September 2026 Newsletter

2 Sept

Top sustainability stories from August 2026.

Webinar Invitation: SFDR 2.0: Navigating the Next Phase

Tuesday 8th September, 2-3pm BST

Join Danesmead for a webinar with AIMA and a member of the EU Platform on Sustainable Finance to explore what lies ahead for SFDR 2.0. The session will provide an update on the latest developments in the legislative process and outline the anticipated timeline for reform.

We will take a practical look at the proposals, focusing on the key questions investment managers have been asking since they were published. Drawing on our expertise, we will examine topics including product categorisation, mandatory exclusions, good governance, PAIs, and core reporting requirements. Alongside regulatory insights and context, attendees will gain practical perspectives on how firms can begin preparing for the next phase of SFDR.

The rise of transition investing

As the European sustainable finance market matures, investors are increasingly reassessing how they deploy capital to support the net-zero transition. While SFDR has helped improve transparency, concerns that it favours companies already performing well on responsible investment metrics have prompted growing interest in transition investing. Rather than focusing solely on already sustainable companies and assets, this approach targets businesses with credible plans to reduce emissions and improve environmental performance over time. For private equity investors, transition investing offers an opportunity to drive real-world decarbonisation through active ownership while supporting SFDR Article 8 and Article 9 fund objectives. Success, however, depends on robust transition plans, measurable outcomes and clear evidence of progress, helping investors support genuine transition opportunities and avoid greenwashing. Read our full article here.

New EU packaging rules enter into force

On 12 August, the EU's revised Packaging and Packaging Waste Regulation (PPWR) began applying across the bloc, establishing the first harmonised, single-market-wide framework for packaging. Immediate obligations include strict limits on PFAS ("forever chemicals") in food-contact packaging and new traceability requirements for manufacturers and importers. Further milestones follow including harmonised labelling for waste sorting by 2028, and recyclability, reuse, and single-use plastic restrictions from 2030. Environment Commissioner Jessika Roswall called the regulation "an investment in Europe's future," designed to cut waste and boost recycling while replacing a patchwork of national rules. For companies (and their investors), this may raise short-term costs as companies update packaging and suppliers, but should also reduce uncertainty by creating one clear EU-wide rulebook and fewer regulatory surprises later.

Climate regulations evolve with both political pushback and continued progress

Recent weeks have brought political pushback against climate-related corporate obligations, but the broader regulatory direction remains one of advancing accountability. In Washington, the U.S. Mission to the EU objected to the EU’s CSDDD and CSRD, warning Brussels that the U.S. "will take any actions necessary" to shield American firms from what it called unreasonable extraterritorial burdens. New Zealand's Parliament, meanwhile, passed the Climate Change Response (Tort Liability) Amendment Bill, barring courts from holding companies liable in tort for climate damage, thus halting the closely watched Smith v. Fonterra case before trial. This is a major legal climate case that aims to hold large emitters legally responsible for climate-related harm.

However, mandatory disclosure is moving ahead elsewhere, including in the U.S. Despite California’s regulator CARB deferring the original deadline for SB 253 from 10th August until 10th November, 2026, the requirement remains in place. Alongside SB 261's climate-risk disclosures, it's a reminder that, state climate reporting obligations continue to take effect even in places where national or federal level regulation is lacking. Australia has taken a similar approach. On 23rd August 2026, the Australian Treasury opened a consultation, "Improving the efficiency of climate-related financial disclosures," proposing to ease assurance requirements and clarify Scope 3 supply-chain reporting expectations, while leaving its mandatory climate disclosure regime itself intact.

El Niño raises concerns over climate and economic impacts

The UK Met Office has warned that the developing El Niño climate pattern could be “the strongest in living memory”, increasing the likelihood of extreme weather events worldwide. El Niño is typically associated with higher global temperatures, droughts in some regions and increased flooding in others, with impacts on agriculture, water resources and energy systems. Combined with a warming climate, scientists warn that a strong El Niño could exacerbate physical climate risks and place further pressure on supply chains and food production. For investors, the implications extend beyond short-term weather disruption. A stronger El Niño could increase pressure on agricultural commodities, water-intensive industries, energy markets and global supply chains, highlighting the importance of understanding physical climate risks within portfolios and investment decisions.

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