Navigating the 2025 Business Trilemma: Sustainability, Resilience, and Growth

Business leaders could be forgiven for viewing 2025 with a degree of trepidation. This is understandable given the trilemma of challenging growth prospects in major economies, rising policy and regulatory divergence and uncertainty, and imminent compliance costs and deadlines.

Governments in the UK, US and Europe are exploring starkly different approaches to boosting business growth and competitiveness, while also imposing new rules and expectations on companies to improve their sustainability and resilience. How are firms to respond to these mixed messages?

The answer may lie in focusing on the spirit rather than the letter of incoming regulation. If firms can walk the walk of sustainability and resilience, they could find it easier to talk the talk of compliance, while also positioning themselves for long-term growth.

An unpredictable landscape

First, let’s quickly survey the landscape.

Both mature and developing economies are struggling to come to terms with higher debt and inflation levels, giving rise to unpredictable actions and outcomes. Even the US, which strongly outperformed all major economies in 2024, is planning radical policies under the second Trump presidency. Uncertainty over the combined economic impact of steep tariffs, mass forced deportation, and a return to lower taxation and regulation means US growth in 2025 and beyond is not a given.

Europe too is rebalancing its priorities, emphasising security and competitiveness alongside sustainability. As well as ‘smarter’ regulation, this means adding ‘carrots’ to regulatory ‘sticks’, by protecting strategic industries and boosting investment and innovation through a deeper capital markets union and the Net Zero Investment Act. This may sound prudent, but the reset could rip up rules that firms are already attempting to comply with.

Having promised a focus on growth, the UK government’s efforts to tackle debt have left businesses cautious, reining in hiring and spending plans. The recent UK Listings Review, alongside changes to the Corporate Governance and Stewardship codes, has sought to ease red tape. But UK deregulation has limits, with Financial Conduct Authority Chair Ashley Alder underlining its commitment to international norms, such as those being developed by the International Sustainability Standards Board (ISSB).

Common threads

Such differences could widen further, causing frustration, cost and uncertainty. Countries (and CEOs) will always differ on whether low-to-no regulation or more interventionist approaches will deliver optimal economic outcomes. But there are common threads to 2025’s incoming regulations which could shape corporate responses.

Several reflect the fact we live in an age of systemic threats to which the most effective response is often collective. Recent cyber-security breaches at US telecoms firms and the US Treasury Department have highlighted the continued need for common practices and standards to increase operational resilience. Similarly, reducing emissions to limit climate change and protecting nature to stem biodiversity loss can only be achieved if firms across multiple jurisdictions set policies and targets along their supply chains.

For this reason, Europe’s Digital Operational Resilience Act (DORA) places strong emphasis on regular end-to-end testing, information-sharing procedures and third-party relationship management alongside internal governance and risk management by financial institutions. Similarly, the Corporate Sustainability Reporting Directive (CSRD) calls for disclosures on Scope 3 emissions, not just those for which a firm is directly responsible. To an extent, DORA and CSRD are also signposts to the future, with similar directives and frameworks coming into place over the next five years requiring greater cooperation with partners to achieve common goals that boost collective sustainability and resilience, supporting long-term growth by addressing threats to all.

Combined, these rules are telling us a more universal truth about business in the 21st century: While firms must continue to compete to deliver value to customers, there are more areas in which collaborative and collective efforts are cheaper and more effective, if not essential. Embedding this message into business processes and partnerships over time should make compliance less of an extra consideration or burden.

Integration over addition

A related point is that adjusting to these new regulations should involve more integration with – than addition to – existing functions or tasks.

Inevitably, disclosures-focused regulations, such as CSRD, do lend themselves to a ‘box-ticking’ approach, with firms scrambling to understand the full scope of the new information to be reported. Even so, compliance is a process not an event. Only the biggest firms that have previously complied with the Non-Financial Reporting Directive need to report under CSRD during 2025. And even these are granted flexibility to take a risk-based approach via a ‘double materiality assessment’ and need only seek limited assurance from third parties. In these circumstances, CSRD already allows firms leeway to take a considered and targeted view. And they may be granted more latitude under the European Commission’s expected ‘omnibus’ proposals.

Of course, CSRD is only one side of the coin when it comes to rising sustainability expectations, with the Corporate Sustainability Due Diligence Directive (CSDDD) scheduled for 2027, requiring large firms to implement processes to identify, prioritise and address environmental and social harms, both in their own operations and along their supply chains. While its complementarity with CSRD is easy to spot, CSDDD has as much in common with DORA, in that it relies on big firms using their influence to raise standards along their supply chains. In both cases, the new rules encourage firms to collaborate more intensively over time to minimise common risks that have the potential to wreak costs and reputational damage for all concerned.

To support business resilience and sustainability, firms can build incentives to collaborate on into procurement initiatives (eg reducing exposure to deforestation, modern slavery, or Scope 3 emissions), or embed operational resilience testing and disclosures into third-party technology upgrade cycles. Similarly, information-sharing can be built into customer and supplier relationships, potentially uncovering not only common risks but shared opportunities with strategic partners.

Working with the grain

Regulatory divergence is a constant source of uncertainty for firms operating across multiple markets. It’s likely to be a notable feature in 2025, with tariffs also adding to an unpredictable outlook. And firms hoping to be freed by a ‘bonfire of the regulations’ in the US should bear in mind the interconnectedness of a still highly globalised world. Ask all those large US firms already reporting Scope 3 emissions, despite the growing likelihood of never having to face a federal mandate to do so.

For many, it may be better to work with the grain of regulation, especially as policymakers in many jurisdictions are actively taking an accommodating approach. This means focusing on the principles and priorities behind specific line-by-line rules. This may reduce your overall burden and will help align your business not only with the expectations of regulators, but also customers, employees, investors and other stakeholders. When growth is not a given, embedding sustainability and resilience could be the best policy for long-term success.

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