Sustainability in Focus / Q4 2026

October 28, 2026

This is the first issue of our new "Sustainability in Focus" newsletter, where we share:

- our views on the key themes and issues shaping the global sustainability landscape as well as on recent legislative or policy developments; - insights from our recent work on sustainability issues; and - links to other sustainability resources (such as podcasts, webinars or briefings) that we regularly publish.

We've included a feedback section so you can tell us what you like and anything you think we should change.

We look forward to sharing further newsletters with you on a quarterly basis.

Happy reading!

Sustainability themes and issues this quarter | August – October 2026

With Halloween just around the corner, we highlight the quarter's key ESG themes – all treats, no tricks!

From sourcing to sales: supply chain accountability is increasingly a focus area. As implementing measures come on-stream, the EU's Empowering Consumers for the Green Transition Directive (EmpCo Directive) restrictions on vague green claims, unsupported labels and offset-based climate-neutral product claims are giving some companies a fright.

New requirements in several jurisdictions will also force companies to uncover risks lurking in supply chain shadows. While CS3D obligations do not take effect until 2029, the EU Deforestation Regulation (EUDR) applies from 30 December 2026 for large and medium-sized operators and from 30 June 2027 for micro and small operators.

On modern slavery, the UK is proposing mandatory DD disclosures and Australia's proposed new 'failure to prevent' offence and civil penalties for reporting non-compliance call for more rigorous supply chain due diligence.

The European Commission's rating scheme for data centers above 500 kW and proposed minimum energy and environmental performance standards (MPS) put the sustainability impact of AI in focus. For developers and corporate customers, efficiency now shapes site selection, capital allocation and contracts (Data Centers Managing Social Risk and Opportunity).

Sustainability regulation is shape-shifting. Shifting regulatory expectations and geopolitical uncertainty continue to challenge companies. The EU's Omnibus I changes to the CSRD have produced stripped-back ESRS with over 60% fewer mandatory datapoints, plus a voluntary standard for companies outside the CSRD that still face data demands from supply chain partners. EFRAG is also consulting on standards for non-EU companies.

The UK is following suit with a 'once in a generation' review of corporate reporting. Although the changes are unlikely to bite for a couple of years, proposals include simplifying company categories, thresholds and exemptions and replacing existing ESG disclosures with core baseline narrative disclosures.

The reporting map is widening. Nearly 40 jurisdictions are moving towards the ISSB's global baseline standards. It is hoped that the FCA's UKLR changes, requiring listed companies to make 'comply or explain' climate, and ultimately sustainability, disclosures under the new UK SRS, will not bring "bubble bubble toil and trouble" for accounting periods starting 1 January 2027.

The Australian financial services regulator's "ASIC's" review of the first Australian sustainability reports found that statutory reporting has improved both the quantity and quality of climate-related financial information. It highlights eight key action areas and signals expectations for the 2027 and 2028 cohorts.

California's first SB 253 GHG emissions reports are due on 10 November 2026, while SB 261 enforcement remains paused pending a ruling on a litigation.

Other issues to keep on your watchlist

- EU CS3D timetable. The amended directive's main due-diligence requirements are due to apply from 26 July 2029, with certain reporting requirements applying from financial years beginning in 2030. - Simplification of EU Taxonomy disclosures. Simplification proposals will follow the ESMA July 2026 consultation. - UK equality reporting. New UK requirements to publish Equality Action Plans from April 2027, and forthcoming legislation requiring disability and ethnicity pay gap reporting. - Further ISSB-aligned sustainability disclosures. Further countries mandating ISSB-aligned reporting including Japan, where mandatory SSBJ-based disclosures will begin for large Prime Market companies for financial years ending in March 2027 and will then be phased across market-capitalisation bands. - EU proposed Public Procurement Act. This proposal could expand environmental, social and resilience criteria to be considered in public procurement processes.

FCA publishes rules requiring listed issuers to report using the UK SRS

- The UK Financial Conduct Authority (FCA) has published rules requiring listed issuers to make climate and sustainability disclosures against the UK Sustainability Reporting Standards (UK SRS) on a 'comply or explain' basis. - The new rules replace existing climate-related financial disclosures and apply to accounting periods starting on or after 1 January 2027, with first reporting in 2028. - Most of the requirements are those consulted on earlier this year. A key change is that all categories of disclosures will be subject to a 'comply or explain' approach, whereas the consultation had proposed that climate disclosures (other than in relation to Scope 3 emissions) would be mandatory. - Transitional reliefs are available, including in relation to Scope 3 emissions and non-climate related sustainability (S1) disclosures. - Alongside the rules, the FCA is consulting on a technical note to help issuers apply the 'comply or explain' approach.

EU adopts simplified ESRS and sustainability reporting standard for voluntary use

- On 3 July 2026, the European Commission adopted two delegated regulations, which are now subject to European Parliament and Council scrutiny.