In 2025, the focus on Environmental, Social, and Governance (ESG) factors continues to shape corporate law, with new regulations being introduced to ensure that companies are held accountable for their social, environmental, and ethical responsibilities. While the emphasis on ESG principles has been growing for years, this year has seen a significant uptick in laws mandating ESG disclosures, influencing corporate governance frameworks and investments.
New ESG Regulations and Corporate Accountability
The Securities and Exchange Commission (SEC) has recently rolled out an updated set of rules that require publicly traded companies to disclose their ESG risks and practices. These rules, which went into effect on July 1, 2025, mandate companies to report on carbon emissions, workforce diversity, executive compensation, and human rights practices. The goal is to provide investors with more transparency and accountability regarding how companies manage risks related to climate change, labor practices, and corporate governance.
According to Mary Schapiro, a former SEC Chair and now an advisor to Sustainable Finance Advisory, “Companies that incorporate strong ESG practices tend to perform better over the long term, as they are better at managing risk and engaging with their stakeholders.”
The Importance of ESG for Investors
Investors are increasingly prioritizing ESG factors when making investment decisions. ESG-focused funds and sustainable investing have grown significantly, with assets under management in ESG funds surpassing $30 trillion globally by 2025. In fact, many institutional investors now use ESG criteria to assess the long-term sustainability of companies. BlackRock, one of the largest asset management firms globally, recently announced that 80% of its new investments in 2025 will be in companies that meet specific ESG standards.
This increased focus on ESG factors has spurred corporate boards to adopt better governance practices, implement sustainable practices, and improve diversity and inclusion efforts. By doing so, companies are not only addressing regulatory requirements but also responding to market demand for responsible, transparent, and ethical business practices.
A Shift in Corporate Culture
The shift toward ESG compliance has led to a deeper integration of these values into corporate culture. Companies are increasingly hiring Chief Sustainability Officers and expanding their legal and compliance teams to ensure they meet ESG requirements. In response, law firms are seeing growing demand for specialized legal counsel in the field of sustainable business practices, ethical investment, and green corporate governance.
In a statement from Latham & Watkins, a leading global law firm, the firm’s Corporate Governance Chair, Jane Fitzgerald, said, “The trend we’re seeing is that companies not only need to address the regulatory frameworks but are increasingly adopting ESG principles as a part of their core business strategies.”
The Future of Corporate Law and ESG
As we look toward the future, experts agree that ESG laws will continue to evolve, influencing corporate decision-making and business operations globally. With more jurisdictions embracing ESG regulations, companies across various sectors will need to adjust their corporate strategies to align with these standards, ensuring long-term success and sustainability.
For corporate lawyers, the growing prominence of ESG laws presents both a challenge and an opportunity to advise clients on how best to navigate these evolving legal landscapes.
