ESG News - July 2026

👉 Brazil adopts ESG comply-or-explain framework

Brazil’s securities regulator (CVM) has withdrawn mandatory ISSB-aligned sustainability reporting for listed companies before the regime’s planned 2026 start, replacing it with a comply-or-explain model. Companies that opt out must publicly justify their decision when filing annual accounts from 2027. ISSB-based reporting remains available voluntarily, potentially reducing compliance costs while increasing investor reliance on voluntary disclosures for sustainability-related risk assessment.

Source: ESG News, 06/02/2026

👉 ISO launches net-zero transition planning standard

ISO has released a net-zero transition planning standard for financial institutions, providing guidance on governance, target-setting, capital allocation and implementation of transition plans. The framework is voluntary and aims to improve consistency across banks, insurers and asset managers. While not creating new regulatory obligations, it may influence supervisory expectations, disclosure practices and assessment of transition-related risks by investors and lenders.

Source: ESG Today, 06/04/2026

👉 EFRAG tests non-EU reporting standard

EFRAG has launched a field test of its proposed sustainability reporting standard for non-EU companies ahead of a public consultation expected in July. The framework is designed to support reporting by companies subject to the CSRD through non-EU parent operations. For investors and multinational issuers, the exercise may shape future disclosure requirements, data comparability and compliance costs linked to cross-border sustainability reporting.

Source: ESG News, 06/04/2026

👉 FCA proposes replacing TCFD product disclosures

The FCA has proposed replacing TCFD-based climate reporting requirements for investment products with a materiality-based disclosure regime. Asset managers would report climate risks and opportunities only where financially relevant, while institutional investors could request product-level emissions data annually. The regulator estimates annual compliance savings of £20m across the sector. If adopted, the changes would reduce reporting burdens and shift climate disclosure towards investor demand and decision-useful information. Consultation closes on 13 July 2026, with implementation proposed for autumn 2026.

Source: ESG New, 06/08/2026

👉 EU revises debt prospectus rules

From 5 June 2026, EU Prospectus Regulation amendments affect debt issuers, arrangers and investors. ESG-labelled bonds face new disclosure requirements, while certain non-equity prospectuses benefit from reduced financial history and revised approval timelines. Pending Level 2 measures create interim compliance uncertainty for issuance documentation and investor due diligence.

Source: Sullcrom, 06/03/2026

👉 Commission consults on simplified ESRS

The European Commission has launched consultation on draft ESRS 2.0, largely adopting EFRAG’s simplification proposals while retaining the CSRD’s double materiality framework. The draft removes hundreds of mandatory datapoints and further reduces reporting requirements for in-scope companies. Subject to adoption and parliamentary scrutiny, the revised standards are expected to apply from FY2027, with optional early use from FY2026. For investors, reduced disclosure volume may lower reporting costs while increasing reliance on materiality assessments for sustainability data comparability.

Source: Global Policy Watch, 05/19/2026

👉 SBTi releases revised Net-Zero Standard

The Science Based Targets initiative (SBTi) has published Corporate Net-Zero Standard Version 2.0, introducing annual reporting requirements, implementation assessments and continuous target review cycles. The framework adds differentiated pathways for SMEs and companies in lower-income markets and expands options for addressing hard-to-abate emissions. Validation under the new standard is expected to begin in 2027, increasing disclosure, governance and transition-planning expectations for corporates and investors relying on SBTi-aligned targets.

Source: ESG News, 06/12/2026

👉 EFRAG narrows CSRD scope for non-EU groups

EFRAG estimates that the EU Omnibus reforms will reduce the number of non-EU companies subject to CSRD sustainability reporting from around 10,000 to 1,200. Revised thresholds require non-EU parents to generate more than €450 million of EU revenue for two consecutive years and maintain substantial EU operations. The changes leave reporting timelines broadly unchanged, with affected groups expected to report from FY2028. For investors and lenders, coverage of mandatory sustainability data from non-EU issuers will narrow materially, increasing reliance on voluntary disclosures and alternative ESG data sources.

Source: ESG Today, 06/10/2026

👉 EBA consults on Climate Risk integration

The European Banking Authority has launched a consultation on the 2027 EU-wide stress test methodology, introducing a dedicated climate risk module covering both transition and physical risk scenarios. The exercise will apply to 64 banks representing around 75% of EU banking assets. While climate outcomes will not directly affect capital requirements, banks will face expanded data, modelling and disclosure expectations, increasing supervisory scrutiny of climate-related risk management ahead of the 2027 test cycle.

Source: European Banking Authority, 06/11/2026

👉 EU member states endorse SFDR 2.0 position

EU member states have provisionally agreed the Council’s negotiating position on SFDR 2.0, ahead of trilogue discussions with the European Parliament. The proposal would replace the current Article 6/8/9 framework with product categories based on minimum sustainability criteria, while reducing some disclosure obligations. Positions on fossil-fuel expanders, sovereign bond treatment and alternative funds remain under negotiation. For asset managers and distributors, the reforms could reshape product classification, reporting requirements and sustainable fund positioning across EU markets.

Source: Responsible Investor, 06/17/2026

👉 UK proposes mandatory deforestation due diligence

The UK government will consult this year on mandatory due diligence requirements for businesses trading commodities including soy, palm oil, cocoa and rubber, using powers under the Environment Act. The proposals align core commodities and data requirements with the EU Deforestation Regulation to reduce compliance duplication. For investors and financial institutions, greater supply chain traceability may affect portfolio risk assessments, reporting processes and stewardship expectations.

Source: Gov UK, 06/23/2026

👉 Global sustainable funds recorded net inflows of $3.5 billion in Q1 2026, reversing $27 billion of outflows in the previous quarter. The recovery was driven by European-domiciled funds, which attracted $9.1 billion, while US sustainable funds posted a 14th consecutive quarter of net redemptions. Passive strategies and fixed income funds led allocations, although total sustainable fund assets fell 10% to $3.51 trillion amid market volatility and weaker equity performance.

Source: ESG Today, 05/28/2026

👉 BNP Paribas Asset Management will co-chair a Finance for Biodiversity Foundation working group developing a nature transition framework for financial institutions. The initiative aims to standardise assessment of corporate nature-transition plans, potentially improving biodiversity-related capital allocation, stewardship decisions and transition-finance market consistency.

Source: ESG News, 06/10/2026

👉 New York City’s pension funds are seeking new passive equity managers after concluding that incumbent providers failed to meet contractual climate-related commitments. The review could redirect mandates across a $127bn public equities portfolio, increasing scrutiny of stewardship delivery and accountability in ESG-linked asset management mandates.

Source: ESG Dive, 06/15/2026

👉 Only 19% of companies use advanced methods to quantify the financial impact of sustainability risks and opportunities, despite 60% incorporating them into financial planning, according to KPMG. Limited valuation capability may hinder capital allocation, risk pricing and investment decisions as sustainability becomes more integrated into corporate finance.

Source: KPMG, 07/02/2026