April 2026 Newsletter

Top sustainability stories from March 2026.

EU SFDR negotiations move toward Q3 2026 conclusion

Negotiations on the EU’s review of the Sustainable Finance Disclosure Regulation (SFDR) are expected to conclude in Q3 2026, marking a key milestone in the reform of the bloc’s sustainable finance framework. Parliamentary discussions on the European Commission’s proposed revisions are underway, with a final vote anticipated from September at the earliest, ahead of trilogue negotiations with member states. The reforms aim to simplify disclosures, address greenwashing risks and reduce compliance burdens, while improving clarity for investors. Although the revised framework is not expected to apply before 2028, firms are closely monitoring developments given the potential implications for product classification and sustainability disclosures.

CARB sets SB 253 reporting deadline as SB 261 remains on hold

The California Air Resources Board (CARB) has approved initial regulations under SB 253, setting a deadline of 10th August 2026 for reporting of Scope 1 and Scope 2 emissions. First year disclosures will not require third party assurance, easing initial compliance pressure. In contrast, implementation of SB 261, which requires biennial climate‑related financial risk disclosures, remains paused following an injunction from the US Court of Appeals for the Ninth Circuit. CARB has confirmed it will not enforce the original 1 January 2026 deadline for SB 261 and will set a new reporting timeline once litigation is resolved, with voluntary reporting remaining open in the interim.

FCA steps up guidance on sustainability labelling under UK SDR

The FCA has published practical examples of good and poor practice when using sustainability investment labels under its SDR regime. Based on its review of fund authorisations, the guidance aims to improve transparency and reduce greenwashing. It highlights common shortcomings, including vague sustainability objectives, unsubstantiated claims and disclosures that do not accurately reflect investment strategies. By contrast, good practice is characterised by clear, measurable objectives, fund‑specific and balanced disclosures, robust supporting evidence and KPIs that are clearly aligned to the chosen label. Alongside this, the FCA has issued further advice for asset managers, reinforcing that labels must be used consistently with underlying investment approaches and supported by credible data and governance. The regulator emphasises that SDR labels are not marketing tools, but regulatory designations that require ongoing substantiation and careful oversight throughout the product lifecycle.

UK launches industry expert group on fiduciary duty guidance

The UK government has announced the creation of an industry expert group to help develop new statutory guidance on fiduciary duty for pension trustees. Convened by the Department for Work and Pensions (DWP), the group will bring together legal, investment and pensions specialists to provide practical, principles‑based clarification on how fiduciary duties apply in modern investment decision‑making. The guidance is intended to address long‑standing uncertainty around whether and how trustees can take account of long‑term and systemic factors, including climate change, sustainability risks and members’ interests. Ministers say the work will give trustees greater confidence while reinforcing that acting in members’ best financial interests remains paramount.

Cushman & Wakefield sued over alleged failure to manage climate risk in pension plan

US real-estate firm Cushman & Wakefield is facing a legal challenge from a former employee who alleges the firm failed to manage climate‑related financial risks in its pension plan. The claim argues that the company breached its fiduciary duties by retaining an investment fund that did not assess or manage climate risk, despite evidence that climate change poses material financial threats to long‑term investment performance. Filed under US pensions law (ERISA), the case is being closely watched as a potential test of whether climate risk should be treated as a core financial consideration in retirement plan governance, rather than a discretionary responsible investment issue. The case contrasts with the 2023 American Airlines litigation, where similar plans were challenged for allegedly over‑prioritising RI considerations, rather than for failing to consider climate‑related financial risk at all.

Sustainability reporting continues despite CSRD scope reductions, report finds

90% of companies removed from the scope of the EU’s Corporate Sustainability Reporting Directive (CSRD) following the Omnibus simplification process plan to maintain or expand their sustainability reporting, according to a new report. The survey by consultancy Osapiens covered more than 400 senior executives across Europe and the UK, and found that sustainability reporting is increasingly viewed as a strategic business tool rather than a compliance exercise. Many companies cited benefits including improved risk management, investor confidence and better decision‑making. Notably, 86% of respondents said they remain capable of producing CSRD‑aligned reports, with sustainability data already embedded in broader corporate and financial reporting processes.

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