Key ethics, compliance and sustainability trends to watch in 2025
Le goodblog | read time: 5 min
Last year was a significant one for ethics and compliance professionals, with various major changes introduced into the EU legislative landscape, but 2025 is likely to be even more significant. This is because of the increasing political uncertainty that is dividing the business world and how it responds to ESG concerns and ESG related legislation. Here are seven key areas we believe will be the focus of business attention in the coming year.
1. Political uncertainty
We are moving into a very different world order – both in Europe, the US and further afield – as the rise in populism poses a challenge to the established consensus that has developed in the western world over the last two decades. It is clear that populism will encourage some companies to drop efforts to promote diversity, protect the environment and resist corruption.
However, companies should be wary about these choices. In part, the populist agenda is driven by a profound distrust in business and the way that businesses behave. Therefore successful businesses are likely to be those that operate in a way that allows employees, customers, suppliers, shareholders and regulators to have genuine trust that the business is operating in a fair and transparent way. This ethical and reputational imperative remains as strong as ever, regardless of the political uncertainties that we are facing.
2. Human rights in the supply chain
With the EU’s Corporate Sustainability Due Diligence Directive entering its first year in full operation, organisations will be under increasing pressure to evaluate and mitigate any human rights issues in their global operations. Over the past year there have been rapid developments in risk mapping techniques that should help to introduce a more precise and thoughtful attitude to measuring such impacts.
The hope must also be that 2025 will usher in a more sophisticated mindset among stakeholders, so that they view the detection and disclosure of supply chain problems as evidence of robust due diligence, rather than some kind of failure. After all, the whole idea of proper supply chain monitoring is to root out and address problems, not to hide them, and organisations that do so should be rewarded, not penalised, for their transparency.
3. Multi stakeholder initiatives
As the United Nations Forum on Business and Human Rights highlighted at the end of last year, 2025 is likely to see increased attention on the desirability of businesses collaborating with other organisations in order to solve complex problems. In a globally connected world it is no longer possible to work in isolation, and all companies hoping to build robust supply chains that operate to higher standards will need to shift their focus towards openness and collaboration with other organisations. Companies acting alone are likely to fail, in particular in complex areas like child labour, forced labour and working on conflict zones.
4. Artificial Intelligence and data
The rapid development and deployment of AI presents many opportunities, but also concerns. For companies there are issues around algorithmic bias, job displacement and misuse of facial recognition. But like it or not, AI is here to stay, and there’s a role for it in corporate sustainability. AI is likely, for instance, to be useful when it comes to sifting the huge amount of social and environmental data that organisations gather on their suppliers, customers and business intermediaries – and in helping to develop the complex tools needed to make judgements about each of these partners.
While there are plenty of fruitful avenues to explore, organisations must be acutely aware of the dangers related to AI, especially given the general absence of legislation mandating standards or practices in this area. They must consider its use through an ethical lens to avoid potential reputational damage. There is also a generational challenge emerging, with younger workers much more willing to use AI and more willing to upload data to open AI tools in order to get better outputs. The risks for data privacy, company confidentiality and copyright infringement are all too clear.
5. Climate change and greenwashing
The visible impacts of climate change are intensifying day by day, and worldwide concerns are continuing to grow accordingly, despite the rise in populist, anti environment rhetoric. Stricter regulations and guidelines are pushing companies to increase their focus on reducing their environmental impacts, and to giving greater consideration as to how they can help reduce the damage caused by global temperature rises. Along with the heightened scrutiny comes a greater dislike of greenwashing, so organisations will have to make sure that what they are putting forward really is making a difference. Anything else will be punished in the court of public opinion and may put the company legally at risk for example with the new EU Greenwashing Directive.
6. Non-financial reporting
The first reports required by the EU’s Corporate Sustainability Reporting Directive will need to be published this year by large and listed companies, disclosing information on the risks and opportunities they face from social and environmental issues and on the impacts their activities have on people and the environment. These reports will have to be compiled according to European Sustainability Reporting Standards and will set a new benchmark for non-financial reporting and ESG data collection that everyone will have to live up to. This reporting is taking place in the midst of a backlash in parts of the EU against the burdens on business. This year will be crucial to see how reporting works in practice and whether companies reduce reporting efforts and data quality.
7. Conflict affected areas
With ongoing crises in Ukraine and the Middle East, and conflicts erupting sporadically in many other parts of the globe, companies need more than ever to pay attention to the ethical implications of operating in, or sourcing from, conflict-affected areas. Companies involved in conflict-affected areas must conduct heightened human rights diligence, which will help them to assess, and come to terms with, the ethical dilemmas that result whether they stop sourcing, exit or remain in a country or area affected by conflict.
Final thoughts
These seven factors are compounded by a tough and complex economic environment which is still re-ordering since the Covid pandemic, with higher inflation, reorganised supply-chains and continuing political stand-off between China and the United States. Navigating the competing pressures to comply with sustainability related regulations on the one hand together with the political backlash on the other, will require nerve and long-term vision. As businesses look ahead to 2025, staying ahead of the business ethics and corporate sustainability challenges will clearly require a proactive, thoughtful approach.
By prioritising long-term sustainable practices and ethical decision-making, businesses can build resilience and maintain stakeholder trust. GoodCorporation continues to work with clients to assess their current practices, providing the expertise needed to design, implement and embed robust solutions that deliver measurable and lasting improvements. To learn more about how GoodCorporation’s ethics, compliance and sustainability services could benefit your business, please get in touch to speak to a member of our team.
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