30 Jan, 2026
January 2026 — Hong Kong sustainable finance taxonomy, China climate disclosure standard and EU guidelines on sustainability in stress testing
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 Dec. 3, 2025, to Jan. 22, 2026, we look at the publication of Hong Kong’s updated sustainable finance taxonomy, China’s climate disclosure standard, EU financial regulators’ guidelines on sustainability stress testing, and more.
EUROPE
UK regulator updates guidance for banks and insurers on managing climate risks
The Bank of England's Prudential Regulation Authority (PRA) on Dec. 3, 2025, issued its supervisory expectations for banks and insurers regarding their management of climate-related risks. The publication updates a first set of expectations released in 2019 and describes how physical and transition risks affect banks and insurers. The expectations are designed to help firms build resilience against climate-related risks. The updated expectations place greater emphasis on the use of scenario analysis to inform business decisions and manage risk. They also ask that a firm’s management provide its board with relevant information on climate-related risks and that board members understand the impacts of climate risks on a bank’s or insurer’s business model. The supervisory statement also details how the PRA expects banks and insurers to manage climate-related data and disclosures.
European Commission proposes revised emission standards for cars and vans
The European Commission on Dec. 16, 2025, proposed revising its carbon emission standards for news cars and vans requiring automotive manufacturers to meet a 90% tailpipe emissions reduction target by 2035, instead of the 100% target set previously. Manufacturers would have to compensate for the remaining 10% of emissions by using EU-produced low-carbon steel, or from e-fuels and biofuel, the Commission said. It also reduced the emission target for vans to 40% from 50% previously, citing challenges in the uptake of electric vans. The Commission also said automotive manufacturers will be able to benefit from credits for EU-manufactured small affordable electric cars before 2035 to encourage the rollout of more small EV models on the market.
European Commission publishes draft regulation on plastic waste
The European Commission on Dec. 23, 2025, published draft regulation that would establish a harmonized set of EU-wide end-of-waste criteria for plastic waste. The regulation seeks to clarify when obligations from current waste legislation cease to apply to plastic waste. It would provide businesses with clear rules on when plastic waste ceases to be waste and are considered raw materials again, the Commission said. It would also reduce administrative burdens for economic operators in the waste sector and make it easier to trade and use recycled plastics across borders, the Commission noted. The establishment of common quality criteria would allow producers to use them in more products and encourage new investments in the recycling sector, the Commission said. The regulation would apply from July 1, 2026, and would be applicable in all EU member states.
EU supervisory bodies publish guidelines on sustainability in stress testing
Three European supervisory bodies on Jan. 8, 2026, published guidelines setting out how national banking and insurance regulators should integrate environmental, social and governance (ESG) risks into financial stress tests for the banking and insurance sectors. The guidelines, issued by the European Securities and Markets Authority, the European Banking Authority and the European Insurance and Occupational Pensions Authority, create common standards for developing sustainability-related stress testing standards throughout the EU’s financial system and harmonize methodologies used by banking and insurance supervisors. The guidelines will apply from Jan. 1, 2027. Initially, national regulators may focus on climate and environmental risks, including both physical and transition risks in stress tests, but may extend them to address social and governance factors if they have the right tools to assess them. Under the guidelines, national regulators are encouraged to adopt a risk-based approach, starting with a materiality assessment, where they should identify the ESG risks that are most material to financial institutions’ business models, policies, geographic exposure and sectoral activities.
EU rules on monitoring forever chemicals in drinking water come into effect
New EU rules on monitoring forever chemicals in drinking water came into effect Jan. 12, 2026, requiring EU member states to monitor the levels of per- and polyfluoroalkyl substances (PFAS), known as forever chemicals, in drinking water, the European Commission announced. The new rules are designed to ensure member states meet the EU’s updated directive on the quality of drinking water. Governments will have to inform the Commission of the results, including data on whether limit values have been exceeded, on exemptions granted and on any incidents. If limit values are exceeded, EU countries will have to reduce PFAS levels and inform the public, the Commission said. Measures taken may include closing contaminated wells, adding treatment steps to remove PFAS, or restricting the use of drinking water supplies for as long as the limit values are exceeded.
EU regulator publishes guidance on sustainability-related claims
The European Securities and Markets Authority (ESMA) on Jan. 14, 2026, published guidance to provide clarity for market participants on how they should describe ESG integration and exclusions in marketing communications to retail clients. The regulator set out four principles for market participants to follow in order to avoid greenwashing, or making an investment product sound more sustainable than it actually is. ESMA said sustainability claims should “fairly and accurately” represent the entity’s sustainability profile and its financial products; they should be based on information that is easy to access; they should be substantiated with “clear and credible reasoning,” facts and processes; and they should be based on up-to-date information with any material changes disclosed in a timely manner.
ASIA-PACIFIC
Fiji launches green finance taxonomy
Fiji launched a green finance taxonomy designed to steer investments that meet the country’s climate and development priorities, the Reserve Bank of Fiji said Dec. 11, 2025. The taxonomy aims to define and label investments that qualify as “green” or “sustainable” in Fiji. It will also drive private capital by encouraging innovative financial products and enhance transparency by setting clear disclosure criteria, the Reserve Bank said. It will also support measurement and reporting through its integration with Fiji’s Measurement, Reporting and Verification system, which tracks the country’s greenhouse gas emissions mitigation efforts, according to the Reserve Bank. The taxonomy will initially prioritize climate change mitigation, focusing on the energy and transport sectors, which the Reserve Bank said are “key contributors” to Fiji’s carbon emissions. Economic activities will be assessed against technical screening criteria and social safeguards to ensure they substantially contribute to climate objectives while doing no significant harm to other environmental goals, the Reserve Bank said.
China issues ISSB-based climate disclosure standards
The Chinese Ministry of Finance on Dec. 25, 2025, published its climate-related disclosure standards based on IFRS S2, the climate disclosure standard developed by the International Sustainability Standard Board (ISSB). The standard will initially be voluntary, and its scope and implementation timeline will be determined at a later date. Like the ISSB standards, it is based on four pillars of disclosure: governance, strategy, risk management, and metrics and targets. China is developing sets of standards aligned with IFRS S1 and IFRS S2 and plans to establish a nationwide framework by 2030. It is also seeking to incorporate some adaptations for the Chinese market, including using national methods to measure carbon emissions.
Philippines regulator adopts sustainability reporting standards
The Philippines Securities and Exchange Commission on Dec. 29, 2025, adopted two Philippine Financial Reporting Standards (PFRS) on Sustainability Disclosures aligned with global reporting standards established by the ISSB. PFRS S1 pertains to disclosures on sustainability-related risks and opportunities, while PFRS S2 relates to climate-related disclosures. Listed companies will be required to submit their sustainability reports at the same time as their annual reports. The standards will be phased in between 2027 and 2029 depending on company size. Companies with a market capitalization of more than 50 billion Philippine pesos will be required to start reporting in 2027. Companies with a market capitalization of more than 3 billion Philippine pesos and up to 50 billion Philippine pesos will be required to start reporting in 2028. Companies with a market capitalization of 3 billion Philippine pesos or less and large non-listed firms with annual revenue of more than 15 billion Philippine pesos are required to start reporting in 2029.
Hong Kong financial regulator publishes updated sustainable finance taxonomy
The Hong Kong Monetary Authority on Jan. 22, 2025, published an updated version of its sustainable finance taxonomy to include the manufacturing and information, communications and technology sectors. The taxonomy also broadens the scope of the energy and transportation sectors by incorporating new green and transition activities, including the transmission and distribution of renewable and low-carbon gases and low-carbon transport infrastructure. The taxonomy also incorporates climate change adaptation as a core objective, reflecting the need to manage physical climate risks and build resilience across sectors, the regulator said. Climate mitigation, the primary focus of Hong Kong’s initial taxonomy, will continue to be a priority. The taxonomy will continue to expand and will incorporate a larger range of sectors, activities, transition elements and environmental objectives over time, the regulator said.
UNITED STATES AND CANADA
Canada to finalize first set of investment guidelines for sustainable taxonomy in 2026
Canada on Dec. 18, 2025, announced it expects to finalize investment guidelines for three sectors by end-2026 to establish Canada’s sustainable finance taxonomy. It aims to add guidelines for three additional sectors by fall 2027. The voluntary guidelines will identify investments related to the energy transition. The Canadian Climate Institute is developing the guidelines and will work with the investor-led initiative Business Future Pathways to establish a governance structure that will oversee the development of the taxonomy’s criteria. A new independent Taxonomy Council will be created to approve the guidelines. The council will collaborate with government, industry and other key stakeholders to decide which sectors would benefit most from taxonomy guidance in delivering emissions reductions and developing a low-carbon economy.
US to withdraw from international climate treaty
US President Donald Trump on Jan. 7, 2026, issued an executive order withdrawing the US from 66 international organizations, including the United Nations Framework Convention on Climate Change (UNFCCC), the global climate treaty that organizes international efforts to reduce greenhouse gas emissions. Under international rules, the withdrawal from the UNFCCC would take effect one year after formal notification. The US is the only country ever to have moved to exit the convention. The US would no longer take part in the UNFCCC climate negotiations, including annual Conference of the Parties gatherings such as COP30, limiting the US’ ability to shape emerging global norms and frameworks. However, the legal path for the US to leave the UNFCCC is uncertain given that the treaty was ratified by the US Senate. The order also directs federal agencies to depart the Intergovernmental Panel on Climate Change (IPCC), the UN scientific body that produces global assessments on climate change, as well as the International Energy Forum, the International Renewable Energy Agency, and the International Solar Alliance.
MIDDLE EAST AND AFRICA
Nigeria publishes draft roadmap for adoption of global disclosure standards
Nigeria's Financial Reporting Council on Jan. 8, 2026, issued an amended roadmap for the adoption of the ISSB’s standards and the country’s sustainability reporting guidelines. Under the roadmap, companies can apply the standards on a voluntary basis until 2027. From 2028, banks, insurers and publicly traded companies would be required to report according to the standards and the guidelines. Small and medium-sized enterprises would be required to report from 2030. Government and governmental organizations would be required to report from 2028. Companies would have to report using limited assurance in the fourth and fifth years of reporting. In the sixth year of reporting, they would be required to use reasonable assurance.
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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