ESG has been a hot topic for many years, but with shifting political landscapes, evolving regulations, and economic pressures, many mid-market business owners are wondering: Is ESG still a priority?
The short answer? Yes, but the conversation has changed. Instead of seeing ESG as just a compliance exercise or a corporate responsibility checkbox, businesses are now focusing on how it drives value, enhances resilience, and creates a competitive advantage.
So, in the face of so much noise and rhetoric, what’s shaping ESG in 2025, and what should mid-market businesses pay attention to?
A shifting political landscape
ESG policies have always been influenced by politics, and 2025 is no exception. While the US government under the Trump administration is dialling back certain ESG regulations, other global economies, especially in Europe and Asia, are doubling down.
Countries including Japan, Australia, Canada, Hong Kong, and Singapore have recently introduced new corporate sustainability reporting requirements, and in the EU, the legislative landscape has increased significantly, with nearly 2,500 ESG disclosure policies now in place worldwide1. Investors still see strong ESG performance as a key driver of long-term financial growth, with sustainable businesses proving to be more resilient and profitable.
The takeaway is clear. Even if ESG regulations are shifting in some regions, the broader trend towards and further evolution of sustainable accountability is here to stay.
Supply chain risks and transparency
For many mid-market companies, supply chains present both a challenge and an opportunity.
New EU legislation under discussion, such as the Corporate Sustainability Due Diligence Directive (CSDDD), is increasing the pressure on businesses to ensure transparency and accountability in their supply chains. This means companies must conduct more thorough due diligence, ensuring suppliers meet environmental and social responsibility standards to protect the business from both continuity and reputational risks.
Beyond compliance, businesses are recognising the strategic benefits of a diversified, resilient supply chain. The risks of over-reliance on high-risk geographies, combined with consumer and investor expectations for ethical sourcing, are making supply chain transparency a business imperative.
Evolving ESG reporting requirements
Sustainability reporting is no longer just for the big players. In 2025, 90% of S&P 500 companies will publish sustainability reports, a massive leap from just 20% a decade ago2. The same trend is filtering down through mid-market businesses as sustainability factors become standard requirements in winning work through bids and tenders, as well as investor evaluations.
With ESG-related legislation increasing by 155% over the past decade3, it’s clear that expectations around transparency are only growing. While smaller companies may not yet be legally required to meet the strictest reporting standards, those that proactively integrate ESG into their operations will be better positioned for future growth, investment, and market opportunities. However, mid-market businesses must also be wary of greenwashing, ensuring that reporting reflects genuine sustainability efforts. The key is to be transparent and authentic in communication to build credibility and avoid the reputational risks associated with misrepresentation.
The bottom line: ESG is a business growth driver
If you’re wondering whether ESG still matters in 2025, the answer isn’t just ‘yes', it’s a strategic imperative that needs to be proactively integrated into a business’s growth plans. Mid-market businesses that prioritise ESG are more likely to attract potential clients and partners, improve their positioning, and elevate valuations when it matters most.
With 82% of business leaders believing ESG’s importance will continue to grow5, the real shift isn’t about whether to engage with ESG, but how to make it work for your business.
3edie: ESG regulations have increased 155% in the last decade
4The Times: ‘Thirsty’ ChatGPT uses four times more water than previously thought
5Thomson Reuters2024 State of Corporate ESG: Navigating new frontiers of regulation and AI
The growing importance of nature and biodiversity
Climate change is no longer the only environmental concern for businesses, biodiversity and nature-related risks are becoming a central focus.
Investors and regulators are increasingly asking businesses to assess and report on their impact on nature. Frameworks like the Taskforce on Nature-related Financial Disclosures (TNFD) are gaining traction, and new UK regulations under the Town and Country Planning Act now require businesses to demonstrate biodiversity net gain in certain sectors.
For mid-market companies, this means evaluating how their operations interact with natural ecosystems, whether through land use, supply chain impacts, or resource consumption. Businesses that take a proactive approach to sustainability will not only mitigate risk but also strengthen their brand and stakeholder relationships.
AI and sustainable innovation
AI is transforming how businesses approach sustainability. From data-driven ESG reporting to predictive analytics for energy efficiency, AI-powered tools are helping companies optimise their sustainability efforts like never before.
But AI itself comes with environmental costs. Data centres consume enormous amounts of energy and water, ChatGPT queries alone are estimated to use 148 million litres of water daily4. This has sparked innovation in low-impact AI solutions, with businesses increasingly factoring AI’s environmental footprint into their sustainability strategies.
For mid-market businesses, AI presents a double opportunity. Leveraging technology to improve ESG performance while also addressing the sustainability challenges AI creates.
The bottom line: ESG is a business growth driver
If you’re wondering whether ESG still matters in 2025, the answer isn’t just ‘yes', it’s a strategic imperative that needs to be proactively integrated into a business’s growth plans. Mid-market businesses that prioritise ESG are more likely to attract potential clients and partners, improve their positioning, and elevate valuations when it matters most.
With 82% of business leaders believing ESG’s importance will continue to grow5, the real shift isn’t about whether to engage with ESG, but how to make it work for your business.
3edie: ESG regulations have increased 155% in the last decade
4The Times: ‘Thirsty’ ChatGPT uses four times more water than previously thought
5Thomson Reuters2024 State of Corporate ESG: Navigating new frontiers of regulation and AI
“From supply chain transparency to sustainable innovation, ESG is no longer just about compliance. It’s a driver of resilience, profitability, and long-term success.
For mid-market businesses, the opportunity is clear. Those that embrace ESG strategically will be the ones that thrive in the years ahead.”
Jo Daley, Director - Head of Impact, Clearwater
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