December 15, 2025
By Adam Schwarz with expert input from Garrett Jones, Stephan Wehr, and the Delphi Senior Leadership Team
Executives entered 2025 facing a complex backdrop: slower global growth, persistent inflation, energy volatility, and geopolitical tension. Climate disruption and fast-evolving sustainability expectations added even more complexity. What emerged was a clear inflection point, a year in which sustainability shifted from a peripheral conversation to a core business determinant.
Across industries, we saw the same pattern: credibility, execution, and resilience are now the principles defining competitiveness. In 2026, the companies that succeed will be those that treat sustainability as a strategic capability, not a reporting exercise.
This review highlights five major takeaways from 2025 and five trends shaping 2026. Together, they outline how leaders can navigate and thrive in the next chapter of sustainability, climate, and ESG.
1. Regulation blurred borders and ESG readiness became a cost of market access
2025 made one thing clear: sustainability regulations are no longer local. Policies originating in the EU, including , the Corporate Sustainability Due Diligence Directive, and the EU Deforestation Regulation, now extend obligations deep into global supply chains, requiring suppliers worldwide to generate data and demonstrate compliance even if they sit outside regulated jurisdictions.
This shift turns sustainability reporting into a prerequisite for participation in global value chains, similar to quality or safety standards. Mechanisms such as the EU’s Carbon Border Adjustment Mechanism (CBAM) make this explicit by attaching a direct cost to carbon-intensive goods at the border. In practical terms, companies that cannot provide emissions, traceability, or responsible-sourcing data face a heightened risk of losing customers, contracts, and market access.
What this means for executives in 2026:
Build ESG data readiness into your commercial strategy. Compliance is no longer a back-office function; it is a condition of doing business in many markets.
2. Credibility (not ambition) became the currency of ESG performance
2025 was the year aspirations stopped being enough. Regulators tightened oversight on sustainability claims, with the UK moving to regulate ESG rating agencies and the EU adopting binding rules to govern methodology quality, conflict-of-interest management, and transparency.
Financial supervisors, such as OSFI in Canada and the NGFS globally, also exposed major gaps in how firms measure climate and transition risk, reinforcing the need for decision-grade sustainability data.
The message was unmistakable: Markets are no longer rewarding bold promises; they are rewarding verifiable progress, robust governance, and transparent methodologies.
What this means for executives in 2026:
Treat sustainability data with the same rigour as financial data. Implement assurance pathways early. Develop credible transition plans that withstand investor and regulatory scrutiny.
3. Energy realities collided with affordability pressures and reshaped climate policy signals
As global inflation and the cost-of-living crisis continued in 2025, governments faced pressure to balance long-term decarbonization with short-term affordability. Energy shocks from geopolitical conflicts and surging electricity demand, intensified by AI and data-center growth, elevated energy security as a political priority.
Polling throughout 2024–2025 consistently showed that while climate concern remains high, affordability outranks climate as a top voter priority in many economies. The result: some governments softened timelines, adjusted policies, or sequenced transition measures more cautiously.
Yet this didn’t reverse the transition. Clean energy investment remained near record highs, and long-term climate targets remained intact. But the pathway became more volatile, and more political.
What this means for executives in 2026:
Plan for policy oscillation. Build resilience to energy-price variability and recognize that the politics of affordability will continue to influence climate policy design.
4. Climate risk proved systemic, demanding enterprise-level integration2025 reinforced that climate risk isn’t an ESG issue; it’s a business continuity issue.
Climate risk is now recognized as macro-financial, legal, and operational in nature, affecting insurance availability, asset valuations, credit risk, supply-chain stability, and litigation exposure.
What this means for executives in 2026:
Integrate climate into enterprise risk management. Ensure climate scenarios inform capital planning, insurance decisions, and operational resilience, not just sustainability reporting.
5. Canada reframed climate as competitiveness, with a new industrial strategy
Under Prime Minister Mark Carney, Canada entered 2025 with a clear ambition: positioning the country as a clean-energy and critical-minerals superpower.
Budget 2025 and the One Canadian Economy Plan put forward a nation-building agenda centred on:
This reframed Canada’s climate policy as industrial strategy, not environmental programming, aligning climate, competitiveness, and national security.
What this means for executives in 2026:
Strategic alignment matters. Companies with credible, investable transition plans will benefit from public-private investment flows, procurement opportunities, and long-term policy stability.
1. The coming fight over carbon responsibility and cross-border compliance
Expect growing disputes over which actors bear responsibility for emissions and climate harms, especially as CSDDD, EUDR, and new due-diligence laws mature.
In parallel, U.S. political resistance to climate disclosure, including litigation against federal rules and state-level anti-ESG laws, will complicate the operating landscape for multinationals.
This isn’t just about accounting; it’s a broader contest over climate liability, jurisdiction, and sovereignty.
Leadership implication: Prepare for more legal complexity and ensure contracts, governance, and disclosures clearly allocate climate-related responsibilities.
2. Climate information integrity becomes a governance priority
COP30 placed information integrity at the heart of global climate action, warning that misinformation slows progress, distorts markets, and erodes public trust.
The rise of AI-generated synthetic content adds urgency.
Leadership implication: Strengthen controls on climate communications, transparency, lobbying positions, and use of AI. Boards will increasingly be expected to oversee this.
3. AI, data, and infrastructure constraints reshape decarbonization pathways
Electricity demand from AI and data centres is projected to more than double by 2030, adding pressure to already strained grids.
Energy access, reliability, and affordability will become binding constraints on both emissions-reduction efforts and digital-transformation strategies.
Leadership implication: Location strategy, capital planning, and net-zero pathways must account for grid readiness and energy-price volatility.
4. Transition finance enters a new era of accountability
With emerging standards like SBTi v2 and increased scrutiny from regulators and investors, transition plans will be evaluated on their execution, not their ambition.
Access to green capital, grants, guarantees, tax incentives, and blended finance, will increasingly depend on credible, measurable progress.
Leadership implication: Transition plans must evolve into operational roadmaps with clear capex, timelines, milestones, and accountability structures.
5. Geopolitical and social fragmentation intensifies, but doesn’t slow the transition
2025 underscored a paradox: climate action is increasingly politicized, yet structural forces, investment trends, industrial strategy, technology costs, and physical climate impacts continue to accelerate decarbonization globally.
This fragmentation won’t halt the transition; it will make it more uneven, more contested, and more consequential for business strategy.
Leadership implication: Build flexibility into strategy. Prepare for scenarios where climate policy tightens in one jurisdiction and loosens in another. Invest in resilience, not uniformity.
2025 was a watershed year, a recalibration toward credibility, execution, and integration. The companies that will lead in 2026 won’t be those with the boldest visions but those with the clearest plans, strongest data, and most adaptable strategies.
At Delphi, we believe sustainability is now inseparable from competitiveness.
The challenge for leaders is no longer whether to respond, but how decisively they act, embedding resilience, climate insight, and credible execution into the core of their business.
The organizations that move now will be better positioned to manage risk, unlock value, and compete in an increasingly volatile world. As 2026 approaches, we look forward to supporting organizations ready to turn insight into action. If this conversation resonates, we invite you to connect with us.
