The landscape of sustainability reporting is evolving—fast. And while headlines in the U.S. may suggest a retreat from mandatory ESG disclosure, the global momentum remains undeniable. For companies navigating an increasingly complex web of regulations, investor expectations, and public scrutiny, the path forward will require strategy, clarity, and a willingness to adapt.

A Global Shift, Despite Setbacks

Let’s start with the big picture: 2024 and 2025 marked significant progress in global sustainability disclosure requirements. Japan, for instance, introduced new climate-related financial disclosure rules aligned with the International Sustainability Standards Board (ISSB) framework, which will require thousands of listed companies to begin climate-related reporting. This reflects a clear move toward harmonization with international norms.

Meanwhile, despite some high-profile pullbacks—such as the U.S. SEC’s decision to scrap its climate disclosure rule—the overall trend is clear: sustainability disclosure is here to stay.

In the EU, the Corporate Sustainability Reporting Directive (CSRD) is rolling out in phases, though it will apply to fewer non-EU companies than initially expected due to recent clarifications. Still, it remains one of the most comprehensive and ambitious reporting frameworks, requiring detailed disclosures on climate, human rights, and double materiality from thousands of companies. This will undoubtedly create a trickle down effect, where companies that have to comply will require data from their suppliers to support their disclosure.

U.S. State-Level Action Fills the Federal Gap

While federal climate disclosure in the U.S. has stopped, state-level regulation is filling the vacuum. Several states are stepping up with their own rules and expectations:

California passed two landmark climate disclosure laws (SB 253 and SB 261) requiring thousands of companies to report Scope 1, 2, and eventually Scope 3 emissions, and to disclose climate-related financial risks. To date, these laws have stood up to regulatory challenges and lawsuits, and companies have to begin reporting in 2026.
Illinois, Colorado, and New Jersey have introduced similar greenhouse gas emissions reporting legislation as California’s (SB 253).
New York’s Climate Leadership and Community Protection Act (CLCPA) has led to new expectations for utilities and large companies on carbon reductions and transparency.
Additionally, various forms of Extended Producer Responsibility laws have already been enacted in five states, including California, Colorado, Maine, Minnesota, and Oregon. With bills being introduced in another eight states that require detailed environmental data from manufacturers on packaging, recyclability, and waste.

Together, these laws send a clear signal: while federal ESG regulation in the U.S. may be stalling, the subnational push is strong—and legally binding. And with disclosure mandates growing globally, expectations around ESG data and transparency aren’t going away.

Communicating ESG Amid Political Headwinds

At the same time, we’re hearing from many U.S.-based, global companies that they’re feeling uneasy about how to communicate sustainability in today’s polarized environment. The term "ESG" has become politicized—causing marketing, legal, and C-suite leaders to second-guess how they talk about climate, DEI, or responsible supply chains.

But here’s the paradox: regulators, investors, and B2B stakeholders still expect disclosure—no matter what we call it. Asset managers want climate risk data. Suppliers are asking for greenhouse gas emissions data. Lenders are screening for transition risks. Even customers are now demanding environmental and human rights disclosures in procurement processes. Opting out simply isn’t an option.

The demand for credible, consistent sustainability reporting is only growing stronger.

The future of sustainability reporting will not be one-size-fits-all. Companies will need to rethink their reporting strategy, data systems, communications, and governance models to stay compliant, relevant, and competitive.

So Where Is Sustainability Reporting Headed?

As we help our clients prepare for the next chapter, here are five predictions for the future of sustainability reporting that leaders should be thinking about now:

1. Convergence with Financial Reporting

Some companies are integrating ESG into financial reporting. We expect this trend to grow, especially as international standards (ISSB, CSRD) align ESG data with financial materiality. Expect to see climate risk disclosures in 10-Ks.

2. Simplified Standalone ESG Disclosures

Conversely, other companies are opting for a modular approach—maintaining a robust ESG data packet or internal repository to share with stakeholders, paired with a shorter, focused public report summarizing performance, risks, and key community and employee initiatives

3. Improving ESG Data Infrastructure (The Human Way)

Data quality remains a fundamental—and often overlooked—challenge. While the market is saturated with technology platforms promising quick wins, the reality is: junk in equals junk out. Building a solid, enterprise-wide ESG data infrastructure requires human input—clear protocols, data owner accountability, and ongoing training. Without these foundational pieces, inaccurate data can become a liability, opening the door to reputational risk, regulatory penalties, or accusations of greenwashing.

4. Taking a Strategic Approach to ESG Language

We’re seeing companies start to walk back terms like “ESG” and “DEI” to avoid political risk—but language changes should be handled with care. Reporting and communication must still serve the stakeholders who matter—and sometimes those stakeholders have conflicting perspectives. Removing certain language can interfere with many ESG ratings and procurement questionnaires that rely on explicit terminology to assess performance and eligibility. Take Accenture’s recent example: As a federal contractor, it altered its DEI commitments to avoid potentially losing U.S. federal government contracts; however, it was also in bid for a $50M contract with the Transport of London, which requires an explicit DEI policy. Upon learning that Accenture rolled back its DEI commitments, Transport of London suspended its relationship with Accenture and withdrew them from their bid process. Words still matter—globally.

5. Increased Use of Digital Tools and Platforms

With multiple disclosure regimes to manage, companies will rely more on climate tech, ESG platforms, and AI to collect, manage, and report data. These tools will help centralize everything from Scope 3 emissions to supplier human rights performance—provided they’re paired with strong human governance (see #3).

6. Rise of Assurance and Audit

Expect to see greater demand for limited and eventually reasonable assurance on ESG metrics, especially those tied to emissions and financial risk. This will bring new rigor—and scrutiny—to what companies publish.

7. Stakeholder-Centric Storytelling Will Still Matter

Even as data takes center stage, narrative still counts. Though stakeholders—from investors to employees—want to understand how ESG issues are tied to a company’s strategy, risks, and long-term value creation, reports will still need to balance transparency with storytelling, even as formats shift.

8. Sustainability Communications Will Become Embedded Across the Enterprise

Just as sustainability is being integrated into core business functions—procurement, operations, strategy—it will also become a pillar of enterprise-wide communications. Sustainability reporting is no longer a once-a-year exercise. Instead, it’s becoming a constant drumbeat that shows up in sales and marketing materials, procurement bids and RFPs, executive talking points, investor presentations, and local community engagements. These communications are increasingly used to demonstrate a company’s license to operate in a community—and its ability to compete. That means communications and marketing teams need to level up: they must understand the nuances of ESG data, reporting frameworks, and sustainability issues to support and influence consistent, credible messaging across the business. Companies that invest in cross-functional collaboration between sustainability and communications will stand out—and be better prepared for both scrutiny and opportunity.

Final Thoughts

In this new era, companies face a dual challenge: meeting growing regulatory and investor demands, while navigating reputational and political risks. There is no one-size-fits-all approach, but one thing is certain—ignoring sustainability disclosure is not an option.

Whether your organization is preparing for CSRD, complying with California’s climate laws, responding to investor questionnaires, or simply continuing to report on the commitments you’ve publicly made, the future of sustainability reporting will require clear governance, smart tech integration, and cross-functional collaboration.

The Future of Corporate Sustainability Reporting: Global Momentum, Local Tensions, and What Comes Next

A Global Shift, Despite Setbacks

U.S. State-Level Action Fills the Federal Gap

Communicating ESG Amid Political Headwinds