In 2025, global uncertainty in the ESG landscape has intensified; while regulatory rollbacks have occurred in the United States, certain reporting obligations have been postponed in the European Union. In this context, it is critical for companies to shape their ESG strategies within a framework that emphasizes regulatory compliance, risk mitigation, and alignment with long-term corporate value. Legal scrutiny is particularly increasing in areas such as supply chain due diligence, climate risk disclosures, and green claims.

The year 2025 stands out as a period marked by increasing uncertainty, regulatory volatility, and intensified conceptual debates in the field of Environmental, Social, and Governance (ESG). Political developments and legal reform efforts at both global and regional levels are compelling companies to restructure their sustainability strategies. In this context, the shifting political landscape requires more than mere regulatory monitoring—it necessitates a redefinition of the balance between corporate values, stakeholder expectations, and financial sustainability.

In particular, the rollback of federal environmental and climate policies in the United States—such as the withdrawal from the Paris Agreement, the reversal of climate commitments, and the dismantling of Diversity, Equity, and Inclusion (‘’DEI’’) programs—has significantly reshaped the ESG regulatory outlook.
Meanwhile, in the European Union (‘’EU’’), legislative alignment efforts aimed at streamlining the Corporate Sustainability Reporting Directive (‘’CSRD’’), the Corporate Sustainability Due Diligence Directive (‘’CS3D’’), and the EU Taxonomy Regulation under the broader Omnibus initiative have led to the postponement of certain reporting obligations for some companies by up to two years.

In this complex landscape, establishing a robust ESG approach has become critical for companies to ensure regulatory compliance and long-term resilience. Three key pillars emerge in this context: compliance, risk management, and strategic direction.

Compliance: Preparing for Reporting Obligations
The climate disclosure laws adopted by the State of California (SB 253 and SB 261) extend beyond California-based companies, applying to all businesses generating over USD 1 billion in annual revenue that operate in the state. As of 2026, these companies will be required to publicly disclose their Scope 1 and Scope 2 greenhouse gas emissions. Additionally, companies with annual revenues exceeding USD 500 million must publish climate-related financial risk reports.

Although the final regulations by the California Air Resources Board (‘’CARB’’) have yet to be issued, covered entities are advised to begin building their technical infrastructure for scoping, data preparation, and audit readiness.

In the EU, the recently adopted Stop-the-Clock Directive has postponed CSRD reporting obligations for certain companies. However, for non-EU parent companies, the obligation to comply by 2029 remains in effect. U.S.-based parent companies, in particular, should continue efforts to identify disclosure gaps, establish data collection systems, and prepare detailed compliance roadmaps.

Similarly, under the CS3D, companies are expected to conduct sustainability due diligence across their supply chains and prepare climate transition plans. Early action in developing the necessary internal systems and governance mechanisms will be essential for timely compliance.

Furthermore, the standards issued by the International Sustainability Standards Board (“ISSB”) are being integrated into national regulations not only in Türkiye, but also in countries such as Australia, Brazil, Japan, and Singapore. Accordingly, companies operating on a global scale must closely monitor these developments and establish jurisdiction-specific compliance plans.

Lastly, the fact that the U.S. Securities and Exchange Commission (“SEC”) has chosen not to defend its climate risk disclosure regulation in court does not eliminate the obligation of publicly listed companies under existing U.S. securities law to disclose material ESG risks. Failure to comply with this obligation may result in both regulatory action and investor litigation risks.

Risk Management: Corporate Responsibility through Supply Chains and Environmental Claims

Key sources of ESG risk include obligations related to supply chains and the reliability of environmental claims.

Supply chain-related risks—such as forced labor, child labor, and human rights violations—impose legal and ethical obligations on companies. Therefore, companies are expected to establish supplier codes of conduct, implement auditing mechanisms, and conduct international risk assessments. For companies falling within the scope of the CS3D, these preparations will also directly serve legal compliance.

On the other hand, the growing number of greenwashing cases worldwide has led to increased legal and administrative investigations into corporate environmental claims. While product-level green claims have been common in the U.S., broader corporate-level assertions such as “carbon neutrality,” “net zero target,” or “sustainable company” are now being scrutinized. In both the EU and the United Kingdom, regulators and civil society organizations have begun taking action, including ordering the withdrawal of advertisements, requiring the development of corrective plans, or imposing financial penalties.

In this context, companies must audit all environmental claims, subject such statements to approval processes before publication, and regularly monitor global regulatory developments.

Strategic Direction: ESG Governance Aligned with Corporate Values

Each company’s area of activity, stakeholder base, and set of corporate values are unique. Accordingly, ESG strategies must be tailored to the specific context of each organization. Beyond short-term compliance requirements, companies that approach ESG as a tool for long-term value creation and reputation management become more resilient in the face of changing legal frameworks.

For companies, it is critically important to clarify institutional priorities, identify the ESG-related risks and opportunities they face, assess their current level of compliance with applicable regulations, and establish a roadmap to close identified gaps.

In conclusion, the first half of 2025 has proven to be a challenging period for companies due to both regulatory complexity and conceptual uncertainties in the ESG space.
However, adopting an approach grounded in legal compliance, effective risk management, and long-term strategic governance will not only ensure regulatory alignment, but also deliver lasting benefits in terms of corporate resilience, stakeholder trust, and sustainable value creation.