ESG Wrapped 2025: The Year the Fog Cleared | Azolla Climate

Here are the 6 defining signals from 2025 that every business leader needs to know—and what they mean for your strategy in 2026.

1. The EU “Omnibus I”: The Pressure Release Valve

In February 2025, the EU first rolled-out the “Omnibus I” package. The headline? Simplification. The scope for mandatory CSRD reporting was narrowed, raising the threshold to companies with more than 1,000 employees (up from 500) and €450m turnover.

The EU realized that to save the Green Deal, they had to make it survivable. So if you are a mid-cap company, you just bought yourself time. If you are a large multinational, the reprieve is an illusion—your data is still needed by your banks and investors, regardless of the mandate. Compliance is no longer the ceiling; it’s just the floor.

2. CBAM: The “Green Tariff” Reality Check

While the Omnibus eased reporting rules, the Carbon Border Adjustment Mechanism (CBAM) tightened its grip. 2025 was the final “dry run” before full financial liability hits in 2026.

Climate policy is now officially Trade Policy.

For exporters in Southeast Asia and manufacturing hubs, carbon intensity is no longer just an environmental metric—it is a fierce competitiveness metric. The cost of carbon is about to directly hit the P&L of goods entering Europe, and those without clean data will pay the highest price.

3. The Consolidation: Standards Get Sharp and Serious

2025 saw the fragmented landscape of standards finally coalesce into a unified playbook. The major updates include:

• PCAF: A “year-end gift” in December closed the largest remaining accounting loopholes. New methods for complex instruments—specifically securitizations, green bonds, and reinsurance—now force financial institutions to account for carbon hidden in the most opaque parts of their portfolios.
• SBTi: The Corporate Net-Zero Standard Version 2.0 fundamentally overhauled the framework. It replaced rigid “one-size-fits-all” rules with a tiered system focusing Scope 3 targets on high-impact “priority emissions” and introduced an “Ongoing Emissions Responsibility” model to formally incentivize—but not substitute—the use of carbon credits.
• GHG Protocol x ISO: A historic partnership was announced in September to create a single, unified framework for greenhouse gas accounting.
• TNFD & ISSB: The “Nature” framework (TNFD) effectively graduated from a voluntary niche to a “foundational global standard,” with ISSB signaling deeper integration.
• ISSB Sector Standards: The move to update SASB standards ensures that critical sector-specific nuances aren’t lost in the broader consolidation.

The era of “choose your own framework” is over. Auditability is King. Companies can no longer hide behind vague methodologies. Your carbon and nature data must now be as robust as your financial data.

4. The Climate Scorecard: Top Spots Still Empty

The CCPI 2026 (Climate Change Performance Index) was released, and for another year, the top 3 spots remain vacant. No country is performing well enough to prevent dangerous climate change, with Denmark retaining the #4 spot as the “best of the rest” but still falling short of a “very high” rating.

Global ambition has plateaued. Governments are failing to lead, which shifts the burden of “transition leadership” to the private sector. Expect increased pressure from civil society and activist investors on corporations to fill the governance gap.

5. COP30 in Belem: The “Amazon Consensus”

Held in the heart of the Amazon, COP30 was positioned as the “Nature COP” and largely delivered on finance, securing a new $1.3T target for developing nations. However, the summit struggled to advance the “fossil fuel phase-out” language, resulting in a stalemate on the energy transition text.

Money is moving, even if the politics are stuck. The focus has shifted from “global treaties” to “deal flow.” The new finance targets mean capital will flow to Nature-based Solutions (NbS) and adaptation projects. If your business interacts with land use, water, or forestry, the new capital targets mean 2026 is the year to aggressively pivot toward nature-positive investments.

6. The “Trump 2.0” Effect & The IMO Delay

The US rolled back key climate regulations and threatened new tariffs. The ripple effect was immediate: the IMO (International Maritime Organization) delayed its global carbon levy by a year, citing economic instability and political pushback from major economies.

The global consensus is fragile. We are entering a “Multi-Speed World.” Companies with US exposure may face “Anti-ESG” headwinds, while their EU/Global operations face “Pro-ESG” mandates.

The winning strategy is not to flip-flop, but to build a regional compliance model underpinned by a global data strategy—keeping the “Green” label for Brussels and the “Efficiency” label for the US, while the underlying numbers remain the same.