August 2026 Newsletter

Top sustainability stories from July 2026.

PRI launches consultation on 2027–2030 Strategy

The PRI has launched a consultation on its 2027–2030 strategy, giving signatories an opportunity to help shape the organisation’s future priorities. The consultation comes at a time of significant geopolitical, regulatory and technological change, alongside growing environmental challenges that are reshaping investment risks and market expectations. As part of its three-year strategic planning cycle, the PRI is seeking feedback on how it can best support investors and advance responsible investment practices over the coming years. PRI signatories should have received an invitation to participate in the consultation on 29th June. The deadline to respond is 24th August. We strongly encourage signatories to take part. This is a real opportunity to influence the PRI’s priorities and ensure it remains aligned with the needs of the market. If you’d like to discuss the consultation or sense-check your response, we’d be happy to help so please get in touch.

EU updates ESRS and confirms CSRD Framework

The European Commission has adopted revised European Sustainability Reporting Standards (ESRS) under the CSRD, aiming to cut administrative burden while preserving decision-useful disclosures. The changes aim to streamline datapoints, improve clarity, and enhance interoperability with global frameworks, making reporting more proportionate, especially for smaller and first-time reporters. The revisions also seek to reduce duplication and focus on material information, supporting companies’ transition to sustainable practices without excessive cost. This development follows confirmation that the EU has now finalised the latest CSRD framework, signalling a shift from rule-setting to implementation and consistent, high-quality sustainability reporting across member states.

CARB signals delay and flexibility in SB253 climate disclosure implementation

CARB has announced a delay to implementing SB253, deferring the deadline for entities to report Scope 1 and Scope 2 greenhouse gas (GHG) emissions from 10th August 2026, to 10th November 2026. The California regulator also indicated it will exercise enforcement discretion during the initial reporting period, recognising ongoing challenges around data collection, methodology selection and assurance readiness. The announcement provides companies with additional time to prepare for compliance while signalling a pragmatic approach to implementation.

European Commission seeks input on defining ‘credible’ transition plans

The European Commission’s Joint Research Centre has launched a short survey and published a working draft exploring potential criteria for what constitutes a “credible” corporate transition plan. The survey seeks feedback on how financial institutions assess transition plans, the methodologies they use and the challenges they encounter. While published without prejudice to ongoing legislative discussions, the work is particularly relevant to evolving SFDR 2.0 proposals, including the proposed Article 7 “Transition” product category. The working draft indicates that credibility assessments may consider factors such as governance arrangements, decarbonisation targets, implementation measures, capital allocation, monitoring processes and the consistency of plans with long-term climate objectives.

Northern Trust loses £120m mandate over climate alliance exits

Northern Trust has lost a £120 million global passive equities mandate from a UK charitable foundation after the asset owner decided to transfer the mandate to Amundi. The foundation stated that the move was a direct response to Northern Trust's withdrawal from both the Net Zero Asset Managers (NZAM) initiative and Climate Action 100+ (CA100+), concluding that continued participation in collaborative climate initiatives formed an important part of its stewardship expectations. The mandate was reportedly reallocated following a review of managers' climate commitments and engagement approaches, with the foundation citing concerns that the withdrawals signalled a reduction in support for investor-led climate action. The decision demonstrates that, despite a broader retreat by some US asset managers from climate alliances, participation in collaborative stewardship initiatives remains a significant factor for a number of asset owners when selecting and retaining investment managers.

ESMA clarifies scope of ‘internal’ ESG Ratings under new Q&As on ESG Ratings Regulation

The European Securities and Markets Authority (ESMA) has published new Q&As on the EU ESG Ratings Regulation (ESGGRR), including important guidance on the scope of the exemption for internally developed ESG ratings. ESMA, citing the European Commission, confirms that ESG ratings used solely for “in-house” or intragroup purposes are exempt where they are not published or disclosed to third parties. Examples include treasury operations, risk management, internal lending processes and portfolio construction within a corporate group. The Q&As also address consulting activities, the two-working-day notification requirement, factual error reviews, issuer feedback obligations and exemptions for Second Party Opinion (SPO) providers.

FCA strengthens expectations on Non-Financial Misconduct

The FCA is strengthening its expectations on non‑financial misconduct (NFM), proposing guidance via a policy statement PS25/23 to clarify how behaviours such as bullying, harassment and discrimination impact regulatory assessments of culture, governance and individual conduct. The introduction of Code of Conduct rule COCON 1.1.7FR confirms that such behaviours can fall within the Conduct Rules where they are relevant to a firm’s activities or an individual’s role. The rules and guidance bring NFM firmly into scope of SMCR (Senior Managers and Certification Regime), as well as fitness and propriety rules. From 1st September 2026, firms will be expected to  embed NFM into policies, embedding NFM within conduct frameworks: aligning policies with COCON, ensuring SMCR accountability, integrating NFM into fitness and propriety and remuneration decisions, and strengthening reporting, oversight and early intervention. The FCA also recognises limits to the new rules and notes it cannot regulate behaviour with no sufficient nexus to a firm or role, nor act as a general arbiter of private conduct unconnected to financial services.

If you’d like to know more or discuss any of these topics please get in touch.