The challenges of 2024 created turbulence for businesses navigating supply chain sustainability and ethical sourcing strategies. Rapid regulatory changes, geopolitical tensions and data innovations complicated the sustainability landscape and redefined how we perceive environmental, social and governance (ESG) risks and strategies. What does this mean for businesses in 2025?
Each year, the EiQ team examines the critical trends that impact supply chain resilience, focusing on businesses' supply chain strategies, including ethical sourcing and risk management. While some of these trends are longstanding, their effect on businesses and their due diligence has evolved over time, presenting new challenges and opportunities.
“As we look ahead to 2025, we are poised at the brink of truly unprecedented change but also unprecedented opportunity,” LRQA’s Chief Product Officer Kevin Franklin says. “With a wealth of data at our disposal, cutting-edge technologies to refine our solutions and a growing pool of global expertise, we are ready to tackle the challenges that keep business leaders up at night. Our top trends for the year establish a context for this new era.”
These trends, drawn from LRQA’s extensive work with more than 450 global businesses, as well as supply chain risk data from the EiQ platform, are what we anticipate will be the most impactful for businesses in 2025. EiQ provides unique, in-depth insights using data from more than 25,000 onsite audits per year, supplemented by trusted civil society research and adverse media data to help businesses manage critical risks in their supply chains. The goal in sharing these trends is to guide better data-driven decision-making and inform the design of more impactful supply chain sustainability and risk management programmes that are aligned with the unique needs and appetite of each business.
#1: A growing gap between ambition, expectation and preparedness
Businesses are setting bold ESG targets but often struggle with execution due to limited resources, weak supply chain visibility, and insufficient expertise. This misalignment between ambition and performance is highlighted by data showing 90% of companies failing in key social responsibilities. Addressing this gap is essential for businesses to contribute meaningfully to global sustainability efforts and ensure long-term social and environmental wellbeing.
#2: Navigating a more complex regulatory agenda
As global regulatory bodies tighten their grip on ESG compliance, the scope of work for these professionals is expanding beyond traditional areas. New regulations are not only increasing the stringency of requirements but are also introducing a broader range of topics that must be considered with ESG due diligence. Sustainability professionals are no longer just looking at forced labour and GHG emissions. The regulatory shift is forcing businesses to also consider new topics such as biodiversity and deforestation, highlighting the need for a more holistic and integrated approach to sustainability.
#3: Drowning in data: a pressing need for quality and insight
As technological innovations have developed and are becoming increasingly vital to businesses and their risk management approaches, the emphasis on data quality has emerged as a pivotal trend in responsible sourcing. Without reliable data, decision-making suffers. The implications of poor data quality limit the ability to proactively monitor trends or understand supply chain ESG risk patterns. Inaccurate data can obscure critical issues such as human rights violations, environmental harm and unethical labour practices, leading to an inaccurate or incomplete view of their supply chain operations and associated risks.
#4: Supplier relations: from leverage to collaboration
The relationships between brands, retailers, and their suppliers have undergone significant changes in recent years, becoming increasingly transactional. This shift is largely driven by the need for cost efficiency, speed, and flexibility in a highly competitive market. Transactional approaches risk weakening supplier ties, jeopardising standards and trust. Collaboration and tools, like digital training, empower suppliers, driving shared innovation, ethical practices, and strengthened partnerships across supply chains.
#5: Ongoing risks in unassuming markets: annual audits are insufficient
Forced labour and child labour are ongoing in regions historically deemed ‘low risk’, challenging many of the assumptions made in traditional risk assessments. Findings from EiQ’s 2024 overall supply chain risk index show that more than 50% of the regions assessed are at high or extreme risk for overall supply chain violations, with countries such as Australia, South Africa, and the United States all worsened from medium risk to high risk standings for this index. Quality data can provide foresight into these issues, further highlighting the need for utilising and analysing a more robust and granular dataset.
#6: Geopolitical shifts shape the ESG risk landscape
Geopolitical dynamics like tariffs on China and stricter immigration laws increase ESG risks and disrupt supply chains. Businesses must navigate these challenges while global and state-level sustainability regulations continue to evolve, and the new US government foreshadows a deregulation agenda.
#7: Food safety and product integrity emphasise sustainability needs
Food safety and product integrity are increasingly underscoring the need for sustainability and responsible sourcing in supply chains. With consumers becoming more aware and demanding transparency about the origins of their food, and laws like the EUDR [EU Deforestation Regulation] placing the microscope over raw material sourcing and food products, companies are under pressure to ensure that their products are not only safe to consume but also ethically produced with limited environmental impact. To mitigate these risks, businesses must adopt sustainable sourcing practices that prioritise food safety, fair labour conditions, and environmental stewardship.
#8: Investor influence will continue to change the game
Despite opposing rhetoric in the value of sustainability strategies, data shows businesses prioritising sustainability targets are more attractive to investors. This investor interest in ESG strategies is set to be a key trend in 2025, significantly impacting how businesses prioritise and manage their supply chain ESG due diligence.
The ethical conduct of businesses and their supply chains plays a crucial role in maintaining the sustainability and resilience of global trade networks. As we move into 2025, businesses must pivot towards improving data quality, cultivating stronger supplier relationships, and prioritising human rights and environmental concerns. This presents an opportunity for businesses to transition from reactive risk management to proactive, data-driven strategies, empowering themselves for future success.
To read more about the top trends, download our full report and learn more about EiQ by visiting eiq.com.