By Naturaliste Solutions

Introduction

June brought a surge of global ESG developments — from India’s new ESG debt framework to the EU’s internal debate on corporate sustainability rules, and a clear political shift in the United States. While ESG continues to mature, it is also becoming more politically charged and market-driven.

For Australian businesses, these shifts underscore the need to stay ahead of both local reporting standards — like ASRS and AASB S2 — and international stakeholder expectations. This month’s updates offer a strategic view of where ESG is headed and what it means for risk, capital access, and long-term positioning.

 

Key Executive Takeaways

• The US political climate has triggered a retreat from public ESG commitments, posing reputational and compliance risks for global peers.

• EU regulators are divided over scaling back sustainability rules — a reminder that global alignment remains unstable.

• India’s ESG debt framework marks a new frontier in regulated sustainability finance with mandatory third-party verification.

• Investors are turning away from vague ESG labels toward precise, issue-specific metrics that align with financial outcomes.

• ESG education is shifting from ethical theory to regulation, materiality, and assurance — reflecting evolving workforce needs.

Global ESG Policy Developments

United States: Greenhushing and the ESG Retreat

Following President Trump’s re-election, US companies are increasingly engaging in “greenhushing” — omitting or downplaying environmental initiatives. Green bond issuance dropped by 44% in the first five months of 2025, down to US$24.4 billion compared to US$43.3 billion in the same period last year (Financial Times).

Political rollback of climate policy, reduced incentives, and ESG scepticism have created a chill on public sustainability commitments. But this doesn’t signal ESG’s demise — it signals its politicisation.

Implication for Australian business:

As the ASRS and AASB S2 come into effect, greenhushing could create legal and reputational exposure, not just stakeholder distrust. Companies must prioritise transparent, verifiable ESG reporting to remain credible with regulators, investors, and customers alike.

European Union: Will Sustainability Rules Weaken?

In June, Swedish MEP Jörgen Warborn proposed significantly narrowing the EU’s Corporate Sustainability Reporting Directive (CSRD), limiting it to firms with over 3,000 employees and €450 million in turnover (Reuters).

The goal: reduce compliance burden and strengthen EU competitiveness against US and Chinese rivals. However, critics argue this weakens accountability and undermines the EU’s climate agenda.

Implication for Australia:

If global ESG regulations begin to diverge, businesses must be cautious not to follow the least demanding path. The ASRS still prioritises transparency, and underreporting could breach compliance thresholds and damage credibility with international partners.

India: ESG Debt Framework Tightens Disclosure

India’s securities regulator (SEBI) introduced a comprehensive ESG debt framework on June 5, covering social, sustainability, and sustainability-linked bonds — but notably excluding green bonds (Economic Times).

The framework enforces strict disclosure requirements, outcome tracking, and mandatory third-party verification to curb “purpose-washing” and align India with international finance standards.

Key learning for Australia:

The move reflects a broader trend: ESG financing is entering a phase of regulation and assurance. Australian businesses raising capital through sustainability-linked debt must prepare for heightened scrutiny and build robust validation processes.

Investor Sentiment: From Labels to Metrics

A recent Bloomberg analysis shows a marked shift in how investors approach ESG. Rather than relying on broad ESG labels — now seen by some as politicised — investors are demanding clearer, more targeted sustainability metrics aligned with financial materiality.

This evolution reflects a deeper focus on accountability, measurable outcomes, and alignment with fiduciary duty — especially among institutional asset owners and sovereign funds.

What this means for Australian companies:

Prepare to substantiate sustainability claims with credible, granular data. Under ASRS and AASB S2, qualitative commitments must now be paired with verifiable metrics and third-party assurance. Strategic ESG reporting will soon be a precondition for investor confidence.

Read our article on Avoiding Greenwashing for practical frameworks on credible communication.

ESG in Education: From Ideals to Compliance

Top business schools — including INSEAD and Wharton — are reengineering ESG curricula to emphasise regulation, performance, and financial integration, rather than moral imperatives (Financial Times).

This reflects growing demand from employers for professionals trained in standards like ISSB, ASRS, and scenario analysis — not just sustainability theory.

Relevance for your team:

To meet compliance and risk expectations, ESG skills must be embedded in finance, audit, and governance functions. Our executive training programs support this upskilling through tailored, standards-based content for boards, CFOs, and sustainability leaders.

ESG Ratings: The Adani Controversy

Adani Green Energy Ltd (AGEL) was ranked #1 in India’s utilities and power sector by NSE Sustainability Ratings, scoring 74 overall, with governance (76) and social impact (73) leading the evaluation (The Week).

But the recognition has raised eyebrows. In 2023, the Adani Group faced allegations of stock manipulation and accounting fraud from Hindenburg Research. Major agencies like MSCI and S&P reacted with ESG rating downgrades and exclusions.

Takeaway for Australian business:

This episode illustrates the volatility and subjectivity of ESG ratings. Businesses must not rely solely on scoring systems but should proactively invest in transparent disclosures, independent assurance, and context-based risk reporting — especially as ESG ratings begin to influence procurement, insurance, and capital access.

Strategic Imperatives for Executives

• Maintain transparency: Avoid greenhushing. Comply with ASRS and verify disclosures through third parties.

• Focus your ESG narrative: Report on sector-relevant issues with measurable impacts, not broad themes.

• Embed ESG skills: Build internal capacity to meet financial, regulatory, and assurance requirements.

• Prepare for ESG ratings: Whether voluntary or not, ratings will influence supply chain and investor decisions.

• Track global divergence: Local compliance is non-negotiable, but international awareness is vital for trade and reputation.

Final Thoughts

June 2025 confirms that ESG is not fading — it is becoming more complex, measurable, and consequential. For Australian organisations, the challenge is not whether to act, but how to lead with clarity, strategy, and credibility.