Financial Services Regulatory ESG updater

3 September – 3 October 2026

Introduction

ESG is changing the landscape for financial institutions as stakeholders, including investors, increasingly expect them to make their operations more sustainable.

Financial services regulators also view ESG as a priority, embedding the principles of climate-related financial risks into their supervisory frameworks and dealing with greenwashing issues.

There is limited uniformity in regulation as financial services regulators are at different stages in developing their ESG regulatory framework, particularly in relation to disclosures and taxonomy, which is a challenge for many institutions operating across borders. It is therefore critical to monitor the latest regulator updates.

To help you, we have tracked ESG regulatory developments from 3 September 2026 – 3 October 2026, from the UK, France, EU, the Netherlands, the US, Australia as well as other key international regulators.

This month’s highlights

ESG compliance for challenger banks: the issues they face

Many challenger banks have made sustainability central to their brand. That helps them win customers, but it also exposes them to a fast-growing body of ESG regulation that was largely designed for larger institutions.

Greenwashing is perhaps the biggest risk. In the UK, the FCA’s anti-greenwashing rule (in force since May 2024) requires sustainability claims to be fair, clear, not misleading and consistent with the product. EU supervisors are similarly focused on the issue. Broad claims about how customer deposits are used, such as statements that funds support only sustainable activities, may be hard to support when deposits and treasury assets sit with third parties.

Retail and SME borrowers rarely provide emissions data. Challengers also often rely on fintech partners for carbon-tracking tools and ESG data. That raises questions about how reliable the data is, whether outsourcing rules cover these providers, and who is liable if a partner’s methodology is flawed.

UK and EU supervisors expect climate risk to be built into governance, risk appetite and ICAAP, applied proportionately. Concentrated mortgage and SME lending creates exposure to physical risks such as flooding and to transition risks such as energy-efficiency rules for rented homes. Lean risk teams sometimes struggle to model these well.

ESG disclosure rules are changing on both sides of the Channel. The EU has narrowed the scope of its corporate sustainability reporting regime and is overhauling its sustainable finance disclosure rules.  The UK has published reporting standards based on the international (ISSB) standards. Fast-growing firms need to keep checking which rules apply to them.

In small firms, one senior manager under the Senior Managers and Certification Regime may hold climate responsibility alongside several other roles. Pressure to grow can also conflict with public ESG commitments. Under the Consumer Duty, green products must deliver fair value and features that customers can understand.

Couple of practical steps to consider:

• Keep an evidence file for every sustainability claim.
• Apply due diligence to ESG data providers.
• Build proportionate climate risk analysis into risk appetite and ICAAP.
• Monitor changes to UK and EU disclosure rules.
• Make senior management accountability for ESG explicit.

Challengers that build these foundations early will protect both their green credentials and the trust of their customers.

United Kingdom

30 September 2026- PS26/19: Aligning listed issuers’ sustainability disclosures with international standards

The Financial Conduct Authority (FCA) published Policy Statement 26/19: Aligning listed issuers’ sustainability disclosures with international standards (PS26/19).

Background

On 30 January 2026, the FCA published a consultation paper setting out proposals to evolve its rules in relation to listed companies’ sustainability disclosures (CP26/5). The deadline for comments on CP26/5 was 20 March 2026. In PS26/19 the FCA responds to the feedback it received to CP26/5 and sets out final rules to align listed issuers’ sustainability and climate disclosures with UK Sustainability Reporting Standards (UK SRS), the UK-endorsed version of the International Sustainability Standards Board (ISSB) Standards.

Changes

The FCA states that the changes it has made following the consultation in CP26/5 are not significant when compared to both the consultation proposals and the status quo for all categories of issuers in scope under the TCFD framework. However, in order to fully test its policy position, the FCA have updated the cost benefit analysis to reflect in detail how the policy changes in the final rules will impact costs and benefits.

The FCA reports in PS26/19 that it has simplified the regime in two ways by requiring:

• A comply or explain approach across all categories of disclosures. The comply or explain approach brings UK SRS S2 (climate disclosures) into line with the approach the FCA consulted on for UK SRS S1 (non-climate disclosures) and Scope 3 (emissions data). The FCA believes this will boost the quantity, quality and comparability of financially material information while balancing investor needs with market readiness and the maturity of reporting practices.
• International commercial companies with a secondary listing and depositary receipt issuers to also report against UK SRS on a comply or explain basis, in place of the consultation proposal to signpost any reporting requirements and disclosures under their home jurisdiction.

To help issuers apply the comply or explain rules, the FCA is also consulting on Technical Note (TN) 803.1, as well as updates to TN 801.4 and deletion of TN 802.3. The proposals are outlined within Primary Market Bulletin (PMB) 66. The deadline for comments on PMB 66 is 28 October 2026.

Next steps

The FCA is using the implementation timelines it consulted on. The rules will apply to accounting periods beginning on 1 January 2027, with first reporting in 2028. To support implementation, the FCA is providing a 1-year transitional relief for Scope 3 disclosures and a 2-year transitional relief for S1 disclosures. To support companies as they get ready to implement these new rules, the FCA have also published some practical considerations in PMB 66.

In addition, the FCA intends to organise a series of activities to help companies and investors understand the UK SRS and what is required under our rules. In particular, it is hosting a webinar on 19 October 2026 to explain its updated sustainability disclosure requirements for listed companies. It will also provide information about TN 803.1, which aims to support issuers implement the new regime.

European Union

10 and 16 September 2026 – MEPs vote for clearer, simpler sustainable finance disclosure rules

The European Parliament announced that the Economic and Monetary Affairs Committee (ECON) had reached a broad compromise on the proposal for a Regulation amending Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR), Regulation (EU) No 1286/2014 on key information documents for packaged retail and insurance-based investment products (PRIIPs) and repealing Commission Delegated Regulation (EU) 2022/1288.

The lead MEP Gerben-Jan Gerbrandy (Renew, NL), said: “We have reached a broad compromise, and I am very glad to have been able to facilitate this. The proposed SFDR reform exemplifies how simplification of legislation should work. The goal remains intact, but the means are far more effective for consumers and more efficient for businesses: more clarity on how sustainability can be claimed, and a lot less paperwork. With this goal in mind, the reforms made it possible to reach a broad majority. From now on, people who choose a sustainable financial product can be certain that their money is actually contributing to a greener economy.”

The text was adopted with 37 to 9 and 4 abstentions. The negotiating mandate will be announced at the start of the October plenary session. The final legislation will have to be negotiated with the Council before coming into force.

ECON subsequently published its report on the proposal.

22 September 2026 – Platform response to the European Commission consultation on the Taxonomy Disclosures Delegated Act

The EU Platform on Sustainable Finance published its response to the European Commission (Commission) Consultation on the Taxonomy Disclosures Delegated Act.

Background

On 4 March 2026, the Commission sent the European Supervisory Authorities (ESAs) a call for technical advice to inform the review of the Disclosures Delegated Act under the Taxonomy Regulation. To deliver on the call for advice, on 1 July 2026, the European Securities and Markets Authority (ESMA) launched a consultation seeking stakeholders’ views on certain topics. The consultation covered four topics: revising the operating expenditure key performance indicator (OpEx KPI); the voluntary use of OpEx by financial undertakings (a horizontal issue); group Taxonomy reporting (also horizontal); and additional possible simplifications.

In this context, the Platform on Sustainable Finance, an advisory body to the Commission, has published its response setting out its views on the issues covered by ESMA’s consultation. The response has been transmitted to ESMA and serves as a preamble to the full report the Platform will submit to the Commission on the review of the Taxonomy Disclosures Delegated Act in December 2026.

Recommendations

In the response, the Platform make four main recommendations

• OpEx KPI:  adopting a two‑tier approach consisting of a mandatory OpEx KPI limited to research and development expenditure and a voluntary opt‑in broader OpEx KPI based on the current denominator for companies wishing to disclose additional transition‑related operational expenditure.
• Group reporting:  removing the weighted‑average consolidated KPI. If a single KPI is required, the KPI arising from the group’s main reporting regime should be used, with the regime to be determined based on the group’s prevalent activity.
• Adaptation: incorporating the climate change adaptation clarifications directly into the Disclosures Delegated Act, as suggested by ESMA maintaining the CapEx type C mandatory. The Platform is working on a proposal to improve its definition by clarifying its scope and application.

France

1 October 2026 – AMF publishes its conclusions on the revision of the SFDR regulation

The Autorité des Marchés Financiers (AMF) is presenting its conclusions on two operational issues related to the revision of the SFDR: the credibility of transition plans and consideration of principal adverse impacts (PAI).

In March 2026, the Sustainable Finance Advisory Committee of the AMF launched a working group dedicated to the evolution of the SFDR. This initiative is a continuation of the work already undertaken on this subject, in particular when analysing the Commission’s proposal, in November 2025, to revise the SFDR (SFDR 2.0).

The discussions on the credibility of transition plans highlighted the importance of having clear trajectories, measurable objectives and commitments that can be monitored over time, and of defining key criteria and indicators to assess their credibility. These factors should help in better recognising the value of the transition initiatives undertaken by professionals and in providing investors with information that enables them to more easily assess the reality and progress of these trajectories.

The ‘Sustainable’ and ‘Transition’ categories constituted the main remit of the discussions. The ‘ESG Basics’ category and its associated criteria nevertheless remain an important aspect of the discussion on the revision of the regulation. Their inclusion in future work will help ensure the overall coherence of the future system and to enhance its clarity for stakeholders and investors.

The report contains 14 recommendations, relating in particular to the use of a recognised reference document to verify compatibility with the goals of the Paris Agreement, the definition of clear targets for reducing greenhouse gas emissions, as well as to the actions undertaken and the financial resources mobilised to achieve these objectives.

5 October 2026 – Bank of France blog

The Bank of France issued a blog noting that climate change and nature degradation are exposing banks to new financial risks. Since 2020, three levers have enabled public authorities to change the practices of French banks: the development of forward-looking tools (scenarios, stress tests), the strengthening of supervision and, since 2026, the requirement to develop a prudential transition plan.

The Netherlands

24 September 2026 – Authority for Consumers & markets issues rules on stricter requirements for sustainability claims

The Authority for Consumers & Markets issued rules on stricter requirements for sustainability claims. This is as a result of the European directive ‘Empowering Consumers for the Green Transition’.

29 September 2026 – Financing scenarios for climate neutrality: ‘a compass for tomorrow’s investments’

The Dutch Banking Association issued a blog entitled Financing scenarios for climate neutrality: ‘a compass for tomorrow’s investments’.

Australia

21 September 2026 – ASIC’s Review of Mandatory Sustainability Reports: Progress Noted, But Work Remains

The Australian Securities and Investments Commission (ASIC) released Report 839 (ASIC’s review of sustainability reports lodged for 31 December 2025 (REP 839)), together with an accompanying media release, setting out its observations from a review of 40 sustainability reports lodged by Group 1 entities under Australia’s new mandatory sustainability reporting regime.

The regime in context

Australia’s statutory sustainability reporting requirements commenced for financial years beginning on or after 1 January 2025, with the largest entities required to report first as “Group 1.” Group 2 entities follow for financial years beginning on or after 1 July 2026, and Group 3 from 1 July 2027. As at the date of the report, 312 sustainability reports had been lodged by the December 2025 cohort.

What ASIC found

ASIC Commissioner Kate O’Rourke said ASIC’s review of a sample of 40 sustainability reports detailed in REP 839 identified marked progress in disclosure reporting compared with the quality of disclosures previously made on a voluntary basis, observing that statutory reporting has driven not only greater transparency but also “more meaningful engagement by entities with climate-related risks and opportunities.” ASIC saw evidence of entities adapting or updating existing governance and risk management processes in response to the new requirements.

However, the regulator identified clear room for improvement in forward-looking disclosures, and those underpinned by assumptions or judgement — for example, in aspects of strategy and metrics and targets disclosures. To assist responsible entities, ASIC has outlined eight practical action items for reporting entities, building on its early observations published in May 2026.

Practical action items

The eight practical action items are:

• Explain how information in the sustainability report connects with relevant disclosures in the financial report — for example, linking cross-industry metrics and current and anticipated financial effects with related items in the financial statements.
• Carefully consider whether quantitative information can be disclosed about the current and anticipated financial effects of climate-related risks and opportunities, rather than relying solely on qualitative narrative — and, where qualitative information is provided, ensure users can understand the reasons.
• Consider past events, current conditions and forecast future conditions when identifying climate-related risks and opportunities, including how the entity may be affected directly or indirectly across its value chain.
• Provide clear, effective and proximate disclosure of relevant judgements, assumptions and areas of measurement uncertainty — including when identifying risks and opportunities and calculating cross-industry metrics.
• Remember that the definition of ‘climate-related targets’ in Australian Sustainability Reporting Standard AASB S2 Climate-related Disclosures extends to targets required by law or regulation — such as obligations under the safeguard mechanism.
• Ensure material climate-related financial information is not obscured through the disclosure of additional, climate-related information.
• Meet the cross-referencing disclosure requirements — including ensuring that cross-referenced information is available on the same terms and at the same time as the sustainability report.
• Do not use disclaimers that conflict with the statutory framework and objectives of Chapter 2M of the Corporations Act 2001 (Cth), which may confuse or mislead users.

Next steps

ASIC signalled that in 2026–27 it will review a sample of sustainability reports lodged by Group 1 entities with 30 June 2026 year-ends and will continue engaging with large audit firms on assurance methodologies.

For reporting entities — particularly those in Group 2 preparing for their first mandatory reports — REP 839 is essential reading. ASIC’s eight action items provide a practical compliance roadmap, and the clear message is that the regulator expects continued improvement as entities gain experience. Boards and sustainability teams should be reviewing their forward-looking disclosures and the assumptions underpinning them well ahead of the next reporting cycle.

United States – SEC and CFTC

There have been no reported updates this month.

International regulators – FSB, IOSCO, Basel Committee, NGFS, SASB, IFRS, ISSB

There have been no reported updates this month.