Top ESG and Sustainability Trends Shaping Industries in 2025

Companies that want to meet their sustainability goals by 2030 should stay ahead of emerging trends. Adapting ESG strategies to meet new regulations, address climate change, and leverage the rise of AI is the key to remaining competitive.

Key takeaways:

Sustainability and ESG (Environmental, Social, and Governance) have transcended their status as mere buzzwords—they are now pivotal forces reshaping industrial operations in 2025. Forward-thinking companies are adopting innovative trends, technologies, and regulatory frameworks concerning sustainability.

In 2023, the global green technology and sustainability market was worth $17 billion USD. By 2032, it's expected to grow to over $105 billion, with an annual growth rate of 22.4% from 2024 to 2032. (Fortune Business Insights)

There are several motivations for companies to adopt sustainability practices:

• Enhance operational effectiveness by minimizing expenses and waste.

• Address or attract new customers while gaining a competitive edge.

• Safeguard and enhance brand reputation, fostering public trust.

• Establish long-term business sustainability and success.

Discover the top sustainability and ESG trends you must watch this year to keep your business on track!

What is Sustainable Manufacturing?

According to the definition you can find on the official EPA website, sustainable manufacturing means creating products through economically sound processes that:

• minimize negative environmental impacts,

• conserve energy and natural resources,

• enhance the safety of employees, communities, and the products themselves.

In a nutshell, sustainable manufacturing means operating in a manner that minimizes negative impacts on the environment, community, and society as a whole. By adopting sustainable business practices, manufacturers can:

• reduce their environmental footprint,

• improve their reputation,

• contribute to the well-being of society.

Let’s discuss ways in which companies can implement sustainable practices to achieve long-term success.

👉 What is The Chemical Industry's Commitment to Sustainability and Safety?

Climate Risk as a Business Priority

Based on the Harvard Report on the ESG Priorities for 2025, US CEOs rank climate risk and sustainability as the top two external ESG factors likely to impact their business in the near future. This prioritization reflects the tangible business threats of extreme weather events and climate disasters.

70% of business leaders in 2024 said climate change would have a high or very high impact on their business’s strategy and operations over the next three years, up from 61% in 2023. (Deloitte) 

In 2024, the US experienced numerous extreme weather and climate disasters, with at least 27 of them causing losses exceeding $1 billion each. For manufacturers, these events can disrupt operations, damage facilities, and interrupt supply chains.

Business leaders view climate not just as an environmental challenge but as a material risk requiring proactive management.

In 2024, 84% of S&P 500 companies and 64% of Russell 3000 companies reported climate change as a risk factor, up significantly from 67% and 30% in 2021.

Source: https://www.deloitte.com/global/en/issues/climate/cxo-sustainability-report.html

Driving Growth Through Sustainable Business Strategies

Organizations involved in sustainability initiatives come in different sizes, types, and industries. Examples of sustainable business strategies to advance net zero* efforts include:

• Adopting an integrated approach to sustainability instead of a disconnected one.

• Focusing on competitiveness and revenue generation rather than cost reduction and efficiency.

• Utilizing innovation, scenario analysis, and strategic planning to go beyond compliance.

• Integrating sustainability into all business functions.

• Prioritizing long-term objectives.

• Collaborating effectively with external stakeholders.

*Net zero means balancing the amount of greenhouse gases we put into the atmosphere with the amount we take out. Reaching net zero is important because it’s the point where we stop making climate change worse. Once we hit net zero, global warming levels off, instead of continuing to rise.

9 Sustainability and ESG Trends to Watch in 2025

In 2025, sustainability and ESG (Environmental, Social, and Governance) trends are fundamentally reshaping the manufacturing and chemical industries. Companies are rapidly shifting toward circular manufacturing models, prioritizing material recovery, reuse, and closed-loop systems to minimize waste and maximize resource efficiency.

Digital transformation is accelerating ESG reporting, as manufacturers adopt AI-driven analytics and real-time emissions tracking to streamline compliance and enhance risk management. For organizations in the manufacturing and chemical sectors, leveraging advanced platforms to unify compliance and risk management processes is becoming essential to remain competitive, resilient, and aligned with global sustainability standards.

1. Accelerated Energy Transition

Driven by ambitious net-zero goals and advances in clean technologies like solar, wind, and green hydrogen, businesses are making decisions to move away from fossil fuels faster than ever. This transition is not just about reducing carbon emissions but also about addressing broader environmental concerns.

Source: https://www.spglobal.com/esg/insights/2025-esg-trends

Many companies invest heavily in renewable energy sources as part of their sustainability efforts. The main aim is to minimize environmental footprint and ensure compliance with international climate agreements. For example, global manufacturers are powering their operations with 100% renewable energy, showcasing leadership in the energy transition.

Additionally, the rise of electric vehicles is crucial in reducing reliance on fossil fuels within the supply chain. Enterprises are exploring electric-powered logistics and transportation solutions to contribute to the reduction of greenhouse gases. These initiatives help companies meet their sustainability objectives and provide them with a competitive advantage in the market.

As industries strive to achieve their net zero goals, they also explore innovative solutions such as energy storage systems and smart grid technologies to enhance energy efficiency and reliability.

2. Decarbonization: The Cornerstone of Environmental Sustainability

Decarbonization is a top priority, with manufacturers investing in electrification, green hydrogen, and on-site renewable energy to meet increasingly stringent regulatory demands and investor expectations. Decarbonizing supply chains and participating in carbon markets are now central to business strategy.

Addressing environmental degradation alongside climate change is crucial for maintaining resilient operations and achieving sustainability goals. Companies are focusing on Scope 3 emissions (those from suppliers and product use) and using innovations like blockchain for transparency. These efforts align with the Paris Agreement's goals, which aim to limit global warming and reduce greenhouse gas emissions.

Carbon capture, utilization, and storage (CCUS) technologies are gaining ground, and global carbon markets are expanding, offering new opportunities for climate finance and sustainable growth.

👉 Discover information about Clean Air Act Compliance

3. Water Taking Center Stage

Water security is becoming a top priority for companies as climate change brings more floods and droughts. Effective water management is crucial for environmental sustainability and human health protection. To manage water use and quality, companies invest in water-saving technologies, closed-loop systems, and real-time monitoring.

By implementing water management practices prioritizing conservation and efficiency, companies can significantly reduce their environmental footprint and enhance their resilience against extreme weather events. This involves engaging with local communities and stakeholders to ensure equitable access to water resources and minimize the impact on natural ecosystems.

Furthermore, manufacturers are exploring innovative solutions like water recycling and rainwater harvesting to mitigate water scarcity and ensure a reliable water supply. These efforts are aligned with global sustainability goals, such as the United Nations' Sustainable Development Goals, which emphasize the importance of clean water and sanitation for all. As water becomes a more critical resource, companies prioritizing water sustainability will improve their ESG performance and gain a competitive advantage in the market.

4. Nature and Biodiversity Protection

Preserving natural ecosystems is essential for supporting biodiversity and providing ecosystem services that are crucial for long-term sustainability. Companies are aligning with global frameworks like the Kunming-Montreal Global Biodiversity Framework to reverse biodiversity loss by 2030. The GBF specifically calls on businesses to integrate biodiversity considerations into decision-making (Target 14) and to assess, disclose, and reduce biodiversity-related risks and negative impacts (Target 15.)

The Securities and Exchange Commission (SEC) has introduced climate disclosure requirements mandating public companies to report on greenhouse gas emissions and climate-related risks, while some states—most notably California—have enacted stricter ESG and biodiversity-related disclosure laws.

• Integration of Nature-Based Solutions

  
  

To meet these requirements and support biodiversity, manufacturers are integrating nature-based solutions such as reforestation, wetland restoration, and sustainable land use. These approaches help address deforestation, habitat loss, and climate risks, while also supporting responsible sourcing and operational resilience. Financial instruments like blue bonds and biodiversity ETFs channel investment into conservation and restoration projects.

• Disclosure Trends and Tools

  
  

New disclosure standards are helping companies manage and report nature-related risks. Disclosures among US-listed companies are rising: in 2022, one-third of S&P 500 companies and 13% of Russell 3000 firms reported on biodiversity, nearly double the rate from the previous year. Utilities, energy, and materials sectors lead in such disclosures, while the quality of impact assessments is still developing. Frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) are guiding companies to improve the granularity and consistency of their biodiversity reporting.

These regulations require companies to address not only direct emissions and impacts but also those throughout their supply chains, including raw materials sourcing and land use. As a result, manufacturers must develop robust compliance strategies and enhance transparency in their ESG reporting.

👉 Get insights on The CDP Disclosure

5. Digital Transformation for ESG

AI, big data, and digital platforms are revolutionizing business sustainability. New technologies help companies optimize resources, model environmental risks, and enhance transparency in ESG reporting.

These digital tools enhance ESG strategies by improving data collection, analysis, and reporting. AI enables smarter operations that reduce waste and improve sustainability.

Advanced analytics and machine learning algorithms enable manufacturing companies to:

• predict and mitigate climate risks,

• optimize supply chains,

• enhance operational efficiencies.

Technology streamlines sustainability reporting and ensures compliance with frameworks like the SEC climate disclosure rules.

Moreover, digital transformation facilitates greater collaboration and engagement with stakeholders, including customers, investors, and local communities. Companies can communicate their sustainability efforts more effectively through digital channels, fostering trust and loyalty. Additionally, digital tools empower companies to track and measure ESG performance, providing valuable business insights that drive strategic decision-making.

With the help of platforms like Parakeet, companies can navigate the complexities of sustainability requirements and turn potential risks into opportunities for business growth.

6. AI for Smarter Sustainable Operations

The manufacturing industry is changing a lot because of new advances in artificial intelligence. These changes help companies run more efficiently, cut down on waste, and support sustainable practices.

• AI systems assess factory energy consumption to identify inefficiencies. By implementing changes based on these sustainability insights, manufacturers can lower their carbon footprints while maintaining productivity.

  
  

• Predictive maintenance allows manufacturers to anticipate when equipment needs servicing, rather than waiting for failures. This proactive approach minimizes downtime and reduces waste from overstocking spare parts.

  
  

• AI-powered vision inspection systems quickly detect defects with higher accuracy than human inspectors, enhancing product quality and reducing material waste.

  
  

• Manufacturers are embracing circular economy principles, supported by AI. For instance, smart inventory tracking optimizes the efficient reuse of materials across production cycles.

These innovations improve sustainability in manufacturing while also increasing operational efficiency.

👉 Find out more about Compliance in the Age of AI

7. Supply Chain Transparency and ESG Disclosure

Supply chain transparency is in the spotlight, driven by new legislation such as the EU Corporate Sustainability Due Diligence Directive, compelling organizations to conduct comprehensive ESG audits and integrate tools like supplier scorecards and blockchain for traceability. These measures are specifically aimed at enhancing visibility and accountability throughout the supply chain.

👉 Read about Supply Chain Finance in the Industrial Sector

2025 brings tougher ESG regulations and more complex reporting requirements for enterprises. Frameworks like the EU’s Corporate Sustainability Reporting Directive (CSRD) and new biodiversity disclosure standards raise the bar for overall ESG transparency and accountability. In the United States, the landscape for ESG (Environmental, Social, and Governance) regulations and reporting in 2025 is complex and rapidly evolving, with significant differences between federal and state requirements.

US companies operating in Europe or other jurisdictions must comply with the EU’s Corporate Sustainability Reporting Directive (CSRD). They may be subject to the IFRS Sustainability Disclosure Standards (ISSB). The ISSB standards require detailed, science-based sustainability reporting. They are not limited to the EU, but intended for worldwide use. However, this depends on whether the jurisdiction in which they operate or are listed has adopted these standards.

8. Circular Economy and Product Innovation

Circular economy principles are driving product design and business models. Companies are developing products that use fewer resources, last longer, and recycle easily. Using sustainable materials is a key component of circular economy principles. It helps reduce environmental impact and promote resource efficiency. Innovations—like stronger, lighter plastics and biodegradable materials—show how circular thinking can reduce waste and create new value streams.

A global shift to a circular economy, which refers to using resources efficiently, reducing waste, and recycling, by 2040 could create savings of more than US$4.5 trillion. (WEB)

EPA Circular Economy Initiatives

The EPA’s new recycling and waste programs are the initiatives that aim to modernize U.S. recycling, support circular manufacturing, and address plastic pollution at scale.The Environmental Protection Agency is developing waste prevention, reuse, and recycling programs that support circular manufacturing:

• Solid Waste Infrastructure for Recycling Grant Program

• Recycling Education and Outreach Grant Program

• Battery Collection Best Practices and Voluntary Battery Labeling Guidelines.

These programs are part of a broader National Recycling Strategy to improve the national recycling system, with a goal to increase the recycling rate to 50% by 2030.

9. Social Impact and Inclusive Growth in Manufacturing

Sustainability now means more than just environmental action. The social dimension of ESG is gaining traction, with a heightened focus on social equity, diversity, and employee well-being. Businesses are engaging with local communities to ensure that sustainability initiatives benefit all stakeholders.

• Incorporating social impact into sustainable business practices involves creating inclusive workplaces that value diversity and promote equal opportunities. This includes implementing fair labor practices, providing training and development opportunities, and ensuring safe and healthy working conditions.

  
  

• Furthermore, companies are investing in community development programs that address social issues such as education, healthcare, and poverty alleviation. By collaborating with local organizations and stakeholders, businesses can create shared value and contribute to the long-term prosperity of the communities in which they operate.

  
  

• Inclusive growth also involves promoting fair trade practices and ensuring that supply chains are free from exploitation and human rights abuses. Companies are adopting transparency measures and conducting regular audits to ensure compliance with ethical standards and regulations.

  
  

Overall, the integration of social impact and inclusive growth into sustainability efforts not only enhances corporate reputation but also drives innovation and competitiveness. Projects that create jobs, uplift local economies, and advocate fair transitions to low-carbon futures are gaining momentum and encouraging positive change.

3 Things to Consider While Setting up a Sustainable Business Strategy in 2025

Companies must develop a business strategy that takes into account climate risk and its potential impact on their operations. This involves assessing the company’s greenhouse gas emissions, identifying areas for reduction, and implementing sustainable practices to minimize environmental footprint. By doing so, companies can reduce their exposure to climate-related risks, improve their reputation, and contribute to the transition to a low-carbon economy.

The International Energy Agency (IEA) highlights the need for companies to align with sustainable development goals. Enterprises that don't adjust to these changing regulations risk falling behind.

1. Leadership and Governance

Effective leadership and governance are essential for driving sustainability efforts within an organization. Business leaders must prioritize sustainability and ensure that it is integrated into the company’s mission, values, and operations. This involves setting clear sustainability objectives, establishing a governance structure to oversee sustainability initiatives, and providing training and resources to employees to support sustainable practices.

Companies that successfully included environmental, social, and corporate governance (ESG) priorities in their business strategies were twice as likely to see a 10% boost in revenue compared to their peers. (McKinsey)

2. The Sustainable Customer Experience (CX) for Customer Loyalty

Customers expect companies to prioritize sustainability. That's why demonstrating a commitment to environmental and social responsibility is the way to connect with conscious consumers.

According to Deloitte, nearly four in ten (38%) global shoppers are prepared to pay more for products created with sustainable materials. Demand for these sustainable goods is projected to rise significantly, especially in emerging economies.

By engaging with customers on sustainability issues and providing sustainable products and services, companies can build loyalty and drive business growth. This involves communicating sustainability efforts, providing transparent information about products and services, and involving customers in sustainability initiatives.

3. Sustainable Supply Chains and Operations

Sustainable supply chains and operations are critical to reducing environmental footprint and improving social responsibility. Companies must assess their supply chains, identify areas for improvement, and implement sustainable practices to minimize waste, reduce energy consumption, and promote fair labor practices.

Parakeet Risk: Your Sustainability Co-Pilot

Parakeet Risk is a game-changing platform for companies tackling sustainability challenges.

Its real-time monitoring of energy, waste, and pollution helps companies stay compliant while cutting costs. As regulations tighten, tools like Parakeet become essential. They connect to industrial IoT devices and databases, turning complex data into clear insights, which:

• Simplifies regulatory reporting,

• Automates risk assessments,

• Supports ESG initiatives,

• Streamlines internal audits.

  
  

  
  

  

Sustainability Landscape: Conclusion

2025 is a turning point for sustainability and ESG. Companies that lead on energy transition, decarbonization, water and nature stewardship, digital transformation, and social impact will not only meet regulatory demands but also unlock new growth opportunities.