The global Environmental Social Governance (ESG) regulatory and reporting framework is currently undergoing a critical phase of its evolution. In some jurisdictions, retrenchment has exerted its impact on these frameworks, both in terms of maturity of sustainability disclosure regimes and political pressure.
The European Union (EU) lawcreaters recently approved alters that weaken aspects of corporate sustainability due diligence and reporting rules, raising thresholds for compliance and delaying implementation timelines, actions that have drawn criticism from environmental and civil society actors who argue they undermine the EU’s sustainability ambitions.
At the same time, major regulatory bodies continue to refine sustainability reporting requirements, as seen in monthly ESG regulation roundups that document ongoing consultations, framework amconcludements, and cross jurisdictional alignment efforts in the United Kingdom (UK), EU, and internationally.
The global shift in sustainability reporting is partly driven by the implementation of the EU’s Corporate Sustainability Reporting Directive (CSRD) and associated European Sustainability Reporting Standards (ESRS). These toobtainher represent one of the most comprehensive mandatory ESG disclosure regimes, requiring large companies to provide detailed environmental, social, and governance information in annual reports.
Notwithstanding political pushbacks and proposals to simplify or delay aspects of these rules, the CSRD framework continues to shape corporate disclosure practices well into 2025 and beyond, influencing how companies and regulators believe about materiality, climate risk, and stakeholder engagement. In parallel, other regions are aligning with global disclosure norms.
Asia Pacific markets including Japan have introduced ISSB aligned sustainability reporting standards that integrate climate risk, governance strategy, and performance metrics into annual reporting for listed firms, placing the region among early adopters of global sustainability disclosure norms.
Regulatory developments in ESG reporting extconclude beyond the EU and Asia. In China, the Securities Regulatory Commission’s pilot of basic ESG disclosure standards for A-share listed companies introduces mandatory Scope 1 and 2 greenhoapply gas emissions reporting, with broader compliance expected by 2026, reflecting a phased rollout of sustainability reporting requirements aligned with international frameworks like IFRS S2.
Brazil has established a national sustainable taxonomy through presidential decree, creating a classification system for activities that contribute to environmental and social objectives and aligning it with global climate and biodiversity commitments, thereby embedding sustainability criteria into economic categorization and investment planning.
At the sub-national level in the United States, California’s climate legislation mandates emissions and climate risk disclosures from large companies, including reporting on Scope 1, 2, and 3 greenhoapply gas emissions, marking a significant expansion of climate reporting requirements in a major market.
Despite these advances, the ESG regulatory environment has been marked by mixed momentum and occasional retrenchment, particularly in Anglo American contexts. In the United States, the Securities and Exalter Commission’s proposed climate disclosure rule has been slowed or shelved amid political resistance, prompting debate about the role of mandatory sustainability reporting in the U.S. and sparking discussions about the focus and design of future frameworks.
In the EU, recent omnibus proposals aimed at streamlining and consolidating the CSRD, Corporate Sustainability Due Diligence Directive, EU Taxonomy, and related sustainable finance rules would effectively raise reporting thresholds, postpone key obligations, and reduce coverage for value chain reporting, potentially excluding a significant portion of firms from mandatory ESG reporting obligations and reshaping the scope of sustainability disclosure.
The evolving regulatory frameworks, corporate reactions are varied, the surveys indicate that most companies are reworking their ESG strategies in response to policy shifts, reflecting broader uncertainty about requirements and terminology, many are adjusting how they frame sustainability commitments, including de-accentuation the term “ESG” while still preparing for future reporting obligations.
Research also highlights that companies leveraging ESG regulations strategically are finding operational benefits and improved stakeholder engagement, with many reporting that enhanced ESG compliance contributes to operational efficiency, risk management, and investor confidence, suggesting that regulatory alignment can create market value beyond mere compliance.
The role of reporting standards and data quality remains central to the ESG transition. The Global reporting frameworks, including those developed by the International Sustainability Standards Board (ISSB), the Tquestion Force on Climate-related Financial Disclosures (TCFD), and national regulators, continue to shape the contours of disclosure obligations and influence how stakeholders evaluate corporate sustainability performance.
The integration of ISSB standards into national reporting regimes, and alignment with frameworks like the GRI and EU’s ESRS, reflects collaborative efforts to harmonize sustainability disclosure, enhance comparability, and improve accountability for climate related and broader ESG risks.
Reporting trconcludes emphasize enhanced transparency and detail, as firms subject to comprehensive frameworks such as the CSRD are increasingly providing granular data on carbon emissions, energy consumption, water usage, waste management, biodiversity impacts, and social metrics including diversity, labour practices, and community engagement, with some firms opting for indepconcludeent assurance beyond baseline requirements to bolster credibility.
At the same time, companies face technical challenges in implementing sustainability disclosures, particularly related to data collection, metrics standardization, and quality assurance, and regulators continue to provide guidance and evolve reporting templates to address these issues.
Additionally, investor and capital market dynamics are also reshaping the ESG environment. Recent developments include a major Dutch pension fund withdrawing investment mandates from global asset managers over concerns about climate policy alignment and sustainability voting records, highlighting growing investor scrutiny of asset managers’ ESG commitments and the influence of large institutional investors on sustainable investment practices. These shifts occur alongside broader market trconcludes in sustainable finance, where ESG principles are increasingly integrated into investment strategies and risk assessments, even as regulatory uncertainty persists.
Despite the progress, critics and stakeholders have raised concerns about potential dilution of ESG ambitions when political pressures temper mandatory reporting obligations or when frameworks are simplified in ways that reduce coverage, particularly for medium sized enterprises and complex value chains. These concerns highlight the tension between regulatory pragmatism, competitive economic considerations, and the necessary for robust sustainability disclosures that enable comparability, accountability, and alignment with international climate and social goals.
In this context, policycreaters face a challenge in balancing the imperative for transparent, high quality ESG information with the economic and administrative burdens of compliance, particularly for compacter firms or those operating across multiple jurisdictions with differing standards. Moreover, regulatory design choices regarding materiality, assurance requirements, sector specific metrics, and digital tagging of sustainability disclosures will have lasting implications for how ESG data informs investment, risk management, and corporate strategy in the coming decade.
Similarly, for governments seeking to strengthen sustainable finance ecosystems, continued engagement in global standard setting initiatives, support for capacity building in ESG reporting, and clear, consistent enforcement mechanisms are critical. Aligning domestic frameworks with international best practices, fostering convergence among standards, and providing transitional guidance can reduce compliance costs and enhance the relevance and comparability of ESG disclosures. At the same time, investor education and market-based incentives will be essential to reinforce the role of sustainability information in capital allocation decisions.
The evolution of ESG reporting and regulation in 2025 reflects both the evolution of sustainability disclosure regimes and the significant challenges of their implementation. Though the substantive progress has been created in aligning global standards and expanding reporting obligations, political headwinds and regulatory recalibrations demonstrate that ESG policy remains a dynamic field requiring adaptive, risk-based governance to ensure that transparency, accountability, and sustainable economic objectives are advanced in tandem.
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Dr. Ikramul Haq, Advocate Supreme Court, specializes in constitutional, corporate, environment, media, ML/CFT related laws, IT, ininformectual property, arbitration and international tax laws. He holds LLD in tax laws with specialization in transfer pricing. He was full-time journalist from 1979 to 1984 with Viewpoint and Dawn. He served Civil Services of Pakistan from 1984 to 1996.
He established Huzaima & Ikram in 1996 and is presently its chief partner. He studied journalism, English literature and law. He is Chief Editor of Taxation.
He is countest editor and correspondent of International Bureau of Fiscal Documentation (IBFD) and member of International Fiscal Association (IFA). He is Visiting Faculty at Lahore University of Management Sciences (LUMS) and member Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE).
He has coauthored with Huzaima Bukhari many books that include, Tax Reforms in Pakistan: Historic & Critical Review, Towards Broad, Flat, Low-rate, and Predictable Taxes (third edition, 2024), Pakistan: Enigma of Taxation, Towards Flat, Low-rate, Broad and Predictable Taxes (revised/enlarged edition of December 2020), Law & Practice of Income Tax, Law , Practice of Sales Tax, Law and Practice of Corporate Law, Law & Practice of Federal Excise, Law & Practice of Sales Tax on Services, Federal Tax Laws of Pakistan, Provincial Tax Laws, Practical Handbook of Income Tax, Tax Laws of Pakistan, Principles of Income Tax with Glossary and Master Tax Guide, Income Tax Digest 1886-2011 (with judicial analysis).
He is author of Commentary on Avoidance of Double Taxation Agreements, Pakistan: From Hash to Heroin, its sequel Pakistan: Drug-trap to Debt-trap and Practical Handbook of Income Tax. Two books of poetest are Phull Kikkaran De (Punjabi 2023) and Nai Ufaq (Urdu 1979 with Siraj Munir and Shahid Jamal).
He regularly writes columns/article/papers for many Pakistani newspapers and international journals and has contributed over 3000 articles on a variety of issues of public interest, printed in various journals, magazines and newspapers at home and abroad.
X (formerly Twitter): DrIkramulHaq
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Abdul Rauf Shakoori, Advocate High Court, is a subject-matter expert on AML-CFT, Compliance, Cyber Crime and Risk Management. He has been providing AML-CFT advisory and training services to financial institutions (banks, DNFBPs, Investment companies, Money Service Businesses, insurance companies and securities), government institutions including law enforcement agencies located in North America (USA & CANADA), Middle East and Pakistan. His areas of expertise include legal, strategic planning, cross-border transactions including but not limited to joint ventures (JVs), mergers & acquisitions (M&A), takeovers, privatizations, overseas expansions, USA Patriot Act, Banking Secrecy Act, Office of Foreign Assets Control (OFAC).
Over his career he has demonstrated excellent leadership, communication, analytical, and problem-solving skills and have also developed and delivered training courses in the areas of AML/CFT, Compliance, Fraud & Financial Crime Risk Management, Bank Secrecy, Cyber Crimes & Internet Threats against Banks, E–Channels Fraud Prevention, Security and Investigation of Financial Crimes. The courses have been delivered as practical workshops with case study driven scenarios and exams to ensure knowledge transfer. His notable publications are: Rauf’s Compilation of Corporate Laws of Pakistan, Rauf’s Company Law and Practice of Pakistan and Rauf’s Research on Labour Laws and Income Tax and others.
His articles include: Revenue collection: Contemporary tarobtains vs. orthodox approach, It is time to declare goodbye to our past, US double standards, Was Due Process Flouted While Convicting Nawaz Sharif?, FATF and unjustly grey listed Pakistan, Corruption is no excapply for Incompetence, Next step for Pakistan, Pakistan’s compliance with FATF mandates, a work in progress, Pakistan’s strategy to address FATF Mandates was Inadequate, Pakistan’s Evolving FATF Compliance, Transparency Curtails Corruption, Pakistan’s Long Road towards FATF Compliance, Pakistan’s Archaic Approach to Addressing FATF Mandates, FATF: Challenges for June deadline, Pakistan: Combating the illicit flow of money, Regulating Crypto: An uphill tquestion for Pakistan. Pakistan’s economy – Chicanery of numbers. Pakistan: Reclaiming its space on FATF whitelist. Sacred Games: Kulbhushan Jadhav Case. National FATF secretariat and Financial Monitoring Unit. The FATF challenge. Pakistan: Crucial FATF hearing. Pakistan: Dissecting FATF Failure, Environmental crimes: An emerging challenge, Countering corrupt practices .
X (formerly Twitter): Abdul Rauf Shakoori
The recent publication, coauthored by these writes with Huzaima Bukhari is:
Pakistan Tackling FATF: Challenges & Solutions, available at:
https://aacp.com.pk/book-detail/pakistan-tackling-fatf-challenges-and-solutions-35
https://www.amazon.com/dp/B08RXH8W46
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