ESG Reporting in 2025 & 2026: What Changed and What It Means for Companies

TL;DR

2025 saw major shifts in ESG and sustainability reporting worldwide. The EU introduced a two‑year CSRD delay (“Stop‑the‑Clock”), new thresholds, and simplification measures that significantly reduced the scope of companies required to report. Other jurisdictions—including the UK, Switzerland, Japan, Singapore, China, Australia, and several U.S. states—advanced or paused their own sustainability disclosure frameworks.

Despite regulatory fluctuations, expectations for transparency and accountability remain high. Companies should prepare for mandatory reporting beginning 2027–2028 and align with evolving stakeholder expectations.

Listen Now: Debating Key 2026 Changes in Due Diligence, Circularity, Carbon, and ESG Reporting

How ESG Reporting Changed in 2025

The global ESG landscape entered a transition period in 2025. While climate-related reporting for listed companies continues to expand, reporting obligations for non‑listed companies became less certain. The most significant changes occurred in the European Union.

CSRD: Key 2025 Updates

The EU Corporate Sustainability Reporting Directive (CSRD) underwent major adjustments in 2025, despite already having entered into force.

• “Quick Fix” Delegated Act – Introduced phasein relief for Wave 1 reporters until 2026, deferring selected European Sustainability Reporting Standards (ESRS) datapoints.

• “StoptheClock” mechanism – Approved a twoyear delay of CSRD application.

• Scope reduction of ~90% – Part of the simplification package adopted by the EU.

Updated CSRD Scope and Threshold

Additional EU Simplification Measures

• Member States may waive reporting in 2025–2026 for companies newly falling below the thresholds.

• Sector specific ESRS standards become voluntary.

• Listed SMEs removed from mandatory CSRD scope.

• Companies with <1,000 employees are not required to respond to certain information requests.

• EFRAG (European Financial Reporting Advisory Group) issued draft simplified European Sustainability Reporting Standards (ESRS) and VSME voluntary SME standards.

• The EU Commission released a proposal for the Sustainable Finance Disclosure Regulation also known as SFRD II to simplify Sustainable Finance Disclosure Regulation requirements.

Global ESG Reporting Developments in 2025

United Kingdom

• Launched a public consultation on UK Sustainability Reporting Standards (S1 & S2)

Switzerland

• Paused Climate Disclosure Ordinance pending Code of Obligations upgrade (to be aligned no later than 1 January 2027).

Japan

• SSBJ released first national Sustainability Disclosure Standards:

• Universal Sustainability Disclosure Standard

• General Standard

• Climate Standard

Singapore

• Delayed external assurance of Scope 1/2 to FY2029/2032.

• Phasing in ISSBbased Climate Reporting (CRD) by market cap and listing status.

China

• CSRC launched mandatory ESG disclosure pilots for Ashare listed companies and companies reporting on China’s main exchanges, effective for reporting periods ending after 5 March 2025.

• China issued the first Corporate Sustainability Disclosure Standard, which covers governance, strategy, risk and opportunity management, and metrics and targets. The standard also requires companies to disclose material climate impacts.

Australia

• ASIC issued RG280 guidance on climate reporting under Corporations Act Chapter M2.

United States

• California

  • SB 253 (Scope 1/2 in 2026; Scope 3 in 2027) remains passed.

  • SB 261 enforcement paused by the Ninth Circuit Court of Appeal; CARB will not enforce January 2026 deadline.

• New York’s Mandatory GHG Reporting Program requires natural gas and liquid fuels suppliers, waste haulers and transporters, electric power entities, agricultural lime and fertilizer suppliers, and other large emitters to report and verify their GHG emissions if they exceed certain relevant thresholds as of 1^st June, 2027.

• Climate Corporate Data Accountability Acts proposed in New York, New Jersey, Illinois, Colorado (for companies >USD 1bn revenue), but none advanced.

Why ESG Reporting Still Matters

Despite delays, exemptions, and rescoping, the number of companies publishing ESG or sustainability reports continues to increase annually. As noted in ESG Reporting.docx , companies report to:

• Meet legal and regulatory requirements

• Maintain market access

• Satisfy investor and financial stakeholder expectations

• Improve transparency and trust

• Communicate progress toward sustainability targets

Beyond frameworks like CSRD, many regulations require specific reporting elements, including:

• Modern Slavery Acts

• EU Deforestation Regulation (EUDR)

• Human Rights Due Diligence laws

• Taxonomy

• Climate risk and greenhouse gas (GHG) accounting

Reporting drives accountability, encourages goalsetting, and supports stakeholder engagement on material issues.

What Companies Should Do Next

• Understand whether upcoming ESG or climate-reporting thresholds apply (2027–2028).

• Map cross jurisdictional requirements (EU, US states, UK, APAC).

• Strengthen internal data management and assurance processes.

• Align internal reporting with widely recognized frameworks (ESRS, ISSB, GHG Protocol).

• Prepare for increasing stakeholder scrutiny regardless of temporary regulatory delays.

Frequently Asked Questions (FAQ)

Is CSRD still happening after the 2025 delay? Yes. The CSRD has been delayed by two years via the “Stop‑the‑Clock” mechanism, but it has not been canceled. First reporting now applies for FY 2027 for EU companies and FY 2028 for non‑EU parents.

Did CSRD scope shrink in 2025? Yes. The simplification package reduced the scope by about 90%, introducing new turnover and employee thresholds.

Are listed SMEs still required to report? No. Listed SMEs have been removed from mandatory CSRD scope.

Which countries advanced ESG rules in 2025? Japan, China, Australia, and Singapore advanced assurance or disclosure frameworks, while the UK held consultations.

Which countries paused or delayed ESG measures? Switzerland paused its Climate-Disclosure Ordinance, Singapore delayed assurance deadlines, and California suspended enforcement of SB 261 for now.