Below, we highlight a selection of insights from our white paper, offering a snapshot of what’s to come in 2025.
1. Regulation Remains a Driving Force
The year 2024 has seen a spate of new supply chain sustainability regulations, with the EU leading these efforts. As the new European Commission begins its work, the 2024 – 2029 term will focus on consolidating and implementing existing policies while strengthening industrial competitiveness.
With Donald Trump's re-election as U.S. president, federal climate and environmental regulations are
expected to be rolled back in the United States. However, state governments are likely to push ahead with new ESG legislation, sustaining progress at the regional level.
Below, we summarize some of the key developments that companies should closely monitor across Europe and North America.
European Union
- CSRD: Companies previously subject to the Non-Financial Reporting Directive (NFRD) must publish their first CSRD report in 2025. At the same time, other large EU companies will begin collecting data for their initial reporting cycle.
- Deforestation Regulation (EUDR): Implementation for the first group of companies was postponed by one year and is set to start on December 30, 2025. Given the complexity of the regulation, companies are advised to prepare well in advance.
- CBAM: Since January 2025, only the official EU methodology is accepted for calculating emissions.
- Green Claims Directive: Designed to fight greenwashing and protect consumers, this law requires companies to substantiate environmental product claims using a robust methodology. The directive is pending adoption.
- Omnibus Procedure: In November 2024, European Commission President Ursula von der Leyen proposed a consolidation of existing and forthcoming ESG reporting requirements as part of a so-called omnibus regulation to reduce the burden on companies. The framework would harmonize overlapping disclosure obligations from the CSRD, Taxonomy Regulation, and CSDDD. A detailed proposal is expected in late February 2025.
United Kingdom
- Sustainability Reporting Standards (SRS): The UK aims to introduce ESG disclosure requirements for listed companies, aligning with the ISSB reporting standards.
- Carbon Border Adjustment Mechanism (CBAM): The UK government has announced plans to implement a Carbon Border Adjustment Mechanism by 2027. This mechanism will place a price on carbon-intensive imported goods, similar to the EU’s CBAM.
- Forest Risk Commodity Regime (UKFRC): The UK has proposed legislation requiring companies to address illegal deforestation risks in their supply chains, with mandatory due diligence for commodities like soy, cocoa, and cattle products.
North America
- New York’s Senate Bill S897A: Also known as the Climate Corporate Data Accountability Act, this initiative aims to introduce climate-related disclosure rules, including the obligation to disclose Scope 3 emissions.
- U.S. FOREST Act: This proposed federal legislation seeks to prohibit the importation of products made wholly or in part from commodities produced on land subjected to illegal deforestation.
- Canadian National Instrument 51-107: The Canadian Securities Administrators (CSA) have proposed climate-related disclosure rules aligned with international frameworks, requiring companies to report Scope 1, 2 and 3 emissions, among other metrics.
The highly dynamic regulatory landscape calls for proactive approaches to sustainability and continuous monitoring of developments to ensure efficient resource allocation and effective governance systems. Mapping all applicable legal requirements can help companies identify overlaps and synergies and simplify compliance.
2. Risk-Based and Product-Focused Approaches in the Spotlight
As sustainability demands intensify, both regulators and companies increasingly recognize that prioritization is key. Unlike many national due diligence laws, the EU’s CSDDD and other regulations take a pronounced risk-based approach in line with international standards. This allows companies to focus their efforts on the most severe and likely risks in their supply chains. For example, companies may de-prioritize EU-based suppliers who already adhere to stringent EU rules. The risk-based approach under the CSDDD incorporates company-level, geographic, sector-specific, and product-related risk factors, with detailed guidance expected by early 2027.
At the same time, there is growing regulatory emphasis on product-level transparency. Regulations like the EU’s Eco-Design for Sustainable Products Regulation (ESPR), the EU Batteries Regulation, or the Green Claims Directive oblige companies to collect and report product-related sustainability data. Digital Product Passports (DPPs) are emerging as a powerful tool in this context. They rely on detailed lifecycle assessments, including data such as product origin, composition, environmental impact, and recycling, which promote greater transparency across supply chains.
These developments underscore that supply chain mapping and product traceability efforts will be essential to meet new legal obligations. In addition, much closer collaboration with suppliers will be required than ever before.
3. Full Supply Chain Visibility: The New Imperative
Today’s supply chains are highly complex, dynamic, and often opaque. Recent and upcoming legislation requires companies to achieve full visibility, including at the product level, through measures like supply chain mapping and advanced traceability practices.
Global developments such as geopolitical tensions and natural disasters continue to expose the fragility of supply chains, making them one of the most vulnerable areas of a company’s operations. According to the Supply Chain Resilience Report 2024, 80% of organizations worldwide experienced supply chain disruptions in 2024. These disruptions increasingly stem from failures to comply with sustainability legislation. To address these risks and fulfill regulatory obligations, companies must achieve full visibility across all supply chain tiers. This encompasses regulatory requirements related to decarbonization, sustainability reporting, due diligence, and product compliance.
To enhance visibility throughout their supply chains, companies must assess and streamline every aspect of their operations – from governance structures and supplier relationships to the strategic use of technology.
4. Connecting the Dots: Embracing Integration at All Levels
Companies are faced with complexity on all fronts, from supply chain fragmentation and regulatory requirements to data collection and rising stakeholder expectations. To address these challenges, companies must shift from siloed thinking to a systems-based approach, both within their organizations and beyond.
There are many strategies companies can adopt to streamline supply chain sustainability, harness synergies, and seize new opportunities:
- Foster holistic integration across the organization to enhance process alignment and efficiency
- Identify interconnections between regulations to maximize the value of existing data
- Consolidate relevant data into a single source of truth
- Align goals with teams, suppliers and external stakeholders
- Strengthen internal and external collaboration to enhance data-sharing and product traceability
5. Artificial Intelligence Coming of Age
Artificial Intelligence (AI) has been in use for many years, but recent advances in performance and capabilities have paved the way for new, powerful applications to drive digitalization and sustainability. AI offers opportunities for automation, simplifying complexity, improving efficiency, and generating unprecedented actionable insights. Specific AI use cases in supply chain sustainability management can be found in our sustainability trends white paper.
According to IBM's State of Sustainability Readiness 2024 report, more than half of organizations are not yet actively utilizing AI for sustainability purposes. However, 90% of executives believe AI can positively influence their sustainability goals. This contrast highlights a critical challenge: While companies clearly recognize the immense potential of AI, many still struggle to incorporate it into their processes and workflows.
IT departments play an increasingly vital role in addressing this challenge by deploying advanced technology solutions. Some companies are establishing specialized sustainability teams within IT to tie these efforts into core processes. As AI adoption accelerates, IT teams will be instrumental in ensuring seamless integration and the responsible use of technology.