The ultimate 2025 ESG goal-setting roadmap

2025 marks a defining year for companies setting environmental, social, and governance (ESG) goals—especially those doing so for the first time. With investors, regulators, and consumers scrutinizing corporate sustainability efforts more than ever, establishing transparent, measurable targets is key to credibility and long-term success.

However, starting from scratch is no small task. Reliable data, internal alignment, and structured planning are necessary to avoid accusations of greenwashing, which can erode trust and damage stakeholder relationships.

Building on the themes explored in Top ESG Priorities for 2025 and The Growing Demand for Sustainable Supply Chains, this article outlines how businesses can set ESG goals that are data-driven, aligned with regulatory requirements, and supported by third-party validation.

Why ESG Goal-Setting Matters in 2025

Much like financial targets, ESG goals provide a structured approach to risk management, resource allocation, and long-term strategy. Their significance extends beyond compliance, offering:

• Stronger Stakeholder Relationships – Transparent commitments enhance trust with investors, customers, and employees.
• Alignment with Global Agreements – Goals that align with frameworks like the Paris Agreement and Montreal Biodiversity Framework signal leadership in corporate responsibility.
• Proactive Risk Management – Setting ESG targets helps companies identify regulatory, financial, and reputational risks while uncovering opportunities.

As discussed in previous articles, regulatory pressure and supply chain expectations are intensifying. Businesses that proactively set and track ESG goals can mitigate risks while gaining a competitive advantage.

Why 2025 is a Defining Year for ESG Commitments

Several key developments make 2025 a turning point for ESG goal-setting:

• Regulatory Expectations Are Growing – The Corporate Sustainability Reporting Directive (CSRD) and California Climate Rule require companies to disclose ESG goals and their annual progress toward meeting them.
• Litigation Risks Are Increasing – Legal actions targeting misleading sustainability claims have escalated, particularly against industries failing to set science-based targets.
• Greenwashing Scrutiny Is at an All-Time High – Following regulatory crackdowns in 2024, businesses will rely more on third-party validation, such as Science-Based Targets Initiative (SBTi) approval, to protect their reputations.

Companies that align their ESG goals with industry benchmarks and stakeholder expectations will secure a competitive edge in this new era of accountability.

How to Set Effective ESG Goals

Setting measurable and achievable ESG goals requires a structured, data-driven approach.

1. Conduct a Materiality and Benchmarking Assessment

A materiality assessment helps companies identify which ESG topics matter most to stakeholders and business operations. Aligning goals with peers and competitors helps gauge industry standards.

2. Establish a Baseline

Understanding current performance is key to tracking future progress. For example, measuring carbon emissions provides a foundation for setting net-zero targets. Organizations already tracking ESG metrics can use historical data to measure improvements over time.

3. Apply the SMART Framework

Well-structured ESG goals follow the SMART framework:

• Specific – Clearly defined objectives (e.g., achieving 100% renewable energy).
• Measurable – Standardized metrics to track progress.
• Achievable – Goals that are ambitious but realistic.
• Relevant – Alignment with industry and global sustainability commitments.
• Time-bound – Defined target dates (e.g., reducing emissions by 50% by 2030).

4. Seek Third-Party Validation

Validation from the SBTi adds credibility to ESG goals. However, approval is not guaranteed—many companies fail to meet stringent criteria. Working with a certified public accountant (CPA) or external consultant can improve the likelihood of success.

Overcoming Challenges in Setting ESG Goals

Setting ESG goals is essential for any company serious about sustainability, but getting it right is no small feat. Businesses realize that superficial commitments won’t cut it. Here's how to overcome the common hurdles that come with setting and meeting your ESG goals:

1. Identifying the Right Focus Areas

• The Challenge – Companies struggle to determine which ESG topics are most relevant.
• The Solution – Conduct a materiality assessment to identify priority areas like emissions reduction, diversity, or water conservation.

2. Collecting Reliable ESG Data

• The Challenge – Data collection across an organization and supply chain is complex.
• The Solution – Work with cross-functional teams and suppliers to gather accurate information. Engage a CPA or third-party validator to verify data before making commitments.

3. Gaining Leadership Buy-in

• The Challenge – ESG goals can stall without executive support.
• The Solution – Tie sustainability targets to financial outcomes, demonstrating cost savings, risk reduction, and brand reputation benefits.

Strategies for Meeting ESG Goals While Maintaining Credibility

Setting goals is only the first step. Achieving them requires structured execution and ongoing evaluation.

• Develop Clear Implementation Plans – Outline cost assessments, timelines, and resource allocation.
• Integrate ESG Goals into Business Strategy – Connect sustainability efforts to financial performance.
• Work with CPAs and ESG Validators – Maintain data integrity and compliance with evolving standards.
• Regularly Report Progress – Platforms like the Carbon Disclosure Project (CDP), EcoVadis, and annual ESG reports increase transparency.

Companies that communicate progress honestly and adapt to regulatory expectations will strengthen their stakeholder relationships and long-term resilience.

We Can Help

Companies with credible and measurable ESG goals are better positioned to meet growing expectations from regulators, investors, and corporate partners. The SMART framework provides a structured approach to setting clear, achievable, and strategically aligned ESG goals. Just as financial planning requires precision, ESG goal-setting benefits from the same level of rigor and accountability. By working with a CPA, businesses can create ESG goals that are both data-driven and realistic.

Elliott Davis is here to guide you through every step of the ESG goal development, data validation, and regulatory compliance process. Let’s work together to build a credible and forward-thinking sustainability strategy for 2025.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.