4 June 2026
May 2026 – ISSB nature disclosures, EU deforestation rule amendments, Australia to streamline sustainability reporting
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 April 21 to May 21, we look at the International Sustainability Standards Board’s planned proposal on nature-related disclosures, the European Commission’s proposals to amend the EU’s deforestation regulation and plans by the Australian government to streamline sustainability reporting.
INTERNATIONAL
ISSB plans to propose non-mandatory nature-related disclosures
The International Sustainability Standards Board (ISSB) on April 22 announced it will propose requirements for nature-related disclosures in the form of an IFRS Practice Statement, which is non-mandatory by design. The nature disclosures would complement the ISSB’s two existing standards, which already require companies to provide material information on nature-related risks and opportunities, the ISSB said. The guidance would explain how companies could disclose nature-related information in accordance with the existing standards, it said. The ISSB plans to draw on the work of the Taskforce on Nature-related Financial Disclosures (TNFD). The TNFD said in November 2025 it will complete all its current technical work, including the development of additional sector guidance, by the third quarter of 2026.
EUROPE
European Commission proposes amendments to deforestation rule
The European Commission on May 4 proposed amendments to the EU Deforestation Regulation (EUDR), which aims to ensure that key goods placed on the EU market will not contribute to deforestation and forest degradation. The draft amendments would add certain downstream products, including soluble coffee and some palm oil derivatives, to the regulation. They would also exclude certain products including leather or retreaded tires, some packing materials, used and second-hand products, and waste. The Commission also published a report to the European Parliament and Council of the EU on its measures to simplify the EUDR since its entry into force in June 2023. It said the measures would reduce annual compliance costs for companies in scope of the regulation by about 75% compared to the initial compliance costs.
European Commission publishes draft revisions to EU sustainability standards
The European Commission on May 6 published draft revisions to the European Sustainability Reporting Standards (ESRS), which are used by companies subject to the EU’s Corporate Sustainability Reporting Directive (CSRD). The Commission decided to amend the ESRS following its decision to simplify its sustainability reporting framework. The revisions would reduce mandatory datapoints by over 60% and total datapoints by over 70%, according to the Commission. It also said the amended standards would be shorter and clearer, allow more flexibility for companies, and simplify the materiality assessment used to determine what information companies need to report. The Commission also published a draft voluntary standard for companies that are not required to report under the CSRD.
EU securities regulator outlines supervisory approach to sustainability reporting
The European Securities and Markets Authority (ESMA) on May 6 issued guidance for EU national regulators and supervisors about how sustainability under the Markets in Financial Instruments Directive II (MiFID II), an EU regulation that aims to protect investors. In a supervisory statement, ESMA said it encouraged national authorities to take a “proportionate supervisory approach” prioritizing dialogue rather than enforcement with companies as they adopt the regulation. It also set out supervisory expectations on collection and treatment of clients’ sustainability preferences; the categorization and matching of products to those preferences; the application of the portfolio approach; and the target market assessment of products. The statement follows ESMA’s assessment on companies’ progress in applying the sustainability aspects of the regulation. Companies have continued to make progress in integrating the MiFID II sustainability requirements into their suitability and product governance processes, but progress is uneven depending on the company and jurisdictions, and improvements are necessary in several areas, the regulator said.
European Central Bank updates good practices for climate and nature reporting
The European Central Bank (ECB), which supervises large banks in the eurozone, on May 8 published updated good practices for banks when integrating climate and nature risks into their strategy, governance, and risk management. The practices draw on approaches used by more than 60 different institutions to address gaps in the management of physical risks, prudential transition planning, scenario analysis and nature related risks. The ECB said it had updated some of its original good practices with additional information on topics such as prudential transition planning, transition products, target-setting and credit loss calculations and impairments. It also said it had expanded its good practices to include nature-related risks as banks’ management of nature risks remains underdeveloped. The recommendations are not legally binding and do not set supervisory expectations or standards, the ECB said.
UNITED STATES AND CANADA
US SEC moves to rescind climate disclosure rules
The US Securities and Exchange Commission (SEC) on May 4 submitted a proposal to the Office of Information and Regulatory Affairs to rescind the SEC’s climate disclosure rules published in March 2024. The SEC said in March 2025 that it was stepping back from defending its climate disclosure rules amid ongoing litigation against the rules. A court in September 2025 put cases against the rule on hold, stating that it is the SEC's responsibility to determine whether the initial rules will be rescinded, repealed, modified or defended in litigation.
California regulator releases concept of carbon capture and storage regulation
The California Air Resources Board (CARB) on May 7 published a draft of potential regulations that would establish a Carbon Capture, Utilization, Removal and Storage Program in the state. California in 2022 adopted a law requiring CARB to develop the program to evaluate the efficacy and viability of carbon capture, utilization, or storage (CCUS) and carbon dioxide removal (CDR) technologies. CARB is seeking public feedback on its proposals, and a comment period is open until June 5. CARB is seeking feedback on the definitions of CCUS and CDR projects and the use of new technologies in developing both types of projects, including marine carbon dioxide removal, biomass or bio-oil storage. The proposals also include the creation of a publicly available online database where a developer would submit its project monitoring plans and compliance status.
ASIA-PACIFIC
Malaysia unveils national carbon market policy
Malaysia’s Ministry of Natural Resources and Environmental Sustainability on April 21 launched the country’s national carbon market policy, setting out the legal foundation for the country to meet its Nationally Determined Contributions (NDC), or emissions targets under the Paris Agreement on climate change. Under its NDC, Malaysia is aiming to reduce emissions by 15 to 30 million tonnes of CO2-equivalent by 2035 from its peak greenhouse gas emission level. The country expects to hit its peak emissions level between 2029 and 2034. The policy also seeks to create market-based mechanisms to accelerate the country’s decarbonization and improve the bankability of domestic carbon projects. It establishes the foundations for the high-integrity carbon market that will enable domestic project developers to access both domestic and international climate finance through carbon credit transactions. It also aims to align Malaysia’s carbon policies with domestic and international efforts to mitigate against the effects of climate change.
Cambodia launches sustainable finance taxonomy for banking sector
The National Bank of Cambodia on April 27 announced the launch of the country’s sustainable finance taxonomy, a classification system for sustainable economic activities, for the banking sector. The central bank said the taxonomy will focus initially on climate mitigation in the energy, transport and construction sectors and will support financial institutions in classifying green projects and activities. It also said that the taxonomy aims to improve transparency in the implementation of sustainable finance and to mitigate greenwashing. The taxonomy uses a traffic-light system to define eligible activities. Green activities are considered aligned, amber activities are transitional, and red is ineligible.
New Zealand regulator updates guidance on sustainability-related disclosures
New Zealand’s Financial Markets Authority on May 12 published updated guidance on sustainability-related reporting for entities subject to the country’s Financial Markets Conduct Act 2013. The guidance outlines how disclosure obligations apply when issuers promote sustainability‑related characteristics in their financial products and replaces previous guidelines published in 2020, the regulator said. It contains four principles on which issuers are expected to base their sustainability disclosures: claims need to be clear; claims need to be substantiated; messages need to be consistent; and third-party involvement needs to be effectively managed. The guidance sets out examples of good practices for issuers to help investors understand the underlying sustainability-related investing strategy of a financial product. The regulator also said issuers must ensure that the promotion of sustainability-related criteria of financial products includes all material information and does not mislead investors.
Australia proposes streamlining sustainability and climate reporting
The Australian government on May 12 proposed raising the thresholds for companies subject to sustainability-related reporting, as part of a move to streamline corporate reporting in the country. Under the proposals outlined in the country’s 2026/2027 budget, the thresholds for filing a sustainability report would be raised to A$100 million of consolidated annual revenue from A$50 million and to A$50 million of consolidated gross assets from A$25 million. The government also said it plans to consult on reforms to climate-related financial disclosures, with the aim of reducing burden for companies, while maintaining the main sustainability reporting requirements. The proposed reforms would seek to clarify how key concepts, like reporting without ”undue cost or effort",” apply in practice, ensure assurance requirements are proportionate and practical and establish greater clarity around information requests from suppliers, especially for smaller businesses.
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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