.png)
.png)
2025 felt like a year of tug-of-war for climate and sustainability: major global forums produced pragmatic, if imperfect, outcomes; the European Union moved to simplify and (in places) roll back the scope of corporate sustainability rules; and the United States under a new administration pushed fast in a more fossil-friendly direction — even while courts, investors and subnational actors pushed back. Below we pull together the main threads you need to know.
Brussels spent much of 2025 wrestling with how to balance ambitious sustainability rules with industry complaints about complexity and cost. The so-called “Omnibus” package — part of a wider push to recalibrate EU sustainability law — produced high-profile changes to the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The Parliament and Council positions moved toward raising thresholds (e.g., employee and turnover thresholds) and narrowing which firms are in scope, effectively removing many smaller listed companies and some non-EU subsidiaries from the immediate reporting and due-diligence requirements. Proponents framed the changes as reducing unnecessary burden and improving legal clarity; critics warned the result would shrink transparency and hurt investors and supply-chain accountability.
At the same time, reports and draft Commission texts signalled a broader EU push to simplify other environmental reporting obligations — for example, proposals that would reduce the granularity of site-level environmental disclosures or ease requirements for farms and certain industrial sites. Supporters say this will cut red tape; opponents say it risks undermining the EU’s climate-risk management and the credibility of corporate sustainability claims.
President Trump’s first year saw rapid executive-level moves to reshape U.S. climate and energy policy. Early orders and policy packages branded around “unleashing American energy” rolled back or paused several Biden-era climate initiatives, directed agencies to revisit greenhouse-gas regulatory assumptions (including social-cost calculations), prioritised fossil fuel development and streamlined permitting for oil and gas. These actions signalled a clear federal pivot away from regulatory levers that had driven decarbonisation policy under the previous administration.
But the story in the U.S. is not one-way. Legal and state-level pushback emerged quickly: several parts of the new agenda were challenged in court or resisted by state governments and private investors. A notable example: a federal judge struck down an order that sought to block development of wind energy on federal lands and waters, calling aspects of it arbitrary — a reminder that litigation and multi-level governance can slow or reshape executive policy.
Throughout 2025, investors and insurers continued to rewire portfolios toward climate-resilient and low-carbon assets — but they did so in a more complicated political environment. Asset owners increasingly pressed companies for measurable transition plans, while rating agencies and auditors wrestled with new reporting formats and the changing legal baseline (especially in Europe). At the same time, some companies accelerated operational decarbonisation — renewables procurement, hydrogen pilots, industrial efficiency upgrades — both for cost advantages and to maintain investment access.
A notable tension emerged: where regulation pulled back or narrowed scope, voluntary and investor-driven disclosure efforts (and litigation risk) increasingly filled some of the transparency gaps. That dynamic means big firms are still likely to face pressure to disclose climate exposure even where formal rules soften.
On the deployment front, 2025 continued to see record additions of solar, wind and battery storage capacity across major markets, supported by ongoing cost declines and maturing supply chains. Demand for heat pumps, green hydrogen pilots, and industrial electrification also increased, though progress varied by region. Despite these gains, systemic bottlenecks persisted: grid congestion, slow permitting cycles, limited interconnection capacity and geopolitical pressure on critical minerals all constrained the pace at which clean technologies could scale. Companies increasingly paired new technologies with operational efficiency programs, blending cost savings with emissions reductions.
The year 2025 saw a string of severe, climate-linked disasters across the globe — in floods, heatwaves, wildfires and storms — that underlined the real and present risks of our warming planet.
A new global wildfire analysis released in 2025, covering the 2024-2025 fire season, estimated that wildfires burned an area larger than India (around 3.7 million km²) over the period, exposing roughly 100 million people and $215 billion worth of homes and infrastructure to fire risk. While the study highlighted the fire-prone regions in South America (Pantanal, Amazon and Chiquitano), it also emphasised that warming, drying and land-use dynamics contribute to dangerous fire seasons worldwide, even in places previously less affected.
In April–July 2025, a severe heatwave struck the Indian subcontinent — including large parts of India and Pakistan — producing extreme temperatures up to 48 °C in some places. The heatwave imposed intense heat stress on populations, disrupted agriculture and water supply, and caused widespread human suffering. Following the heat wave, heavy pre-monsoon rains and monsoon rainfall triggered widespread flooding across multiple provinces. The resulting floods killed over 1,000 people and displaced millions, destroying homes, infrastructure and farmland. In nearby India, unusually heavy monsoon rains combined with dam water releases to produce one of the worst flood crises in decades, inundating villages and affecting millions of residents.
COP30 (Belém, November 2025) produced a package of decisions that reflected a mixed political landscape: negotiators kept alive several implementation tracks — on mitigation, adaptation and finance — and advanced work-streams intended to turn national commitments into action, while at the same time revealing growing North/South divisions over responsibility, finance and timing. The official outcomes focused on operationalising the Global Stocktake follow-ups and accelerating scaled finance and climate action partnerships, but observers noted the language was often the result of compromise rather than ambition. In short: COP30 pushed practical work forward (finance architecture, technical assistance and sectoral dialogues), but did not close the ambition gap the science says is still wide.
2025 didn’t deliver a clean, linear story of progress — it delivered a more complicated one. Global institutions and the private sector continued to push deployment, disclosure and adaptation; national politics and regulatory simplification efforts introduced new uncertainty. That makes 2026 a pivotal year for whether the compromises of 2025 become durable pathways to implementation — or whether they create new gaps that civil society and markets will have to fill.
Looking ahead to 2026, several trends will continue to evolve. In Europe, negotiations on the Omnibus package — including the final scope of CSRD and CSDDD — will determine how far regulatory simplification goes and which companies remain subject to the EU’s sustainability rules. In the United States, the trajectory of climate and energy policy will be shaped as much by courts and state governments as by the federal administration, with ongoing litigation and ambitious subnational programs likely to influence what ultimately takes effect. And on the global stage, a key question will be whether countries, investors and development banks can deliver on the technical work-streams and finance commitments set in motion at COP30, turning political agreements into real implementation. Together, these dynamics will define the level of policy certainty, investment clarity and climate momentum as the world enters a crucial year for meeting mid-decade climate goals.