Make 2025 ‘the year of CSRD… and much more’

From the chief sustainability officer (CSO) to the chief financial officer (CFO) and CEO, board, and investors, 2025 sees the first mandated wave of Corporate Sustainability Reporting Directive (CSRD) reports. Meeting the European Union’s CSRD will consume the time and energy of large and listed companies in the EU and any global firms that do significant business within its borders. However, it would be a wasted opportunity for companies to simply report and comply with the data, analytics, and benchmarking efforts demanded by the CSRD (and all global regulations and voluntary disclosures) without going further.

Businesses should build on the work required to meet the CSRD and other requirements to establish efficient ongoing baseline assessments for their sustainability goals. From there, they should focus on creating and executing roadmaps that deliver material positive benefits to the environment, people, and the business itself. Reporting to fulfill CSRD requirements is not the mission. Politically, the mission is to achieve Europe’s 2050 climate-neutrality target and the European Green Deal’s broader initiatives. When it comes to sustainability, the most ambitious business leaders should focus on the UN’s 17 Sustainable Development Goals (SDGs).

Our broader research outlines, first, that the world knows how to solve sustainability, and second, five themes HFS Research will expand on in 2025 that capture sustainability beyond compliance (see Exhibit 1).

2025 is the year of the CSRD; it would be a waste not to turn that into real impact

The CSRD reports due in 2025, which cover the 2024 financial year, will require 50,000 organizations to report, almost quadrupling that of the previous EU program. CSRD requirements affect:

1. EU-listed firms
2. Large companies with two or more of the following criteria: 250 employees, €50 million in revenue, or a €25 million balance sheet; and
3. Non-EU firms with €150 million in EU revenue (including a series of specific EU ‘branch’ trigger points).

Without dwelling on the details—the EU offers plenty of guides and resources (albeit several enterprise leaders consider them vaguer than would be ideal!), and most all consulting, technology, and services firms also continue to ramp up their sustainability reporting and wider capability (see our report here)—the CSRD covers sustainability impacts related to businesses, risk, and opportunities, including finance and supply chains. It goes beyond emissions (including capturing all direct scope 1, indirect scope 2, and value chain scope 3 emissions) to include waste, water, and nature.

Beyond EU regulation, regardless of policy changes from the incoming US administration, states such as California and New York create a similar dynamic in the US where any firm large enough must align to more ambitious (although not ambitious enough) legislation regarding sustainability.

The time, resources, and energy required to find, collate, and report sustainability data cannot be wasted by reporting alone. That effort must be followed by creating ambitious roadmaps… and taking action. Enterprises that got ahead of regulations are already moving from aligning their organizations for sustainability to focusing on specific initiatives with the most significant impact and business value. Those enterprises are focusing on material spheres of influence that work on environmental, social, and economic metrics.

Exhibit 1: Five themes we’re exploring in 2025 to go beyond EU’s CSRD to embed sustainability and systemic change

Source: HFS Research 2025; source 1; source 2; source 5

Follow the money, people, and deals

Last year, HFS Research explored how much of the perceived ‘greenlash’ is a mist driven by rhetoric as global sustainability investment, strategy, and action ramp up. As per our latest market analysis, enterprises are spending big on consulting, technology, and business services, and providers are building their capability to match the booming revenues, headcounts, and deal numbers (66%, 126%, and 140%, respectively, over the past two years—see Exhibit 2 and our market analysis). The most prominent technology companies are also consolidating reporting, data analytics, and sustainability capabilities beyond disclosure, and the very largest are becoming a threat to the crowded ESG and sustainability specialist technology field (see our separate view).

Exhibit 2: Follow the money, people, and deals: Your peers are spending big on sustainability services; providers are building the capability to match

Source: 18 leading sustainability consulting, technology, and business services firms that appeared in HFS’ 2022 and 2024 market analyses

Stories abound in the enterprise community of enterprises already getting ahead of regulation for impact and value

Years ago, an agricultural giant aligned its reporting to the SDGs: a more ambitious aim than the CSRD and most existing regulations and voluntary standards. The company found clear business value beyond this alignment’s positive environmental and social outcomes, including increased efficiency, better employee support, and powering a struggling national economy. As the reporting process becomes more efficient and the sustainable practices receive support from the CEO and CFO, the company can focus on the most materially impactful projects within its sphere of influence. Additionally, it can collaborate with influential partners in its ecosystem to make systemic improvements to the agriculture industry. Its new initiatives include decarbonizing entire factories aligned to science-based targets, supporting the thousands of small farms that play a role in climate and broader environmental sustainability as well as communities, and further leading as an example of helping employees and their families—as well as playing a national advocacy role in partnership with energy and manufacturing firms.

A convenience store chain recently talked us through its development of a tailored sustainability strategy to address its unique needs and limitations. Prioritizing impactful and low-cost initiatives first—in parallel to reporting requirements, for which it’s easier to get executive buy-in—aims to optimize resources, reduce costs, and improve goal setting. A structured program ensures compliance and long-term success while enabling financial returns and sustainability-focused business outcomes.

See several more enterprise examples in our outline of AI’s potential to achieve positive sustainability outcomes and our reports on enterprise technology platforms, which consolidate the range of ESG and sustainability demands—including a deep dive into Microsoft.

The Bottom Line: Make 2025 the year that CSRD powers new enterprise data, analysis, and cross-organizational and ecosystem collaborations.

CSOs and CFOs working collaboratively with other supportive leaders must find both objective and emotive reasoning—a business case incorporating storytelling—to break down silos within organizations and throughout ecosystems in partnerships. They must address legacy ’debts’—technical, data, process, skills, culture, and strategy—built up over the years in organizations. Businesses must recognize the value of embedding sustainability into their operations and the need for system-changing ambition to lead efforts that demonstrate sustainability’s effectiveness. Collectively, these efforts would align policy, consumer behavior, and industry with the Sustainable Development Goals.