Top 5 ESG Challenges Facing American Corporations in 2025
- Gasilov Group
- Mar 26
- 5 min read
Environmental, Social, and Governance (ESG) strategy has moved from optional to essential for U.S. corporations. But as regulatory pressure intensifies and stakeholder scrutiny deepens, the complexity of ESG implementation in 2025 has surged. Public markets, private equity, regulators, and consumers are all demanding more—more transparency, more data, and more impact.
However, execution is lagging behind ambition.
Below, we unpack five critical ESG challenges American corporations are navigating this year. These aren’t theoretical risks—they’re material pressures reshaping capital allocation, operating models, and reputational equity. And while the headlines often focus on climate targets or DEI statements, the real challenges lie in the infrastructure behind them.
1. Greenwashing Crackdowns Are Getting Legal Teeth
Greenwashing is no longer just a PR liability—it’s becoming a regulatory and legal risk. In 2024, the SEC finalized its long-awaited climate disclosure rule, requiring U.S. public companies to disclose material climate-related risks, including Scope 1 and Scope 2 emissions. Several states—including California—have gone further, mandating Scope 3 emissions disclosure for large companies doing business in the state.
This creates real exposure.
Misleading sustainability claims now carry litigation risk. In March 2024, Delta Airlines faced a class-action lawsuit over its “carbon-neutral” marketing, a case that signaled a broader trend: green claims will need to be evidence-based and auditable. Corporations must now align marketing language with quantifiable ESG performance or face consequences from regulators and investors alike.
Takeaway: Companies need to build a defensible ESG narrative backed by verifiable data. Legal, marketing, and sustainability functions can no longer operate in silos.
2. The Scope 3 Challenge
Scope 3 emissions—indirect emissions from a company’s value chain—are now at the center of ESG disclosure. The challenge? Most companies lack the systems and data infrastructure to track emissions across sprawling, global supply chains.
Yet, pressure is rising. California’s Climate Corporate Data Accountability Act (SB 253), which goes into effect in 2026 but requires 2025 prep work, mandates Scope 3 reporting for any company with over $1 billion in revenue operating in the state. This alone affects thousands of firms, including private entities.
The problem isn’t just data—it’s influence. How does a Fortune 500 company compel small suppliers across Southeast Asia to adopt emissions tracking? Especially when those suppliers lack digital systems or incentives?
Takeaway: Companies must develop supplier engagement strategies, embed ESG criteria into procurement contracts, and invest in scalable data platforms. And they must start now—Scope 3 visibility is a multi-year build, not a quarterly fix.
3. ESG Data Quality and Standardization
Despite the explosion in ESG reporting, comparability remains elusive. Corporations are struggling to unify reporting under evolving standards—SASB, TCFD, GRI, and now ISSB’s global baseline. Investors and regulators want assurance-ready, decision-useful data. What they’re getting is often patchy and inconsistent.
Inconsistent ESG data creates two problems: weak investor confidence and internal misalignment, and without a centralized ESG data architecture, companies risk building redundant systems, duplicating efforts across departments, and missing core insights that could shape strategic decisions.
Moreover, the SEC’s finalized rule requires companies to include climate-related financial disclosures in their 10-K filings. That elevates ESG data to the level of financial reporting—demanding the same rigor, audit readiness, and internal control.
Takeaway: Leading firms are investing in ESG data governance frameworks, not just dashboards. Clean, auditable ESG data is fast becoming a competitive differentiator.
4. Supply Chain Transparency Under Global Pressure
The EU’s Corporate Sustainability Due Diligence Directive (CSDDD), now finalized, will apply to many U.S. multinationals with European operations. It mandates that companies identify, prevent, and mitigate adverse human rights and environmental impacts in their supply chains.
Even companies not directly covered will feel the ripple effect.
Large Tier 1 suppliers will increasingly pass due diligence requirements downstream. This creates both a compliance burden and a relationship management challenge. Suppliers are being asked to provide disclosures they may not be equipped—or willing—to offer.
Takeaway: Companies must rethink how they map and monitor supply chains. Expect to see the rise of supply chain ESG audits, real-time traceability tech, and partnerships with verification providers. But digital tools alone won’t fix trust gaps—supplier engagement and incentives will be critical.
5. Fragmented Regulatory Landscape in the U.S.
While the EU is moving toward a unified ESG framework, the United States remains a patchwork. In 2025, companies face a growing divergence between state-level mandates and federal regulation—creating friction, cost, and strategic uncertainty.
California, for example, now requires mandatory climate disclosures (SB 253 and SB 261), impacting any company with over $1 billion in global revenue doing business in the state. New York and Illinois are exploring similar legislation. Meanwhile, the SEC's final rule, while narrower in scope than originally proposed, still mandates climate risk disclosure for public companies.
This uneven terrain forces companies to build multi-tiered compliance strategies, often duplicating ESG reporting across jurisdictions. It also raises the risk of falling into the lowest common denominator approach—meeting only the minimum where it’s required rather than aligning ESG with core business value.
Takeaway: ESG leaders are approaching compliance as a strategic differentiator rather than a cost center. A forward-leaning posture on disclosure can position companies ahead of regulatory shifts and improve access to capital.
Why It Matters Now
The ESG landscape is no longer a waiting game. Enforcement actions are rising. Investors are demanding assurance-ready data. And new regulations—from California to Brussels—are pulling U.S. corporations into mandatory transparency regimes.
But beyond compliance, the strategic question is this: How will your ESG maturity shape your valuation, resilience, and ability to win in emerging markets?
We’re seeing a widening gap between companies that treat ESG as a reporting burden versus those building future-proof operating models around sustainability, governance, and social license.
There is no one-size-fits-all ESG roadmap. But there is a right approach for your business—based on sector exposure, stakeholder pressure, and growth strategy.
That’s where we come in.
At Gasilov Group, we help organizations design ESG strategies that drive performance—not just compliance. Whether you're navigating Scope 3 complexity, building supplier transparency, or aligning reporting with global standards, we bring the insight, systems, and cross-functional alignment to move from reaction to advantage.
Let’s talk about how to make ESG work for your business—not against it.
Frequently Asked Questions
What are Scope 3 emissions and why are they so difficult to report?
Scope 3 emissions are indirect emissions in a company’s value chain—upstream and downstream. They’re hard to measure due to data gaps, inconsistent supplier reporting, and limited visibility beyond Tier 1 vendors.
What are the new ESG disclosure laws in California?
California’s SB 253 and SB 261 require large companies operating in the state to disclose Scope 1–3 emissions and climate-related financial risks starting in 2026, with 2025 as a preparatory year. Details are available on California Legislative Information.
How can companies avoid greenwashing in 2025?
Ensure ESG claims are backed by verifiable data and align marketing with actual performance. Integrate legal review into sustainability communications and adopt recognized frameworks like TCFD or ISSB.
What does the SEC climate disclosure rule require?
The SEC’s final rule mandates that public companies disclose material climate risks and greenhouse gas emissions (Scopes 1 and 2), with attestation for large filers. Details available at sec.gov.
How can ESG drive business value, not just compliance?
Strategic ESG execution enhances brand trust, investor confidence, supply chain resilience, and access to sustainable finance. Companies that lead on ESG are better positioned to adapt, attract talent, and build long-term advantage.
