:: Sustaining sustainability | Does ESG continue to be as relevant? ::

The Future of Environmental, Social, and Governance (‘ESG’) | Resilience amid political headwinds

As the global landscape shifts following the 2024 elections, the United States’ ('US') renewed withdrawal from the Paris Climate Agreement has raised questions about the relevance and future of ESG principles. Despite geopolitical turbulence and growing doubts about the future of ESG, here is the truth - ESG is not retreating, it is adapting.

Let's dive into some facts.

Global ESG assets are expected to surpass US$ 40 trillion by 2030 (Bloomberg Intelligence).
The European Union ('EU') and Asia-Pacific are advancing robust regulations and sustainable finance standards.
In the US, despite federal pullbacks, states and corporations are stepping up.
Over 90% of S&P 500 companies now report on ESG, integrating it into strategy and risk.
Investors are treating ESG as a material risk, not a moral stance.

Global ESG sentiment | Overall, a net positive

The global sentiment regarding ESG initiatives in 2025 presents a multifaceted landscape characterized by both progress and regression, yet overall reflects a net positive outcome. In select prominent economies, political opposition has prompted the retraction of specific ESG mandates. For instance, significant financial institutions have attenuated their climate commitments, with several banks withdrawing from international coalitions aimed at attaining net-zero emissions. This transition has yielded a fragmented strategy towards ESG, wherein certain institutions are retracting their commitments, mirroring a broader trend of political and economic obstacles affecting ESG strategies.

In contrast, other regions persist in fortifying their ESG frameworks.

European Union	India
The EU remains the gold standard for ESG leadership. With its Green Deal, Taxonomy Regulation, and the CSRD, the EU has created one of the world’s most comprehensive ESG regulatory frameworks. Companies are now legally required to provide detailed non-financial disclosures and climate transition plans. This has created a surge in demand for ESG advisory services, especially around double materiality assessments, reporting frameworks, and supply chain due diligence.	India is making strong strides in ESG, driven by regulatory nudges and investor interest. The Securities and Exchange Board of India has mandated the top 1,000 listed companies to file Business Responsibility and Sustainability Reports. India is also experiencing rapid development in green finance, social impact investing, and ESG benchmarking. ESG advisory services in India focus on helping clients integrate sustainability into operations, measure impact, and align with domestic and global reporting standards.
China	Middle East
China is expanding its ESG focus, especially in climate and environmental reporting. The government is pushing companies to adopt ESG disclosure practices, and the China Securities Regulatory Commission is laying groundwork for mandatory ESG disclosures. With a growing green bond market and focus on decarbonization, ESG advisory firms are helping Chinese companies bridge local compliance with international best practices.	Countries in the Middle East, particularly the UAE and Saudi Arabia, are integrating ESG into their Vision 2030 strategies. There is increasing emphasis on ESG as a means to attract global investment and diversify economies. ESG advisory services are focused on capacity building, ESG strategy development, and investor-grade reporting.
Southeast Asia	Canada
Markets like Singapore, Malaysia, and Indonesia are witnessing rapid ESG evolution. The Monetary Authority of Singapore has introduced green finance initiatives and mandatory climate risk reporting. In this region, ESG consulting is focused on risk management, value chain sustainability, and aligning with ASEAN Taxonomy standards.	Canada is steadily advancing its ESG agenda through evolving regulations and climate commitments. Climate goals include a 45-50% emissions cut by 2035 and a net-zero electricity grid by 2050. Although financed emissions reporting has been delayed and major banks like RBC are adjusting ESG commitments due to legal constraints, the overall trajectory remains toward increased transparency, accountability, and sustainability in corporate governance.

Future-proof ESG | Best practices

Set forth is a summary of key approaches for embedding ESG into strategy, governance, and engagement, to ensure sustainability and global trust.

1. Lead with voluntary disclosure and global standards

In the absence of uniform regulatory mandates across jurisdictions, forward-thinking organizations are voluntarily adopting international ESG frameworks to maintain transparency, credibility and investor confidence. Adhering to standards such as the Task Force on Climate-Related Financial Disclosures, the International Sustainability Standards Board, and the Global Reporting Initiative enables companies to signal long-term sustainability, regardless of domestic political shifts.

Best practice: Publish an annual ESG or sustainability report aligned with globally recognized standards. Even a concise, transparent 5-10 page report can build stakeholder trust and demonstrate strategic foresight.

2. Embed ESG into your core business strategy

ESG should no longer be treated as a parallel CSR initiative or a checkbox exercise. Industry leaders are integrating ESG into their supply chains, enterprise risk management, innovation cycles, and governance frameworks. This integration not only improves operational resilience but also drives differentiation in global markets increasingly influenced by sustainability criteria.

Best practice: Develop ESG Key Performance Indicators that link directly to business outcomes and tie a portion of executive compensation to their achievement. This signals internal accountability and external commitment.

3. Reimagine stakeholder engagement as a strategic lever

Companies that actively engage with their investors, regulators, employees, and communities are better positioned to anticipate and respond to ESG-related risks and opportunities.

Best practice: Issue a public commitment to net-zero or adopt science-based emissions targets, even if enforcement is not mandated in your jurisdiction. This aligns your brand with global sustainability benchmarks and prepares you for future policy tightening.

4. Build an ESG roadmap tailored for mid-sized enterprises

For mid-sized and growing companies, ESG adoption need not be overwhelming. A phased, tailored approach that focuses on material issues can offer both reputational and operational advantages. Practical steps such as setting 3–5 measurable goals, improving energy efficiency, and enhancing board-level oversight can deliver substantial value.

Best practice: Start with high-impact, achievable metrics, such as reducing carbon footprint by 30% over five years, increasing board diversity, or improving employee engagement through purpose-driven initiatives. Track progress annually and update stakeholders.

5. Institutionalize ESG governance

An effective ESG strategy requires strong oversight at the highest levels of the organization. Establishing ESG committees, strengthening ethics and compliance programs, and ensuring transparency through regular updates are essential to institutionalizing ESG governance.

Best practice: Assign ESG responsibilities at the board or C-suite level and ensure clear accountability. Incorporate ESG performance into risk registers and strategic planning processes.

Outlook | ESG’s adaptive future

While political shifts may slow momentum in some geographies, but they will not reverse the structural changes already embedded in global finance and corporate governance. Organizations are increasingly integrating ESG considerations into their risk management and strategic planning processes. Investors continue to emphasize the material risks and opportunities associated with ESG factors, leading to more sophisticated and resilient investment strategies.

This shift reflects a broader understanding of ESG as integral to long-term value creation, rather than a peripheral concern.

Should you require any assistance with your ESG strategy, reporting, validation of metrics or otherwise, please do not hesitate to write to us at contactus@mgcglobal.co.in.

Best regards

Team Markets

MGC Global Risk Advisory

About MGC Global Risk Advisory

Recognized as one of the '10 most promising risk advisory services firms' in 2017, as the 'Company of the Year' in 2018 &, 2019 (both in the category of risk advisory services), one of the 'Top Exceptional Companies to Work For' in 2020, amongst the 'Top 25 Customer Centric Companies' in 2020, 'The Consultant of the year' in 2021 (in the category of risk advisory services), 'Top Exceptional Leaders in Risk Advisory Services' in 2023 and 'Best place to work' in 2024; MGC Global is an independent member firm of Allinial Global.

MGC Global provides services in the areas of enterprise-wide risk management, forensic, internal audits, control assessments (SOC, IFCR & SOX), process re-engineering, governance frameworks, privacy & data protection (including GDPR & DPDP), IT risk advisory, GDPR, VAPT, ISO readiness, cyber security, vCISO, VCFO, accounting advisory, forensic, ESG & CSR services.

Our firm has the capabilities to service its clients through its offices in Bengaluru, Mumbai, NCR; and has service arrangements with associate firms in all major cities in India.

About Allinial Global

Allinial Global (formerly PKF North America) is currently the world's second-largest member-based association. With collective revenues to the tune of approximately US$ 6 billion, Allinial Global has dedicated itself to the success of independent accounting and consulting firms since its founding in 1969.

It currently has member firms in over 105 countries, who have over 28,000 professional staff and over 6,000 partners operating from nearly 700 offices across the globe.

Allinial Global provides its member firms with a broad array of resources and support that benefit both its member firms and their clients in the key impact areas of learning & development, human resources, international outreach, technical support, knowledge-sharing through its specialized communities of practice, information technology and practice management.