09 March, 2026
February 2026 — UK climate disclosure rules, Australia’s sustainable investment labelling regime, EU sustainability reporting revisions
Regulation is shaping the sustainability agenda and changing the way companies do business in different jurisdictions, but keeping pace with constant regulatory updates has become a mammoth task for businesses and investors. In this recurring series, S&P Global Energy Horizons presents key developments to sustainability regulations and standards from around the world.
In this month's update covering Jan. 22 to Feb. 20, we look at the UK’s proposed climate disclosure rules, Australia’s plan to introduce new rules for sustainable investment labels and EU supervisory bodies’ opinions on proposed revisions to EU sustainability reporting standards.
INTERNATIONAL
Global public sector accounting board publishes climate disclosure standard
The International Public Sector Accounting Standards Board (IPSASB) on Jan. 29 issued its first climate-related disclosure standard for public sector entities to report on their climate risks and opportunities. The standard, named IPSASB SRS 1, is aligned with the International Sustainability Standards Board’s (ISSB) climate standard, known as IFRS S2, and requires public sector entities to disclose on their climate governance, strategy, risk management and metrics and targets. The standard also requires entities to disclose material information about climate-related risks and opportunities. The standard is effective for annual reporting periods as of Jan. 1, 2028. Entities will not be required to disclose Scope 3 emissions, which cover an entity’s upstream and downstream emissions, for the first three annual reporting periods.
EUROPE
UK financial regulator to align climate disclosures with ISSB
The UK Financial Conduct Authority (FCA) on Jan. 30 proposed replacing its current rules for listed companies’ climate disclosures to bring them in line with international standards. The proposed rules would align sustainability reporting to the UK Sustainability Reporting Standards — UK SRS S1 and UK SRS S2 — which are based on the ISSB’s two disclosure standards, IFRS S1 and IFRS S2. Current UK rules are aligned with the Task Force on Climate-related Financial Disclosures (TCFD), and the ISSB took over monitoring of the TCFD’s climate disclosures in 2023. Under the FCA’s proposals, companies in scope would be required to report on a mandatory basis according to UK SRS S2, the UK’s climate disclosure standard. Reporting of Scope 3 emissions would not be mandatory, and companies would be allowed to report on a “comply or explain” basis, the regulator said. Wider sustainability disclosures under UK SRS S1 would also be on a “comply or explain” basis given that reporting on non-climate disclosures may be challenging for many listed companies, the regulator said. A public consultation is open until March 20. The FCA said the rules would come into force on Jan. 1, 2027.
European Commission adopts new rules to reduce textile waste
The European Commission on Feb. 9 adopted new rules under its Ecodesign for Sustainable Products Regulation (ESPR) designed to stop companies destroying unsold apparel, clothing, accessories and footwear, as part of its efforts to promote a circular economy and reduce waste. The rules will require companies to disclose information on the unsold consumer products they discard as waste. They also ban the destruction of unsold apparel, clothing accessories and footwear at large companies from July 19. Medium-sized companies will be subject to the ban from 2030. The Commission adopted a Delegated Act — a non-legislative act that amends non-essential parts of legislation — that outlines exemptions for destroying unsold goods, such as for safety reasons or product damage, and national authorities will oversee compliance. The Commission also introduced a standardized format for businesses to disclose the amount of unsold consumer goods they discard, applicable from February 2027.
European Commission opens call for evidence on forced labor product ban
The European Commission on Feb. 6 opened a call for evidence on proposed guidelines for implementing the EU’s Forced Labor Regulation, which prohibits the sale of products made with forced labor on the EU market. The regulation entered into force on Dec. 13, 2024, and will apply from Dec. 14, 2027. It requires the Commission to publish implementation guidelines by June 14, 2026. The guidelines include information on how the relevant authorities should calculate fines for businesses who do not comply with the forced labor ban; how businesses can conduct due diligence in relation to forced labor; and how civil society organizations, victims and other stakeholders can submit information on potential violations of the ban. The Commission is seeking information about the information authorities should consider during an investigation; the documentation businesses should provide during the first phase of an investigation; the best practices for conducting forced labor due diligence; and what training businesses need to comply with the regulation. The call for evidence is open until March 6.
EU lawmakers vote in favor of amending EU climate law
The European Parliament on Feb. 10 voted in favor of amending the EU’s climate law, setting a target of a 90% reduction in net greenhouse gas (GHG) emissions in 2040 compared to 1990 levels. The vote follows proposals from the European Commission published in July 2025. As of 2036, The revised law permits the use of international carbon credits under Article 6 of the Paris Agreement equal to five percentage points of the EU’s 1990 net emissions. The Commission had initially proposed three percentage points. The revisions also allow the use of domestic permanent removals in the EU Emissions Trading System to compensate for residual emissions from hard-to-abate sectors. The Commission will assess progress toward the target every two years and may propose amendments to the 2040 target if necessary to ensure the “EU’s competitiveness, prosperity, and social unity,” Parliament said in a statement. Once the law is approved by EU government ministers, it will enter into force 20 days after publication in the EU Official Journal.
EU supervisory bodies publish opinion on sustainability reporting standard revisions
Three European supervisory bodies on Feb. 16 and 17 published their opinions of revisions to the European Sustainability Reporting Standards (ESRS) following the European Commission’s drive to simplify sustainability reporting in the EU. The European Securities and Markets Authority (ESMA), the European Banking Authority (EBA) and the European Insurance and Occupational Pensions Authority (EIOPA), wrote that they are generally supportive of the revisions but expressed concern about the proposals’ introduction of permanent reliefs for reporting data in some cases. The regulators advised a three-year time limit rather than permanent relief for data that would require “undue costs or efforts” to collect for companies’ own operations. EIOPA said the current proposals would allow companies to forgo reporting if the costs or efforts to disclose the data are considered “undue.” A time limit would bring the ESRS into line with the ISSB’s standards and encourage companies to improve reporting over time and develop better data collection, the regulator said. The EBA also said the waivers set out in the revisions “may significantly reduce the amount of quantitative information” companies report, shifting the burden to users of such information, including banks. ESMA also advised refining requirements on transition plans.
UNITED STATES AND CANADA
Canada repeals regulations on sales targets for EVs, tightens emission standards
Canada will set stronger GHG standards for vehicles that would help Canada achieve a goal of 75% EV sales by 2035 and 90% EV sales by 2040, Prime Minister Mark Carney’s office said in a statement. Doing so will allow it to repeal its Electric Vehicle Availability Standard and allow manufacturers to use different technologies to meet the standards and respond to consumer preferences in the near-term, while driving EV adoption over time, Carney’s office wrote. Tougher emission standards for cars manufactured between 2027 to 2032 will be introduced to drive emission reductions and increase the number of zero-emission vehicles on the road, the government said. It also announced a series of economic measures to encourage Canadians to purchase more electric vehicles.
New York Senate approves carbon emissions disclosure bill
The New York Senate on Feb. 10 approved a bill that would require companies with annual revenues of more than $1 billion operating in the state to disclose their carbon emissions on an annual basis. The draft law mandates the New York State Department of Environmental Conservation to adopt regulations that would require applicable companies to disclose Scope 1 and Scope 2 emissions, which are from direct operations and purchased energy, as of 2028. They would be required to disclose Scope 3 emissions from 2029. Companies would also have to provide third-party assurance. The draft legislation is similar to California’s SB-253 Climate Corporate Data Accountability Act, which requires large companies doing business in the state to report Scope 1 and Scope 2 emissions from Aug. 26, 2026, and Scope 3 emissions from 2027. The New York draft legislation still requires approval by the State Assembly and the governor before it can become law.
US EPA revokes greenhouse gas endangerment finding
The US Environmental Protection Agency on Feb. 12 revoked the 2009 greenhouse gas endangerment finding, which underpins the US government’s efforts to curb emissions and reduce the impacts of climate change. The decision repeals existing GHG reduction mandates for the US energy sector, car manufacturers and oil producers. The agency also announced a final related rule rescinding all GHG reduction mandates for vehicles. It said the 2009 ruling exceeds its authority, adding that such a policy decision lies “solely” with Congress. S&P Global Energy reported that ending the endangerment finding could create legal risks for energy and industrial sectors.
US SEC proposes cutting investment fund Names Rule reporting
The US Securities and Exchange Commission on Feb. 19 proposed eliminating the need for companies to report under the Names Rule for investment funds, which requires that 80% of a fund’s assets are invested consistently with the fund’s name. The Names Rule was updated in 2023 to include words such as “sustainable” or “socially responsible” amid allegations of greenwashing against some investment firms that include environmental, social and governance (ESG) terms in the names of their funds, even if those funds are not consistent with that label. The SEC said it could continue to assess compliance with the Rule by analyzing a fund’s disclosure about the terms used in its name, including the criteria the fund uses to select the investments that the term describes, combined with portfolio holdings.
ASIA-PACIFIC
South Korea revises rules on executive compensation disclosures
South Korea’s Financial Services Commission on Jan. 28 announced revised rules on the disclosure of executive compensation by listed companies in a move to improve transparency. The revised rules will require companies to disclose shareholder returns and operating profits over the last three years, alongside total executive compensation. They will also have to disclose whether the compensation comes from salary, bonus, stock option, stock-based compensation other than stock option or retirement income, and justify the decision. Companies will also be required to disclose all stock-based compensation and the cash value of unfulfilled stock-based compensation. The rules will come into effect from May 2026.
Indonesian securities regulator holds consultation on sustainability-related reporting
Indonesia’s Financial Services Authority on Feb. 10 launched a consultation on mandatory sustainability-related reporting for financial institutions, issuers and public companies based on the country’s sustainability disclosure standards. The regulator is proposing companies in scope publish a sustainability report in line with the standards PSPK 1 and PSPK 2, which become effective on Jan. 1, 2027, and are aligned with the ISSB’s standards. The publication of sustainability reports would be phased in between reporting years 2027 and 2029 depending on the size of the entity, the regulator said. The request for comment is open until March 13.
Australia proposes labelling rules for sustainable investment products
The Australian government on Feb. 13 proposed a new labelling regime for sustainable investment products that is designed to protect retail investors . Under the proposals, an investment product marketed as sustainable should reflect sustainable objectives in its investment portfolio, the Australian Treasury said in a consultation document. It also proposes requiring consumer-facing disclosures to explain the sustainable characteristics of a specific investment or financial product . The proposals suggest requiring issuers to provide a standard description of the fund’s sustainability approach according to a template or requiring issuers to ensure consumers understand a product’s sustainability features without a fixed format. The government is targeting a deadline of 2027 for the start of the regime, subject to final policy decisions. The consultation is open until March 13.
This piece was published by S&P Global Sustainable1 and not by S&P Global Ratings, which is a separately managed division of S&P Global.
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