Global Sustainability & ESG Insights - September 2026

Asia

China

Consultation on Climate Disclosure Application Guides Launched

On September 28, the Ministry of Finance issued draft application guides for the Sustainability Disclosure Standard for Business Enterprises No.1 — Climate (Trial), and nine sector-specific guides. The overarching guide explains how companies should apply China's climate disclosure requirements in practice. It introduces guidance on climate impacts, transition plans, scenario analysis and climate-related financial reporting. The guide also formalises methodologies for reporting Scope 1, Scope 2 and Scope 3 greenhouse-gas emissions. Separate industry guides cover power, steel, coal, oil, fertiliser, aluminium, hydrogen, cement and automotive sectors. The sector-specific guidance identifies climate risks, opportunities, emissions sources, targets and disclosure metrics. The consultation signals China's continued development of a more detailed, sector-specific sustainability reporting framework. The consultation closes on October 26, 2026.

Hong Kong

HKMA Launches Consultation on Phase 2B of Hong Kong Taxonomy for Sustainable Finance

On September 7, the Hong Kong Monetary Authority (HKMA) launched a public consultation on Phase 2B of the Hong Kong Taxonomy for Sustainable Finance. The Taxonomy provides definitions of green and sustainable activities to scale capital flows and address greenwashing. Phase 2B adds 10 new economic activities, increasing the total from 25 to 39. New activities include battery manufacturing and recycling, as well as low-carbon technology production. Practical transition pathways are introduced for hard-to-abate sectors including air transport, and iron and steel. It introduces 24 adaptation measures focused initially on shoreline protection and flood management. The consultation closed on October 7, 2026. This follows the publication of Phase 2A earlier in January 2026.

Europe

Directive on Empowering Consumers for the Green Transition Enters into Effect

On September 27, the Directive on Empowering Consumers for the Green Transition went into effect. Under the Directive, consumers must be informed about product durability, reparability, and environmental and social impact. Traders making sustainability comparisons between products must disclose their comparison methods and data sources. Producers offering commercial durability guarantees beyond the two-year legal guarantee must inform consumers. The Directive bans several commercial practices, including displaying sustainability labels not based on certification schemes. Generic environmental claims and false claims about product durability or reparability are also prohibited. Persuading consumers to replace products earlier than technically necessary is banned.

For more information, view our Executive Compliance Guide.

Simplified ESRS and Voluntary Standards Published

On September 21, the European Commission published delegated regulations simplifying sustainability reporting standards and introducing voluntary reporting standards. The European Sustainability Reporting Standards (ESRS) Simplification Regulation amends reporting requirements under the Corporate Sustainability Reporting Directive. It simplifies materiality assessments and provides relief from more challenging disclosure requirements. The regulation also provides greater flexibility regarding value chain data and anticipated financial effect estimates. It applies from financial years beginning on or after January 1, 2027.

On the same day, a separate regulation establishes voluntary sustainability reporting standards for companies protected by the value chain cap. The cap limits the sustainability information that mandatory reporters may request from supply chain undertakings with an average of no more than 1,000 employees in the preceding financial year. The framework standardizes voluntary disclosures and limits information requests from CSRD-reporting companies. The voluntary standards will apply to value chain reporting from January 1, 2027.

EU Sustainability Rating Scheme for Data Centers Adopted

On September 21, the European Commission adopted a delegated regulation establishing a common EU rating scheme and sustainability label for data centers. The scheme forms part of the EU's Data Centre Energy Efficiency Package and supports implementation of the revised Energy Efficiency Directive. It will apply to individual data centers with an installed IT power demand exceeding 500 kW and will assess performance across criteria including energy efficiency, water efficiency, renewable energy use, waste heat reuse and grid flexibility. Operators will be required to report information on energy consumption, water use, waste heat utilization and renewable energy sourcing to support the rating process. The delegated regulation is subject to parliamentary scrutiny before entering into force. The first sustainability labels for individual data centers are expected to be displayed in 2027.

Consultation on Minimum Performance Standards for Data Centers Launched

On September 21, the European Commission launched a public consultation on minimum performance standards for EU data centers. The consultation will support preparation of a legislative proposal planned for the second quarter of 2027. The consultation considers challenges associated with energy consumption, electricity grid demand, carbon emissions and water use. The consultation accompanies a wider data center energy efficiency package, including a common EU rating scheme and sustainability label for data centers. The consultation will close on December 14, 2026.

Draft Taxonomy for Revised ESRS Released

On September 17, the European Financial Reporting Advisory Group (EFRAG) released a draft Taxonomy for the Revised European Sustainability Reporting Standards (ESRS). The Taxonomy provides the technical basis for representing ESRS disclosures in a machine-readable format. It aligns with the Draft List of Datapoints for the Revised ESRS released in August 2026. Digital tagging of ESRS disclosures is not yet mandatory, as the regulatory framework is still to be established by the European Commission. EFRAG intends to submit the final Taxonomy to ESMA and the European Commission by the end of 2026. The consultation will close on November 11, 2026.

Deforestation-Free Products Regulation Product List Simplified

On September 17, the European Commission published a delegated regulation simplifying the EU Deforestation-free Products Regulation. The regulation updates the list of products subject to deforestation due diligence requirements. Several products, including cattle hides, leather, re-treaded tyres and soybeans for sowing, are removed. Soluble coffee, certain palm oil derivatives and frozen cattle tongues are added from December 30, 2027. The regulation clarifies that testing samples are outside the regulation's scope. It also introduces exemptions for waste, second-hand products, packing materials and medicinal product inputs. The Commission has also updated its guidance to reflect the revised product scope.

European Parliament Adopts Position on CBAM Amendments

On September 15, the European Parliament adopted its negotiating position on proposed changes to the Carbon Border Adjustment Mechanism (CBAM). MEPs backed extending CBAM's scope beyond basic materials to downstream products, including finished steel and aluminum goods. They strengthened anti-circumvention rules targeting arrangements designed solely to avoid CBAM obligations. MEPs rejected a proposed safeguard allowing goods to be removed from scope during price shocks. The proposal will continue through the legislative process.

Position on Revised Sustainable Finance Disclosure Regulation Adopted

On September 10, the European Parliament's Economic and Monetary Affairs Committee voted to adopt its position on the revised Sustainable Finance Disclosure Regulation. MEPs agreed on three standardized product categories: sustainable, transition, and ESG basics. Transition products must exclude firms earning revenue from fossil fuel exploration or extraction unless meeting strict conditions. All categories must exclude investments in companies violating human rights. Only the largest financial market participants would be required to disclose adverse sustainability impacts. Investment companies must conduct due diligence and annual monitoring in relation to categorized products. The proposal will continue through the legislative process.

Middle East

United Arab Emirates

Abu Dhabi Establishes Greenhouse Gas Verification Framework

On September 23, the Environment Agency announced a framework for verifying greenhouse gas emissions across the emirate. The framework establishes requirements for the independent verification of greenhouse gas emissions data. It aims to improve the accuracy, consistency and credibility of emissions reporting. Verified emissions data will help strengthen environmental governance and inform climate-related decision-making. Businesses subject to emissions reporting requirements may need to align data collection and reporting processes.

Saudi Arabia

Environmental Performance Cards for Paints and Varnishes Introduced

On September 2, the Saudi Standards, Metrology and Quality Organization announced mandatory environmental performance card requirements for paints and varnishes. The requirements will apply to paints and varnishes sold in the Saudi market from October 1, 2026. The environmental performance card provides consumers with information on a product’s environmental performance. The initiative aims to improve consumer awareness and support more informed purchasing decisions. Manufacturers and suppliers must satisfy the technical requirements and obtain an environmental performance card before the requirements take effect.

UK

FCA Finalizes UK Sustainability Reporting Rules for Listed Companies

On September 30, the Financial Conduct Authority (FCA) published final sustainability disclosure rules for listed companies. The new regime will take effect from 1 January 2027. The rules align listed company reporting with the UK's Sustainability Reporting Standards, based on ISSB Standards, IFRS S1 and IFRS S2. The FCA has adopted a comply-or-explain approach for sustainability and climate-related disclosures. This replaces the previously proposed mandatory climate reporting requirement. The framework also includes transitional reliefs for general sustainability reporting and Scope 3 emissions disclosures. The FCA is also consulting on updated guidance to support implementation of the new regime. The consultation closes on October 28, 2026.

For more information, view our briefing.

FCA Simplifies Climate Disclosure Rules for Asset Managers

On September 25, the Financial Conduct Authority (FCA) published amendments to its climate-related disclosure regime for asset managers and asset owners. The changes replace TCFD-aligned product-level reports with a more flexible disclosure framework. Firms must assess whether climate-related risks are materially relevant to a product's financial performance. Material climate risks must be disclosed through existing client communications. The FCA also introduces a minimum requirement for firms to provide Scope 1, 2 and 3 emissions data on request. The changes follow an FCA review that found limited investor use of existing product-level climate reports.

Nature Restoration Levy Regulations Enter into Force

On September 11, the Nature Restoration Levy Regulations 2026 came into force in England. The Regulations establish the legislative framework for the nature restoration fund (NRF) levy under the Planning and Infrastructure Act 2025. They enable developers to meet environmental obligations for protected sites and species through Environmental Delivery Plans developed by Natural England. Instead of undertaking certain project-specific assessments and mitigation measures, developers must pay a levy into the NRF.

CBAM Emissions and Verification Regulations Made

On September 8, the CBAM (Emissions and Verification) Regulations 2026 were made, coming into force on January 1, 2027. The UK CBAM applies a levy to direct greenhouse gas emissions embodied in certain carbon-intensive imported products. It applies to imports of aluminum, cement, fertiliser, hydrogen, and iron and steel. The Regulations set out the process for calculating direct embodied emissions, including use of default or actual verified values. They establish requirements for monitoring and verifying emissions data when actual values are used. The Regulations also establish record-keeping obligations for CBAM-related imports.

UK Consultation on Modernizing Corporate Reporting Launched

On September 7, the Department for Business, Innovation, Science and Trade published a consultation on modernizing corporate reporting. The consultation proposes a principles-based strategic report focused on business model, performance, resources, strategy and risks. It proposes removing specific Companies Act disclosure requirements for environmental, employee, social, community and human rights matters. Companies would still report on these matters where they are financially material. The consultation also explores a new “very large” company threshold for certain non-financial reporting obligations. Existing climate-related financial disclosure requirements would remain unchanged. The Government will separately consider how UK Sustainability Reporting Standards should be incorporated into the Companies Act framework. The consultation closes on November 30, 2026.

For more information, view our briefings on the key proposals and next steps, and the future direction of sustainability reporting.

US

US Courts Reject Climate-Related Claims and State Climate Liability Measures

On September 22, the U.S. District Court for the Western District of Michigan dismissed with prejudice Michigan’s claim that BP, Chevron, Exxon Mobil, Shell, and the American Petroleum Institute coordinated in an effort to suppress competition from renewable energy and electric vehicles. The court concluded that Michigan lacked antitrust standing. On September 23, the U.S. District Court for the Southern District of New York granted summary judgment to the United States and EPA and permanently enjoined enforcement of New York’s Climate Change Superfund Act, ruling that it was pre-empted by the Clean Air Act and invalid under the federal foreign-affairs doctrine. This decision follows a similar one issued by the U.S. District Court for the Northern District of New York on August 31, 2026.

EPA Finalizes Repeal of 2024 Power Plant GHG Standards

On September 14, the Environmental Protection Agency (EPA) finalized the repeal of the majority of the 2024 Carbon Pollution Standards for fossil fuel-fired power plants. The EPA also proposed rescinding all remaining greenhouse gas emissions standards for power plants under Clean Air Act Section 111. The supplemental proposal argues that the EPA lacks statutory authority to regulate power plant emissions for climate change purposes. This follows the EPA's February 2026 rescission of the greenhouse gas endangerment finding. A 60-day public comment period will apply to the additional proposal.

California Issues Guidance for First SB 253 GHG Reporting Cycle

On September 1, the California Air Resources Board (CARB) published guidance for the first reporting cycle under SB 253, requiring in-scope entities to report Scope 1 and Scope 2 greenhouse gas emissions. Reports must be submitted by November 10, 2026 for the prior fiscal year. CARB will exercise enforcement discretion, accepting reports based on data that entities were already planning to collect as of December 2024. Entities that were not collecting data at that time may submit a statement of non-reporting. A voluntary intake platform has been developed to streamline submissions and fee invoicing. The ruling follows a similar decision by the U.S. District Court for the Northern District of New York on August 31, 2026, which also concluded that New York's Climate Change Superfund Act could not be enforced.

Co-authored by Nathan Handoll (ESG Researcher in Knowledge).

Further reading and listening

The Race for Power - Meeting the global energy demands of AI data centres

EU Sustainability Omnibus Package: key changes and implications for businesses

Germany: regulator publishes draft determination for electricity grid charges from 2029 (AgNes)

Hong Kong: PCPD issues further guidance on best practices in the use of agentic AI

EU Cyber Resilience Act: Single Reporting Platform Goes Live

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