and GRI–ISSB interoperability, though not yet mandatory.
India 🇮🇳
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SEBI mandates Business Responsibility and Sustainability Reporting (BRSR) for listed companies.
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India is drafting its first Climate Finance Taxonomy and strengthening due-diligence and supply chain obligations.
Other Key Regions
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Australia: AASB S1/S2 aligned disclosures become due March 31, 2026, with first-year reports in early 2026 for the annual report period .
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Hong Kong: ISSB-aligned reporting required by 2025, plus new “Green FinTech Map” and taxonomy extensions .
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Rwanda: Draft adoption of ISSB standards for public entities from 2026, full compliance expected by 2029 .
ESG Compliance Frameworks & Standards
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GRI Universal Standards (2023) continue global uptake; aim for interoperability with ISSB (IFRS S1 & S2) .
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SASB → ISSB merger consolidates sector-specific financial materiality; adopted widely in annual filings .
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Science-Based Targets Initiative (SBTi) v2.0 raises the bar for emission targets, especially Scope 1 and 2 .
What to Expect by 2025
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Convergence of frameworks: CSRD, ISSB, GRI, SBTi, SASB, regional taxonomy convergence strengthens standardization .
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Greater legal enforcement: EU delays hint at complexity, but escalation in audits and penalties seems unavoidable .
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State vs. federal divergence in the US: Expect more California-style mandates and conflicting federal signals .
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Carbon market transparency: CDOP and SBTi v2.0 are tightening rules on offset usage by operationalizing verification and legality .
Final Thoughts
ESG compliance is now a global imperative—but also a landscape with shifting rules. By 2025:
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Expect free-flowing regulatory updates, including 264 changes globally just in May 2025.
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Framework integration (CSRD, ISSB, GRI, SASB, SBTi) should reduce complexity and improve comparability .
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Companies should invest early in data systems, due diligence processes, and verification mechanisms for credible ESG reporting.
This landscape demands more than business-as-usual. Companies that proactively harmonize ESG disclosures across frameworks—and invest in governance and transparency—will lead the way.
