ESG and compliance risks up 10% – What businesses must know

As businesses continue to build sustainability capacity, a new report from Sphera has shed fresh light on the widening gap between ESG and compliance confidence and reality. While most leaders report confidence in their supplier data and reporting systems, the data tells a different story – one marked by escalating risk, fragmented responses, and significant blind spots. 

The report raises serious questions for leaders tasked with maintaining resilience and integrity in an era of tightening regulation and stakeholder pressure. For organisations investing in corporate sustainability training, the findings offer both a warning and a roadmap. Keep reading as we share the insights from the report and what they mean for businesses. 

2025 saw a sharp jump in ESG-related incidents

According to Sphera, ESG and compliance-related risks rose 9.3 percent year-on-year when comparing Q1–Q3 2024 to the same period in 2025. The most prevalent threat? Supplier viability, with an average of 2.7 incidents per 100 monitored suppliers.

While delivery risks have eased from their pandemic-era peaks, other categories are gaining ground. Quality risk, for example, spiked by 59.4 percent year-on-year, a trend attributed to knock-on effects from struggling or misaligned suppliers. Image, compliance, and reputational risks remain persistent – and volatile.

Confidence is high, but so is fragmentation

Sphera’s report reveals a striking contradiction: 99 percent of leaders claim confidence in the accuracy of their supplier ESG data, yet nearly half cite poor or outdated data as a major obstacle to progress. Even more concerning, one-third of respondents struggle beyond Tier 1 suppliers, pointing to shallow visibility and disconnected governance.

These findings suggest a growing disparity between internal reporting narratives and operational reality. In particular, the report warns against treating ESG as a siloed category – a habit that leads to duplicated effort, delayed responses, and missed early-warning signs.