The ESG landscape is undergoing a fundamental reset — and at the heart of this transformation is a new wave of ESG regulations that are redefining how businesses operate, report, and remain competitive. What was once considered a voluntary or values-led initiative is now a board-level priority. This priority is shaped by mandatory disclosure rules, shifting capital flows, and rising demands for corporate sustainability accountability across the value chain.
As regulators tighten expectations, businesses face a critical inflection point: meet the new standards with confidence, or risk falling behind. From updated reporting frameworks to redefine governance expectations, 2026 will introduce complex but necessary changes to how sustainability performance is measured, disclosed, and assured. Below, we outline regulations organisations need to prepare for and how to achieve compliance in 2026.
The ESG landscape in 2025
The ESG landscape in 2025 reflected a year of maturing expectations, strategic realignment, and growing political tension. Regulatory developments (most notably the rollout of the Corporate Sustainability Reporting Directive (CSRD) in the EU) elevated the standards for corporate sustainability disclosure and governance. Organisations were increasingly expected to provide consistent, transparent, and material ESG reporting, accelerating the shift from symbolic commitments to integrated, performance-led strategies.
Many businesses responded by embedding ESG more deeply into core operations, linking environmental and social performance with innovation, risk management, and long-term value creation. Investors, too, reinforced the demand for measurable progress, with ESG assets under management projected to exceed $40 trillion, sharpening the focus on credibility and data integrity. However, 2025 also exposed growing fractures in global (and regional) momentum.
While Europe remained a leader in ESG policy, it too saw a scaling back of certain proposals, including delays to biodiversity reporting and revisions to due diligence legislation. Policymakers, facing political and economic headwinds, softened aspects of the sustainability agenda in response to business pushback and shifting priorities. Meanwhile, other regions, particularly the US, experienced more overt political resistance, with some states reversing course on ESG initiatives entirely.
This uneven progress created a fragmented and unpredictable regulatory landscape, complicating compliance for multinationals and creating uncertainty for companies aiming to lead. At the same time, scrutiny over greenwashing intensified, giving rise to “green hushing”, as organisations became more cautious in how they communicated sustainability claims. Against this backdrop, 2025 marked a clear turning point: science-aligned ESG strategies became not just a reputational asset, but a business imperative.
UK ESG regulations to watch in 2026
As the UK strengthens its sustainability agenda, 2026 will bring a wave of new and evolving ESG regulations that businesses must prepare for.
1. UK Sustainability Reporting Standards (UK SRS)
From 2026 onwards, the UK will begin phasing in the UK Sustainability Reporting Standards (UK SRS), an ISSB‑aligned framework that modernises how companies report on climate and broader sustainability performance. These standards are expected to replace existing frameworks such as the Streamlined Energy and Carbon Reporting (SECR) and the Task Force on Climate-related Financial Disclosures (TCFD).
The UK SRS will introduce more comprehensive, mandatory climate‑related financial disclosures covering governance, climate risk, and forward‑looking sustainability information. Organisations in scope should prepare for enhanced reporting obligations as these standards transition from voluntary to mandatory application.
2. Expanded Sustainability Disclosure Requirements (SDR)
Closely linked to the UK SRS, the Sustainability Disclosure Requirements (SDR) framework will further elevate ESG transparency expectations. While implementation timelines have shifted, the approach seeks to align UK reporting with international standards and investor‑facing disclosure requirements. The Financial Conduct Authority (FCA) is expected to consult on how UK SRS and SDR will apply to listed entities, signalling increased scrutiny of sustainability disclosures in financial markets.
3. Enhanced Environmental Reporting (ESOS Phase 4)
Under the Energy Savings Opportunity Scheme (ESOS) Phase 4, organisations must complete energy‑use assessments and report on energy performance. Importantly, from 2026, ESOS data will be published publicly by the Environment Agency, marking a shift toward greater transparency and reputational accountability in energy compliance reporting.
4. UK Stewardship Code 2026
The UK Stewardship Code 2026, published by the Financial Reporting Council (FRC), sets high standards for transparency and stewardship practices among asset owners, managers, and service providers. Though voluntary, signatories are encouraged to demonstrate robust governance and sustainable investment engagement – a signal that investors’ ESG leadership expectations are rising.
5. ESG Ratings Regulation (FCA Consultation)
The FCA has initiated consultation on bringing ESG ratings providers within its regulatory perimeter, a move designed to improve governance, reduce conflicts of interest, and enhance methodological transparency in how ESG scores are produced. While full implementation is targeted for later years, the regulatory intent underscores growing expectations that ESG data and vendor practices will be subject to formal oversight.
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EU ESG regulations to watch in 2026
Here are some key EU ESG regulations and policy developments organisations should watch in 2026.
1. EU Sustainable Finance Disclosure Regulation (SFDR) Reform
The SFDR, which mandates sustainability disclosures for financial market participants and products, is under review and expected to be amended in 2026. The European Commission’s SFDR 2.0 proposal aims to simplify requirements, introduce a clearer categorisation of sustainable products, and address market concerns about complexity and misuse of ESG labels.
2. EU Taxonomy Simplification and Reporting Changes
The EU Taxonomy Regulation, which classifies economic activities as environmentally sustainable, is being updated with materiality thresholds and streamlined templates that apply from 1 January 2026. These changes aim to make taxonomy disclosures more practical and focused on material business activities, a key consideration for companies preparing CSRD-aligned reports.
3. Corporate Sustainability Due Diligence Directive (CSDDD)
While not yet fully in force, the CSDDD, which places supply chain human rights and environmental due diligence obligations on large companies, is evolving as part of the EU’s broader sustainability framework. The directive has been scaled back in scope and timelines but remains an important factor for organisations with complex supply chains.
5. EU Green Claims and Deforestation Regulation (EUDR)
Complementary EU laws continue to influence ESG compliance in 2026. The EU Green Claims Directive (to regulate environmental claims and prevent greenwashing) and the EU Deforestation Regulation, which requires due diligence for certain agricultural commodity imports, both affect product-level sustainability obligations and transparency.
6. Ongoing Sustainable Finance Initiatives
Beyond specific ESG regulations, the EU sustainable finance agenda, including platforms and guidance on taxonomy, disclosures, and investor transparency, will continue to advance. This broader ecosystem helps align corporate reporting with finance-sector expectations and supports capital allocation toward sustainable activities.
Global ESG frameworks gaining traction
Here are some global ESG frameworks and standards gaining traction worldwide. These frameworks help companies measure, report, and enhance their sustainability performance in a consistent and comparable manner.
1. GRI (Global Reporting Initiative) Standards
The GRI Standards are among the most widely adopted ESG reporting frameworks globally. They provide comprehensive guidance on sustainability topics (from emissions and energy to labour practices and human rights) and are designed for use by organisations of all sizes and sectors. Many companies use GRI as the backbone of their public ESG disclosures.
2. SASB (Sustainability Accounting Standards Board) Standards
The SASB Standards focus on financially material sustainability topics that are most likely to affect the financial performance of companies in specific industries. These standards are especially popular with investors and are increasingly integrated into reporting frameworks that emphasise financial materiality.
3. TCFD (Task Force on Climate‑related Financial Disclosures) recommendations
The TCFD framework provides guidance on climate‑related financial risk disclosures. It focuses on four core areas: governance, strategy, risk management, and metrics/targets. TCFD is widely supported by regulators, investors, and corporations, and many countries are incorporating its recommendations into mandatory reporting regimes.
4. ISSB (International Sustainability Standards Board) Standards
Created by the IFRS Foundation, the ISSB Standards are emerging as a globally aligned baseline for sustainability reporting, particularly on climate and other ESG matters that are relevant to investors. The ISSB’s work aims to harmonise existing frameworks (like SASB and TCFD) and serve as a foundation for jurisdictional reporting requirements.
5. UN SDGs (United Nations Sustainable Development Goals)
While not a reporting standard per se, the UN SDGs provide a widely recognised set of global goals that many organisations use to frame their sustainability strategies and disclosures. Companies often map their ESG initiatives to relevant SDGs to demonstrate alignment with broader societal challenges.
6. OECD Guidelines for Multinational Enterprises
The OECD Guidelines provide voluntary principles and standards for responsible business conduct across the value chain. They cover human rights, environment, bribery, and more – and are often referenced in due diligence and governance practices.
7. ISO Standards (e.g., ISO 14001, ISO 26000)
While not ESG frameworks in a reporting sense, ISO standards help organisations manage specific aspects of sustainability:
- ISO 14001: Environmental management systems
- ISO 26000: Guidance on social responsibility
- ISO 17298: Biodiversity for organisations
Many companies adopt ISO standards to strengthen internal governance and operational controls in ESG‑relevant areas.
8. PRI (Principles for Responsible Investment)
The PRI is a global network of investors committed to integrating ESG factors into investment decisionmaking. Signatories agree to support six principles that promote long‑term value creation and sustainable markets.
How businesses can prepare now for 2026 compliance
Here are key steps organisations can take now to prepare for 2026 compliance.
1. Conduct a gap analysis against upcoming standards
Start by mapping your current ESG data, disclosures, and governance practices against expected 2026 requirements (eg: CSRD, UK SRS, ISSB-aligned reporting). Identify material gaps in:
- Scope 3 emissions tracking
- Double materiality assessments
- Value chain due diligence
- ESG data quality and traceability
2. Embed ESG into governance and strategy
Strengthen board and leadership oversight of ESG risks and opportunities. Assign ESG accountability at the executive level, and ensure sustainability goals are integrated into core business planning, not siloed in Corporate Social Responsibility (CSR) teams.
3. Invest in ESG data systems and tools
Prepare for audit-ready ESG reporting by adopting data management platforms that align with evolving global standards. Choose tools that offer integration with operational systems, version control, and support for frameworks like GRI, TCFD, ISSB, and EU Taxonomy. Explore ESG reporting tools like Workiva, ESG Enterprise, Persefoni, or Greenstone based on your business size and sector.
4. Engage your value chain
2026 regulations increasingly require visibility into upstream and downstream impacts. Begin engaging suppliers, logistics partners, and other stakeholders now, particularly for Scope 3 emissions, due diligence (under CSDDD), and circular economy practices.
5. Prepare for assurance and investor scrutiny
Future ESG disclosures will require external assurance. Start building internal controls and audit trails for non-financial data today. At the same time, anticipate growing investor expectations for science-aligned, forward-looking ESG strategies.
6. Stay informed and agile
ESG policy is evolving rapidly. Stay up to date with consultation outcomes, regulatory timelines, and guidance notes. Assign responsibility for ESG regulatory tracking, or partner with ESG experts, to remain ahead of the curve.
Conclusion
2026 will be a defining year for ESG maturity, bringing clearer regulatory expectations, heightened investor scrutiny, and a stronger push for transparency across the value chain. Organisations that prepare early, by building internal capability, strengthening ESG data systems, and embedding sustainability into core strategy, will be best placed to lead with confidence.
Those that treat ESG regulations as a compliance exercise may soon find themselves falling behind. The next generation of sustainability regulation will favour businesses that take a proactive, science-aligned, and accountable approach. Now is the time to build capability from within. Explore our corporate sustainability training solutions to equip your team with the knowledge, tools, and confidence to lead in a fast-changing ESG environment.
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Dedicated to harnessing the power of storytelling to raise awareness, demystify, and drive behavioural change, Bronagh works as the Communications & Content Manager at the Institute of Sustainability Studies. Alongside her work with ISS, Bronagh contributes articles to several news media publications on sustainability and mental health.
