May 2026 Newsletter

Top sustainability stories from April 2026.

EU considers shift away from double materiality to ISSB standards

In April 2026, the European Union signalled a potential shift away from its double materiality reporting approach under CSRD towards adoption of the ISSB’s global sustainability standards. This would move EU corporate reporting towards a financial materiality lens aligned with IFRS S1 and S2, focusing on how sustainability issues affect enterprise value, rather than also requiring disclosure of wider societal and environmental impacts. If adopted, the change could significantly streamline reporting for multinational companies operating across jurisdictions, while reinforcing climate and sustainability data as auditable financial information rather than standalone ESG disclosures. The proposal reflects growing pressure to simplify and align sustainability reporting frameworks internationally.

SBTi Trend Tracker April 2026: from targets to delivery

The latest SBTi Trend Tracker shows science‑based target‑setting reaching unprecedented scale and becoming embedded in corporate strategy worldwide. By the end of 2025, over 12,000 companies had either validated science‑based targets or committed to set them, with 9,764 companies holding validated near‑term targets across 93 territories. Momentum also accelerated sharply during 2025: the number of companies with validated near‑term targets increased by 40% year‑on‑year, while validated net‑zero targets grew by 61%, reaching 2,325 companies. Industrials remain the largest sector by adoption, reflecting the importance of climate action in high‑emitting industries. Growth is increasingly driven by Asia, with strong uptake across both high‑ and lower‑penetration markets, signalling a shift in the geographic centre of corporate climate ambition. Fast‑growing sectors such as Health Care, Information Technology and Materials highlight how climate targets are spreading beyond early adopters into the wider economy.

HSBC facing investor pressure over climate risk assumptions

Investors are urging the UK’s audit regulator, the Financial Reporting Council (FRC), to scrutinise HSBC’s climate‑related accounting, arguing that the bank may be understating the financial risks associated with climate change and the energy transition. In a letter to the FRC, investors question HSBC’s assumptions about future fossil fuel demand, asset lives and cash flows, warning that overly optimistic scenarios could delay impairments, overstate profits and mislead markets. They also highlight a potential misalignment between HSBC’s public climate commitments, including its net‑zero targets, and the assumptions embedded in its core accounting judgements. The investors argue that this disconnect undermines the credibility of climate disclosures and raises broader concerns about investor protection and market integrity. They call on the FRC to actively review HSBC’s accounts, framing the bank as a test case for whether UK regulators will ensure climate risks are properly reflected in financial statements as scrutiny of climate accounting intensifies.

US DOJ settles first case in DEI-related False Claims Act

The US Department of Justice has announced its first False Claims Act (FCA) settlement focused on allegedly false DEI representations. The case centred on claims that a federal contractor misrepresented its compliance with diversity‑related requirements in order to secure government contracts. According to the DOJ, the company certified that it had implemented required DEI policies and practices, including commitments around equal employment opportunity, when those representations were not fully reflected in its actual operations. The matter was resolved through a settlement of $17m, without an admission of liability, and underscores that DEI statements, certifications and policies can carry legal risk if they are inaccurate, overstated or unsupported in practice.

Businesses continue climate action but reframe net zero messaging

UK businesses are increasingly treating net zero as a commercial necessity rather than a reputational ambition, according to BSI’s sixth annual Net Zero Barometer, published in April 2026. The survey of more than 1,000 senior UK business leaders found that 79% will continue pursuing net zero regardless of political uncertainty, while 82% remain formally committed to achieving net zero. However, 53% reported changing how they communicate net‑zero activity, reframing it around resilience, risk management and business continuity. Operational efficiency and cost savings are now the leading drivers of action (33%), ahead of market competitiveness (22%), highlighting a shift toward delivery‑led decision‑making. Despite this momentum, 91% of businesses want further support, particularly financial incentives and skills‑based training, to accelerate progress from strategy to implementation.

GHG protocol proposes changes to Scope 3 reporting framework

The Greenhouse Gas Protocol has published a progress update outlining proposed changes to its Scope 3 Accounting and Reporting Standard, reflecting growing scrutiny of value‑chain emissions. Key proposals include a new requirement for companies to disclose at least 95% of relevant Scope 3 emissions to remain compliant, alongside the introduction of a new Category 16 to capture “other value chain activities”, such as facilitated or licensing‑related emissions. The proposals also focus on improving data quality, clarifying inventory boundaries and strengthening reporting for investment‑related emissions. While not yet final, the update signals a material tightening of expectations for Scope 3 disclosure and governance.

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