[co-author: Teofisto Consistente VI]
This month's ESG Regulatory Monthly Round-Up sets out updates from the UK, EU and elsewhere across the globe for January 2026.
In the UK, the Financial Conduct Authority (“FCA”) has published a consultation paper proposing amendments to the UK Sustainability Reporting Standards (“UK SRS”), the Competition Markets Authority has opined on green claims across supply chains and the government has published a national security assessment of global biodiversity loss, ecosystem collapse and national security.
In the EU, the European Central Bank (“ECB”) has amended its monetary policy implementation guidelines to enshrine a new climate factor and the European Commission is consulting on proposed acts relating to the supervision of, and enforcement against, ESG ratings providers.
Internationally, China has finalised its first national climate disclosure standard (which is based on the International Sustainability Standards Board (“ISSB”) standards) and the Agreement on Biodiversity Beyond National Jurisdiction (“BBNJ”), also known as the High Seas Treaty) has now entered into force.
In this issue:
Chapter 1: UK developments
Chapter 2: EU Developments
Chapter 3: International developments
Chapter 1: UK Developments
There have been various developments and consultations in the UK including the FCA’s consultation on the UK SRS, DBT response to its consultation on sustainability reporting assurance and new guidance from the UK CMA on green claims.
- FCA consultation on UK SRS for listed companies
On 30 January 2026, the FCA published a consultation paper (CP 26/5) on replacing its current rules for listed companies’ climate disclosures to align them with ISSB standards.
The FCA proposes that in-scope UK listed companies move to mandatory reporting against the UK SRS S2 (climate-related disclosures) – which many companies already do – but do not go as far as proposing mandatory disclosure of Scope 3 emissions data given feedback from issuers about the difficulties in collecting emissions data from third parties. Both Scope 3 emissions disclosure and UK SRS S1 would be on a ‘comply or explain’ basis.
Read more about the content and timeline here. The deadline for responses is 20 March 2026.
- DBT response to consultation on voluntary sustainability assurance regime
On 30 January 2026, the Department for Business and Trade (“DBT”) published a response to its consultation on creating a voluntary oversight regime and register for entities offering third-party assurance services for sustainability-related disclosures which would be operated by the financial reporting regulator under the Companies Act.
Given the overall positive feedback, the government will progress as envisaged in the consultation, legislating to formalise arrangements. The Financial Reporting Council (“FRC”) will be responsible for implementation and will establish an interim regime with a public (voluntary opt-in) register by mid-2026.
- TFC publishes UK roadmap to scale Long-Duration Energy Storage
On 27 January 2026, the Transition Finance Council (“TFC”) published a UK roadmap to scaling Long-Duration Energy Storage (“LDES”). This recognises the importance of LDES for the delivery of secure and reliable energy.
- UK CMA publishes guidance “Making green claims: Getting it right, across the supply chain”
On 22 January 2026, the Competition & Markets Authority (“CMA”) published guidance “Making green claims: Getting it right, across the supply chain” which is to be read alongside the Green Claims Code.
It gives businesses additional clarity about where the responsibility for making environmental claims lies for different businesses across the supply chain.
- UK Government publishes a national security assessment of global biodiversity loss, ecosystem collapse and national security
On 20 January 2026, the UK Government published a strategic assessment exploring how global biodiversity loss and the collapse of critical ecosystems could affect the UK’s resilience, security and prosperity.
It shows how environmental degradation can disrupt food, water, health and supply chains, and trigger wider geopolitical instability. It identifies six ecosystems of strategic importance for the UK and explores how their decline could drive cascading global impacts.
This assessment, which was developed by analysts and experts across the UK Government, supports long-term resilience planning.
Chapter 2: EU Developments
With the final agreement on the terms of the Omnibus I agreed last month, we have moved all Omnibus I news back to this section. We have seen publication of ESMA’s new sustainable finance regulatory timeline and the delegated acts supporting the EU Taxonomy and ESG ratings activities regulation being published.
- ESMA published its updated Sustainable Finance regulatory timeline
On 27 January 2026, The European Securities and Markets Authority (“ESMA”) published its updated Sustainable Finance Regulatory timeline.
Updates include mention of the “Quick Fix” Delegated Act applying to the Corporate Sustainability Reporting Directive (“CSRD”) and updating the timing of the SFDR Level 1 review to Q4 2025 as well as updates to reflect the new requirements under the Omnibus I simplification package.
- ECB announces amendments to monetary policy including introducing a new climate factor
On 27 January 2026, the ECB amended its monetary policy implementation guidelines. The ECB press release explains that the climate factor is being introduced to “protect the Eurosystem against potential declines in the value of collateral in the event of adverse climate-related transition shocks”.
The climate factor will apply to corporate bonds “which could reduce the value assigned to eligible assets pledged as collateral”, depending on the extent to which an asset can be impacted by climate-related uncertainties.
This measure was announced on 29 July 2025 and has effect from 15 June 2026.
- Notice on the application of the sustainable finance framework and CSDDD to defence sector published in the Official Journal
On 14 January 2026, the Commission’s Notice on the application of the sustainable finance framework and the Corporate Sustainability Due Diligence Directive (“CSDDD”) to defence sector was published in the Official Journal. Read our briefing here for more detail.
- European Commission opens consultation on delegated regulations for ESG ratings providers
On 20 January 2026, the Commission published two consultations on proposed acts to supplement the Regulation on ESG rating activities with regard to:
The feedback period is open until 13 February 2026. The delegated acts are expected to be adopted in Q1 2026 and they will enter into force 20 days after publication in the Official Journal.
e. ESMA publishes “Thematic notes on clear, fair & not misleading sustainability-related claims”
On 14 January 2026, the European Securities and Markets Authority (“ESMA”) published a second “Thematic notes on clear, fair & not misleading sustainability-related claims” concentrating on “ESG integration and ESG exclusions, as references to these strategies are often made by market participants and widely referenced in marketing communications directed to retail investors”.
ESMA states that “ESG integration and ESG exclusions can mean different things to different market participants”. A lack of transparency when using these terms poses greenwashing risks to investors. The aim of ESMA’s note is to call on market participants to be clear about what they mean when referencing the “ESG integration and ESG exclusions”.
f. EU Taxonomy Delegated Regulation published in Official Journal
On 8 January 2026, the Taxonomy Delegated Regulation which amends the EU Taxonomy delegated regulations by simplifying certain technical screening criteria for determining whether economic activities cause no significant harm to environmental objectives (i.e. simplifying the Do No Significant Harm test) was published in the Official Journal.
It applies from 1 January 2026 and shall enter into force on the twentieth day following publication.
g. Joint Committee of the European Supervisory Authorities publishes Final Report in relation to ESG stress testing
On 8 January 2026, the Joint European Supervisory Authorities (European Banking Authority, EIOPA and ESMA) published a Final Report setting out guidelines for consistent “integration of ESG risks into their national supervisory stress testing activities”.
The guidelines are addressed to competent authorities and competent authorities must notify whether they will comply or intend to comply with the Guidelines by two months after the publication of the translated Guidelines. The guidelines apply from 1 January 2027.
Chapter 3: International developments
This month, our updates cover a truly global range from Mexico’s new circular economy laws to China introducing its new climate reporting rules. We also cover an international development to protect the high seas.
- China finalises its climate disclosure standard
In January 2026, China’s Ministry of Finance finalised its first national climate disclosure standard which ties corporate reporting requirements to ISSB standards. The rules are voluntary and disclosers will be required to apply a double materiality test when considering risk and opportunities. This differs from the UK integration of the ISSB standards which incorporates single financial materiality only.
- Mexico enacts Circular Economy Law: Extended Producer Responsibility and Product Design, guiding principles
On 19 January 2026, Mexico published the Decree enacting the General Law on Circular Economy (“LGEC”) and amending the General Law of Ecological Balance and Environmental Protection (“LGEEPA”) and the General Law for the Prevention and Integral Management of Waste (“LGPGIR”).
This reform establishes, for the first time, a nationwide and binding legal framework for circular economy, shifting environmental regulation beyond waste management and into the design, production, and use of products and materials.
The new regime introduces Extended Producer Responsibility (“EPR”) as a central policy instrument, to be implemented gradually by sector or product category, and expressly requires productive sectors to develop products under circular design criteria, when environmentally, technically, and economically feasible. Read more here.
- Singapore Sustainable Finance
In January 2026, the Singapore Sustainable Finance Association (“SSFA”) launched its Singapore-Asia Taxonomy FAQ Repository (“SAT”).
It serves as a one-stop resource to support financial institutions, corporates and ecosystem enablers in understanding and adopting the SAT. This platform offers practical guidance, responses to common questions and supporting materials to promote consistent and credible application of the SAT.
- Agreement on Biodiversity Beyond National Jurisdiction (aka the High Seas Treaty) enters into force
On 17 January 2026, the Agreement on Biodiversity Beyond National Jurisdiction (“BBNJ”) entered into force. The BBNJ is an international treaty which has so far been ratified by 81 Parties, including the EU and 16 of its Member States, and signed by 145 countries. (In the UK, the bill is in its final stages of passing through the parliamentary system.)
The BBNJ is intended to make it possible to establish marine protected areas (“MPAs”) in the high seas, regulate the exploitation of marine genetic resources, assess the environmental impact of current and future human activities and support developing countries through capacity-building and marine technology transfer programmes.
The first COP is expected to take place within a year.
- United States withdraws from many international entities
On 7 January 2026, it was announced that the US is withdrawing from 35 non-UN groups and 31 UN entities, including the UN Framework Convention on Climate Change and UN Women.
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