Top sustainability stories for the month.
PRI in Person 2026: responsible investment gets practical
Two years on from PRI in Person Toronto, where the conversation focused on defending sustainability ambition, this year’s event in Amsterdam had a distinctly more pragmatic tone. Against the backdrop of the ESG backlash, discussions centred on what is measurable, financially material and useful to investment decision-making. Several themes stood out. AI is rapidly emerging as a due diligence and stewardship issue, requiring investors to consider governance, workforce impacts and responsible use without waiting for disclosure frameworks to catch up. The energy transition is increasingly being viewed through the interconnected lenses of decarbonisation, energy security, affordability and resilience, while asset owners are becoming more targeted in their expectations of managers. There was also recognition that financial materiality is not the whole story. Issues such as living wages, worker rights and biodiversity can raise questions of values, impact and responsibility alongside investment risk. Overall, the message was clear: sustainability challenges are increasingly systemic investment challenges that need to be integrated into investment decisions. Check out our full reflections here.
ESMA issues transition claims guidance to tackle greenwashing risk
ESMA has published a new thematic note on climate transition claims, setting out expectations for how financial market participants communicate net zero, decarbonisation and transition-related ambitions. As transition strategies become increasingly prominent, particularly in high-emitting and hard-to-abate sectors, the guidance seeks to address the heightened greenwashing risks associated with forward-looking claims about future climate performance. The guidance is aimed at asset managers, issuers, benchmark administrators and investment service providers, and is built around four principles: claims should be accurate, accessible, substantiated and up to date. While the note does not create new regulatory requirements, it provides practical examples of good and poor practice and makes clear that firms should explain not only their transition ambitions, but also the targets, assumptions, implementation strategies and progress metrics used to support them.
FCA confirms revised approach to IFRS-based sustainability reporting
The FCA has finalised its rules for UK listed companies to report on climate and sustainability aligned with the IFRS Sustainability Disclosure Standards (ISSB). Rather than making full application mandatory, the rules will operate on a “comply or explain” basis. This seeks to minimise the administrative burden on smaller companies, which was highlighted in the latest consultation. To support alignment with international standards, companies will need to state whether their disclosures comply with the UK SRS S1 and S2 standards and, where they do not, explain the omissions and their reasons. Disclosures will be included in annual financial reports, covering the TCFD areas of governance, strategy, risk management, and climate-related metrics and targets. The final policy expands “comply or explain” to all disclosure requirements, rather than making UK SRS S2 climate disclosures mandatory as initially proposed, while retaining reliefs for UK SRS S1 reporting and Scope 3 emissions, which were originally due to benefit from a two-year transition and a one-year relief respectively. The new requirements will apply to financial years beginning on or after 1 January 2027, with the first reports expected in 2028.
EU strengthens focus on climate resilience
The European Commission has proposed its first Climate Resilience Framework, designed to strengthen how Europe prepares for worsening physical climate risks. The proposal introduces a common planning trajectory of 1.5°C warming by 2030, 2°C by 2050 and 3°C by 2100, with the 3°C scenario intended as a planning assumption rather than an emissions target. Member States would be required to develop national climate resilience plans by the end of 2030, designate authorities responsible for major climate risks, and integrate resilience considerations into areas such as budgeting, spatial planning and impact assessments. The package also seeks to address Europe’s climate insurance gap through a new Climate Insurance Alliance, while directing greater public and private investment towards adaptation. For investors, the framework could be useful in helping provide a more consistent basis for assessing and stress-testing physical climate risks across assets and portfolios, particularly around valuations, insurability and long-term capital requirements.
COP17: biodiversity action at a critical halfway point
COP17 in Yerevan marks the halfway point towards the global biodiversity targets agreed in 2022, but progress remains slow. Fewer than half of the national targets assessed by the UN are on track, with significant gaps around conservation, subsidy reform and business action. For companies and investors, however, momentum is building. Nature-related disclosure is moving closer to the mainstream, with the ISSB developing proposals informed by TNFD and more than 1,150 organisations already publishing TNFD-aligned reports. Biodiversity finance was also high on the COP17 agenda, including how businesses benefiting from genetic data should contribute to the Cali Fund. With biodiversity loss increasingly recognised as a source of financial risk, businesses and investors should be assessing their nature-related dependencies, impacts and risks now, and integrating nature into existing climate, risk and investment processes. Read our full article here.
Nature reporting and target setting gain momentum
In other biodiversity news, two major developments could help accelerate corporate action on nature loss. The Taskforce on Nature-related Financial Disclosures (TNFD) has released a significant update to its assessment framework, providing more practical guidance to help organisations identify, assess and report nature-related risks, impacts and opportunities. At the same time, the Science Based Targets Network (SBTN) has launched a new framework for setting science-based nature targets, helping companies move from assessment to measurable action. Together, these developments strengthen the tools available to businesses looking to understand their nature-related impacts and integrate nature considerations into strategy, risk management and disclosures.
If you’d like to know more or discuss any of these topics please get in touch.
Further Reading
