INSIGHT

ESG strategies for CFOs: Building resilience and cost-efficiency in 2025 

February 20, 2025

Services: Environmental, Social & Governance (ESG)

---

It’s February 2025, and President Trump’s return to the White House is already reshaping the business landscape. Uncertainty around new tariffs on imports from Canada, Mexico, and China is creating volatility across industries. These measures could raise costs, disrupt supply chains, and force companies to rethink sourcing and operational strategies. 

At the same time, federal ESG oversight is diminishing, but state and international regulations remain in full force. California’s Climate Accountability Package and the EU’s Corporate Sustainability Reporting Directive (CSRD) continue to drive transparency and reporting expectations, regardless of shifts in U.S. policy. Meanwhile, investors still expect businesses to manage climate risks, even as “ESG” rebrands under different names. 

ESG strategies that can help in 2025 

For CFOs and corporate finance professionals, sustainability isn’t just about compliance—it’s a strategic tool for cost reduction, risk mitigation, and long-term resilience. Companies that prioritize supply chain sustainability, operational efficiency, and transparent reporting will be better positioned to navigate economic uncertainty and create long-term value. 

Here’s how ESG strategies can help your business adapt, compete, and thrive in 2025. 

Federal ESG policies 

As expected, the Trump administration has scaled back federal ESG oversight. The SEC’s climate disclosure rules remain tied up in legal challenges, and the United States has once again withdrawn from the Paris Agreement. Early executive orders have focused on deregulating the energy sector and promoting fossil fuel extraction. 

However, while federal oversight may be less aggressive, the underlying risks tied to climate change and sustainability have not disappeared. Investors remain focused on climate resilience and corporate accountability, and companies that ignore these concerns may face consequences such as reduced access to capital and diminished stakeholder trust. 

Tariffs, trade tensions, and supply chain disruptions 

The imposition of tariffs on imports from key trade partners — including Canada, Mexico, and China — is already creating ripple effects across global supply chains. Companies reliant on foreign materials or products will face rising costs, leading to potential margin pressure and inventory challenges. 

This is where sustainability strategies can provide a competitive edge: 

• Localizing supply chains: Companies that prioritize sustainable procurement and work with local suppliers may be less vulnerable to tariff shocks. 

• Supplier diversification: ESG-minded businesses that assess supplier risks — including geopolitical and environmental factors — will be better equipped to pivot in response to trade barriers. 

• Resource efficiency: Companies with sustainability initiatives aimed at reducing waste and energy consumption can offset rising input costs caused by tariffs. 

State and international regulations continue to lead the way 

Even as the federal government pulls back, state and international regulations remain in full force: 

• California’s Climate Accountability Package (SB 253, SB 261, and SB 219): These laws require companies meeting certain revenue thresholds to disclose Scope 1 and 2 emissions starting in 2026, with Scope 3 reporting phased in on a schedule determined by the California Air Resources Board (CARB). SB 219, signed in late 2024, extended CARB’s deadline for adopting regulations but did not delay compliance timelines. Additionally, companies with over $500 million in revenue must submit biennial climate-related financial risk reports under SB 261. 

• The EU’s Corporate Sustainability Reporting Directive (CSRD): Companies with global operations must continue to comply with the EU’s stringent sustainability standards. 

For multinational corporations and those with business ties to California, these regulations will continue to shape reporting practices and require robust ESG infrastructure. Companies that align with global standards may also gain a competitive advantage in attracting investors and accessing new markets. 

4 reasons ESG still makes business sense in 2025 

Despite the political headwinds, many companies will continue to invest in ESG because it makes good business sense. Here’s why: 

1. Operational cost savings: Efficiency-driven sustainability initiatives, such as energy management and waste reduction, can lower operating costs — a valuable benefit in the face of rising input prices due to tariffs. 

2. Risk management: ESG strategies that assess climate risks, supply chain vulnerabilities, and regulatory compliance can protect businesses from costly disruptions. 

3. Stakeholder trust and access to capital: Institutional investors remain committed to ESG, and companies that demonstrate transparency and accountability will maintain better access to capital. 

4. Innovation and market differentiation: Sustainability-focused companies often lead the way in developing new products and services that appeal to environmentally conscious consumers and business partners. 

What CFOs should know 

• Trade uncertainty is putting supply chains at risk: The potential for new tariffs on key imports from Canada, Mexico, and China is creating volatility in supply chains. These tariffs could increase costs for raw materials, components, and finished goods, making local sourcing, supplier diversification, and circular economy strategies more valuable than ever. Companies that have already invested in supply chain transparency, emissions tracking, and sustainable procurement will have a competitive edge in navigating these disruptions. 

• State and international compliance remains critical: Regulations in California and the EU will continue to shape corporate reporting and climate strategies. 

• Efficiency is a competitive necessity: Companies that prioritize energy efficiency, waste reduction, and local sourcing will be better positioned to offset rising costs and maintain margins. 

• Investor pressure remains strong—just under new names: While “ESG” may not be the buzzword it once was, the core priorities—climate risk management, supply chain resilience, and emissions reduction—are still front and center for investors. Many companies are reframing their sustainability efforts in terms of operational efficiency, regulatory compliance, and risk mitigation rather than ESG branding, but the expectations for transparency and action remain. 

How CFOs Can Prepare 

Build supply chain resilience with sustainability in mind 

• Assess exposure to potential new tariffs on imports from Canada, Mexico, and China and explore local or regional suppliers to mitigate cost risks. 

• Strengthen supplier ESG evaluations, ensuring business partners align with sustainability, emissions tracking, and ethical sourcing goals. 

• Invest in circular economy models, such as recycling and remanufacturing, to reduce reliance on volatile global supply chains. 

Focus on cost-saving ESG strategies 

• Improve energy efficiency in facilities and operations to lower costs amid rising supply chain expenses. 

• Reduce waste and material consumption to offset increasing input costs. 

• Monitor changes to federal clean energy incentives: With potential revisions to the Inflation Reduction Act (IRA) and other sustainability-related policies, stay updated on available tax credits and incentives that can still support cost-saving green investments. 

Strengthen ESG data and compliance readiness 

• Ensure systems can track and report Scope 1, 2, and 3 emissions, aligning with California’s Climate Accountability Package and the EU’s CSRD requirements. 

• Enhance internal controls and audit readiness to meet investor and regulatory expectations, regardless of federal ESG rollbacks. 

• Stay updated on state-level and international ESG regulations, which will continue to drive compliance obligations. 

Reframe ESG messaging for business value 

• Shift the conversation from “ESG” to operational efficiency, risk management, and supply chain resilience to align with investor and executive priorities. 

• Communicate climate and sustainability efforts in financial and regulatory terms, emphasizing long-term value creation rather than political narratives. 

• Train leadership teams on how to navigate ESG-related discussions in a politically polarized environment while maintaining momentum on key initiatives. 

Monitor policy and market trends 

• Track emerging state and international policies that may affect operations, including potential future climate-related disclosure requirements. 

• Stay informed on market shifts related to fossil fuels, tariffs, and supply chain disruptions to make proactive financial and operational decisions. 

• Engage with investors and key stakeholders to understand evolving expectations around sustainability and risk management. 

Building resilience amid policy shifts 

While federal policies under the Trump administration may create new challenges, they also reinforce the need for decentralized, business-driven ESG strategies. Companies that align with state and international regulations, strengthen supply chains, and integrate efficiency-focused sustainability initiatives will be in the best position to manage costs, maintain investor confidence, and drive long-term value. 

At BPM, we help companies navigate evolving ESG regulations, supply chain challenges, and cost-saving sustainability strategies. From emissions tracking and climate risk disclosures to supply chain resilience and tax-efficient sustainability investments, our team provides tailored guidance to help you meet compliance requirements and achieve long-term business goals. 

Get in touch today to explore how BPM can support your ESG and supply chain strategy in a shifting landscape.