ESG Trends and Opportunities For 2025

ESG investing is entering a phase of maturity as regulatory oversight and politicization shape how companies and investors approach risk and transparency. 

Aaron White, vice president of sustainable investments at CIBC Asset Management, said the evolving landscape presents both challenges and opportunities, with heightened scrutiny emphasizing the need for robust processes and standardization.

“A hallmark of effective management of ESG risks and opportunities has been transparency to stakeholders,” White said. 

Listen to the full podcast on Advisor To Go, powered by CIBC Asset Management.

He noted that investment managers are increasingly integrating ESG factors into their projections for cash flow and performance. 

Despite the complexities, institutional investors remain focused on ESG considerations, he said, recognizing the importance of addressing systemic and non-financial risks in long-term strategies.

Key trends shaping ESG investing in 2025 include stricter reporting requirements, evolving regulations and significant global milestones. 

Governments and regulatory bodies are expected to enhance ESG compliance standards, with alignment around International Sustainability Standards Board (ISSB) guidance and Canadian frameworks helping to improve corporate disclosures. 

“This standardization will help settle concerns around disclosure risks,” White said. 

He also noted that clear guidelines will be essential for maintaining market transparency while mitigating liabilities.

Another critical development is the implementation of Canada’s Bill C-59, designed to combat greenwashing by holding companies accountable for their ESG claims. 

While the bill’s reverse-onus provisions and steep penalties have led some organizations to scale back disclosures, White said clear enforcement guidance will be key to balancing liability and market transparency.

On a global scale, the upcoming COP-30 summit in Brazil is expected to play a pivotal role in climate action, he said. Marking the 10-year anniversary of the Paris Agreement, COP-30 will push nations to submit new commitments to meet net-zero goals. 

“This summit comes at a crucial juncture, as the world is behind on its commitments to keep warming below two degrees,” White said.

Domestically, White said the 2024 U.S. presidential election could also significantly alter the ESG landscape. He anticipates a potential rollback of environmental regulations, reduced federal focus on climate change, and shifts in energy policies. 

Despite these challenges, White believes deregulation could drive investors to rely more heavily on ESG integration. 

“Investors will increasingly need to assess how companies manage risks internally,” he said.

One exciting opportunity lies in the expanding carbon dioxide removal (CDR) market, White said, which is advancing rapidly with new technologies and infrastructure. Currently dominated by private investments, the CDR market is expected to open new opportunities in public securities, offering investors a chance to support ambitious decarbonization strategies. 

“This market is critical for achieving net-zero commitments and presents significant opportunities for investors,” White said.

Looking forward, White predicts a gradual move away from ESG labelling in favour of integrating ESG considerations as standard practice in investment strategies. 

“ESG integration is simply good investing,” he said, emphasizing the need for advisors to focus on process over products. 

By understanding clients’ non-financial objectives, he said advisors can add significant value to their practices and enhance client outcomes.

“This holistic planning approach adds value to client relationships and outcomes and ultimately to an advisor’s practice.

This article is part of the Advisor To Go program, powered by CIBC Asset Management. It was written without input from the sponsor.