Global companies are struggling to advance their sustainability reporting despite tighter rules, with more than three-quarters still in the early or mid stages of readiness for external assurance, KPMG’s 2025 ESG Assurance Maturity Index showed.

The 2025 index, based on a survey of 1,320 senior executives across various industries, showed that the average readiness score slipped to 46.9 from 47.7 the previous year, reflecting persistent challenges in data collection, regulatory complexity and limited expertise.

Larger firms remain significantly ahead: companies with revenues above $10 billion scored 52.8, compared with just 40.4 for those under $1 billion.

“ESG assurance is no longer just about meeting regulatory thresholds; it is about building trust, unlocking value and demonstrating resilience,” said Mike Shannon, global head of ESG assurance at KPMG International, in the report.

CSRD Driving Progress in Europe

Europe’s Corporate Sustainability Reporting Directive has emerged as a catalyst for progress. First-wave companies reporting under the directive posted higher maturity scores of 53.7, compared with 44.6 for peers not subject to CSRD, the study found.

A majority of these firms reported tangible business benefits: 60 percent expect to gain market share and more than half forecast improved profitability.

“Year one was a very new experience for reporters, which created a degree of flying in the dark with little historic comparable data,” said Patricia Reverter, ESG assurance leader at KPMG in Spain. “But I believe that it will get easier in future years — and there are signs that it is helping deliver on the CSRD’s underlying policy objectives”.

Regional Gaps Widen

North American businesses retained the highest average maturity score at 49, but Europe narrowed the gap to 48.9 thanks to CSRD adoption. Asia Pacific averaged 46.7, while Latin America lagged at 40.

Regulatory clarity has proved decisive. “Despite ongoing regulatory and political headwinds, the business community continues to advance ESG reporting and assurance initiatives,” said Corinne Dougherty, ESG assurance leader at KPMG US. “This momentum reflects growing recognition that robust sustainability practices can deliver tangible value”.

Technology and Supply Chains

Leaders in ESG assurance are increasingly investing in technology. Use of ESG data dashboards has doubled since 2023, and cloud adoption has risen sharply, the report said.

Companies are also tightening supplier requirements: more than half of CSRD firms now impose broad ESG standards on suppliers, up from less than half two years ago.

Still, barriers persist. Fifty-one percent of companies cited the complexity of reporting requirements as the biggest obstacle, followed by evolving regulations and inadequate supplier performance.

A Call to Action

KPMG urged businesses, especially those outside Europe, to accelerate preparations as sustainability disclosure standards gain traction globally.

“Sustainability reporting rules can not only enhance transparency, they can also drive greater engagement from management boards, reinforcing accountability in advancing long-term value,” said George Richards, ESG assurance leader at KPMG in the UK.

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