At the beginning of the new year, Anran Climate Action Institute, SmartESG Information Technology, and Agora Energy Transition co-hosted the "Seizing Core Opportunities, Focusing on Low-Carbon Transition – Empowering Overseas Enterprises Afternoon Tea" event. This event was supported by the Vanke Foundation and also received backing from the Beijing Entrepreneurs Environmental Protection Foundation and S&P Global.

During the event, Anran Climate and SmartESG reviewed and discussed major developments in climate governance in 2025. Based on a ranking from high to low certainty, they jointly released the "Top 10 Global Climate Governance Trends" to support overseas enterprises in achieving low-carbon transitions and expanding into international markets.

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1.1 High Certainty Heading 2

1.1.1. Countries Will Enhance Climate Action Targets, Driving Global Energy Transition

In 2025, all parties to the Paris Agreement must update and submit their Nationally Determined Contributions (NDCs) aligned with the 1.5-degree Celsius target. As a leading objective defining climate ambitions and scope for 2035, this update will influence socio-economic aspects over the next decade. While the level of ambition may vary, the transition from fossil fuels to renewable energy will advance in both scope and depth.

In any market, NDCs are a primary reference point for long-term low-carbon transition planning, especially in energy-related industries.

1.1.2. Growth in Global Carbon Markets Heading 3

The global carbon market is expected to grow in scale, mechanisms, liquidity, and regulation in 2025. This includes the expansion of existing domestic carbon markets (e.g., China) and the launch of new markets (e.g., Turkey, Colombia, New York State, as well as regions like Taiwan, Indonesia, Thailand, Morocco, and Denmark, which plan to implement carbon taxes). The updated NDCs may also prompt more countries to participate in the Paris Agreement's Article 6 international emissions trading mechanism, although regulatory frameworks require further refinement.

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The global carbon market is expected to grow in scale, mechanisms, liquidity, and regulation in 2025. This includes the expansion of existing domestic carbon markets (e.g., China) and the launch of new markets (e.g., Turkey, Colombia, New York State, as well as regions like Taiwan, Indonesia, Thailand, Morocco, and Denmark, which plan to implement carbon taxes). The updated NDCs may also prompt more countries to participate in the Paris Agreement's Article 6 international emissions trading mechanism, although regulatory frameworks require further refinement.

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Article 6 international emissions trading mechanism, although regulatory frameworks require further refinement.

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Both voluntary carbon markets and new international mechanisms under Article 6 are undergoing methodological, regulatory, and quality standard upgrades. This expansion provides more avenues and incentives for corporate participation but also demands clear, accurate definitions of carbon offset roles in climate strategies, along with rigorous disclosure and quality management.

1.1.3. Climate Compliance Pressure Spreads Through Supply Chains in Markets Like the EU

In 2025, the European Union's Corporate Sustainability Reporting Directive (CSRD), new battery regulations, and the Carbon Border Adjustment Mechanism (CBAM) will come into effect, imposing higher compliance and transparency demands on export-oriented enterprises. These regulations will encourage exporters to focus on supply chain carbon emissions and environmental and social risks, ensuring stability and sustainability throughout the supply chain. Similar mechanisms may emerge in other countries or markets within the year.

Companies should closely monitor these policies for their impact on raw material supply stability and adopt sustainable supply chain management practices across all lifecycle stages, from material procurement and production to product recycling.

1.1.4. Strengthened Circular Economy Policies

In recent years, regions such as the EU, Canada, California, and China have introduced regulations promoting circular economies, covering sectors like plastic products and packaging, electronics, and batteries. These policies extend from end-of-life waste management to earlier stages of design, production, and sales. At the INC-5 meeting in Busan, South Korea, plastic waste management emerged as a key area of international consensus, suggesting potential for further cooperation.

Beyond regulatory compliance, governments are supporting circular economy technology development and application, while green finance and sustainable investment channels are increasing their focus in this field, offering new support for corporate green transitions.

1.1.5. Stricter and More Aligned Global Sustainability Disclosure Regulations

In 2025, major global markets will implement substantive climate information disclosure frameworks. The EU's CSRD will expand mandatory reporting, while the ISSB's IFRS S1 and S2 standards will be adopted in more jurisdictions, aligning global climate disclosure standards. Although the return of Trump introduces uncertainty around U.S. climate disclosure rules, institutional investors will continue integrating ESG strategies and demanding disclosure of greenhouse gas emissions, climate risks, and transition plans to optimize portfolio returns. In the Asia-Pacific region, countries such as Singapore, Hong Kong, Japan, and South Korea are also enhancing ESG disclosure requirements.

The harmonization of global regulations will significantly elevate corporate climate risk management practices.

1.2 Medium Certainty/Under Observation

1.1.6. Increasing Climate Risks Drive Greater Resilience Building

As climate disasters intensify worldwide, from China to the U.S., Europe, Southeast Asia, Africa, and Latin America, resilience building is gaining prominence in domestic and international agendas. Key policy questions include how to enhance climate adaptation capabilities in agriculture, public health, and infrastructure, and how to protect vulnerable populations. The scope and pace of funding deployment remain to be observed in 2025.

For businesses operating globally, climate physical risks are increasingly affecting financial performance. Companies must integrate climate risk management into their planning processes. Furthermore, the emphasis on resilience could shift market preferences in climate-vulnerable regions, as demonstrated by post-flood drainage projects in the UAE.

1.1.7. Sustainability of Commodities in Nature-Related Industries Faces Greater Scrutiny

International consensus on biodiversity governance is maturing, with expanded ecological protection zones and heightened focus on sustainable ocean use. COP16 emphasized sustainable agricultural practices, requiring producers to adhere to higher environmental and social standards, particularly for commodities like palm oil and soybean meal. The 2025 UN Climate Conference in Belém, Brazil, is expected to spotlight rainforest protection.

Companies must meet higher sustainability standards, ensure traceability in supply chains, and manage supplier systems effectively.

1.1.8. Accelerating Transition Finance Standards and Scale

With evolving technical pathways and classification standards, transition finance is set for standardized growth in 2025. The EU Taxonomy will further refine technical screening criteria for transition activities. Meanwhile, frameworks like Singapore's MAS Transition Credit framework and Hong Kong's HKMA transition finance initiatives will offer clearer financing guidance for high-carbon industries. In China, the People's Bank of China is leading the establishment of transition finance standards, initially focusing on sectors like coal power and steel.

However, transition finance also faces risks of "greenwashing." Establishing scientific evaluation standards while balancing transition support and environmental integrity remains a policy focus.

1.1.9. Uncertainty Over Global Plastic Reduction Goals

This is a style test for QUOTE: The failure of global plastic reduction negotiations at the Busan meeting highlights deep international divides. While high-ambition alliances led by the EU and Kenya advocate for global plastic production reduction, major petrochemical producers like Saudi Arabia and Russia oppose such measures. The outcome hinges on future negotiations and diplomatic compromises in 2025.

The uncertain negotiation outcome increases risks for plastic-related industries in long-term planning and investment. Divergent national policies could lead to trade barriers, while a successful agreement would significantly guide corporate planning through 2030. Companies should closely follow negotiations on plastic production limits, hazardous chemical regulation, and plastic waste management, and adapt their strategies accordingly.

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1.1.10. Interplay Between Geopolitics and Technological Change Shapes Climate Governance

In 2025, ongoing geopolitical conflicts and regional wars will continue affecting the supply of key resources like energy and minerals. Simultaneously, AI's application in climate governance introduces new uncertainties. Geopolitical friction may exacerbate data silos, impeding cross-border climate data sharing and AI model training. However, international frameworks like the EU AI Act and OECD data governance guidelines aim to regulate AI applications in climate governance.

AI holds promise for improving climate risk assessment, optimizing energy systems, and accelerating low-carbon innovation. Should geopolitical tensions ease, deeper climate-tech cooperation could enhance AI's role in advancing climate governance.

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