Policy Digest: April 2026

The sustainable finance ecosystem, previously grounded in voluntary and principles-based mechanisms, has quickly transformed into an imperative for corporates and financial institutions alike. This month’s edition highlights the policy continuum across several key areas:

BREAKING: The EU's Potential Pivot to adopt the ISSB Standards

• A significant regulatory shift might be on the horizon as the EU considers formally adopting the ISSB's global sustainability standards. This potential move would pivot the region from its current "double materiality" framework—which requires companies to report on both their financial risks and their external environmental impacts—to the ISSB's focus on pure financial materiality. For multinational corporations, this would streamline reporting by creating a single, interoperable global standard, collapsing the complexity of conflicting regional rules. Critically, by bringing climate data under the IFRS Foundation's accounting governance, this would formally reclassify metrics like carbon emissions as an auditable financial line item, fundamentally shifting ESG from a sustainability-led initiative to a core component of financial risk management. Read more

• Scope 3 (financed emissions) Reporting: The Greenhouse Gas Protocol has proposed enhancements to its Scope 3 reporting standard, including greater data granularity, disaggregation of Scope 3 emissions, and a new Category 16 covering ‘facilitated emissions’ from third-party activities. Scope 3 reporting was also the focus of a recent workshop hosted by the California Air Resources Board (CARB). As California’s lead agency for climate reporting oversight, CARB has outlined an implementation timeline starting in 2027, presenting several options ranging from broad applicability to a sectoral phase-in approach.
• Corporate Climate & ESG Reporting: In the EU, the European Financial Reporting Advisory Group (EFRAG) is exploring sustainability reporting for non-SME companies and has invited companies and stakeholders to participate in developing a new voluntary standard (VS). The UK Government is also advancing corporate reporting through new mandatory ethnicity and disability pay gap reporting requirements for large employers. Across the Atlantic, the US is initiating a rollback of the Commodity Futures Trading Commission’s (CFTC) request for material information on climate-related risk.
• Global Taxonomies Development: The European Commission is streamlining the EU Taxonomy Climate and Environmental Delegated Acts. Meanwhile, Canada has announced a new Taxonomy and Transition Planning Council tasked with developing a Sustainable Finance Taxonomy by 2026, initially covering three priority sectors.
• Green Banking: The Slovenian Government is moving forward with mandating ESG risk integration in banking, in line with the EU banking package (CRD VI and CRR III). The European Commission has also adopted a Delegated Regulation introducing regulatory technical standards that establish criteria for assessing environmental performance under the EU Green Bonds Regulation.

Overall, these developments signal a continued shift from voluntary frameworks toward more prescriptive, operational, and enforceable sustainability requirements across jurisdictions.

INTERNATIONAL

• GHG Protocol proposes update to Scope 3 reporting standard

The GHG Protocol is revising its Scope 3 Standard to introduce data quality requirements that will improve the usability and comparability of corporate emissions reporting. Key updates include a new mandate to disaggregate Scope 3 emissions by data type for each category, addressing current inconsistencies in disclosure, and a hard requirement to report at least 95% of total Scope 3 emissions—a threshold not previously specified—allowing companies to exclude minor sources (<5%) based on emissions magnitude. The revisions also propose a voluntary Category 16 covering "facilitated activities," defined as downstream emissions from third-party activities enabled by a company's products, services, or infrastructure where the company generates economic value but does not own or operate the activity. Additionally, Category 15 (investments) requirements are being clarified to apply to all companies, with investment managers holding discretionary control required to report, while investment advisors fall under the new Category 16. The GHG Protocol is foundational reference for corporate climate reporting, and the updated standard aims to complement global regulation and existing frameworks that are slowly converging towards an established emissions measurement, reporting, and verification process. Read more

EUROPE

• Switzerland proposes Corporate Due Diligence Law

On 1^st April 2025, the Swiss Federal Council launched a consultation on the Federal Act on Sustainable Corporate Governance (CSA), an alternative to the Responsible Business Initiative that would align Swiss requirements with EU corporate sustainability regulations – the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The CSA introduces a two-tier system: large undertakings with more than 5,000 employees and turnover exceeding CHF 1.5 billion (approximately 30 companies) would face risk-based human rights and environmental due diligence obligations, while those with more than 1,000 employees and turnover above CHF 450 million (approximately 100 companies) would be subject to sustainability reporting requirements such as the ESRS or an equivalent framework. Non-compliance penalties include fines of up to 3% of global turnover, civil liability for overseas harm, and exclusion from public contracts. Read more

• EFRAG issues call for stakeholder participation on voluntary sustainability reporting standard for non-SMEs

EFRAG is inviting companies and stakeholders across the EU to participate in upcoming engagement and research activities on the application of the new Voluntary Standard (VS) for non‑SME companies that fall outside the scope of the CSRD. EFRAG is particularly seeking interest from EU companies that are not SMEs and have fewer than 1,000 employees or annual turnover below €450 million, as well as auditors, business associations, investors, and other users of sustainability information. Planned activities include webinars, surveys, events, and interviews, which will help assess how the voluntary standard could be implemented in practice. Interested participants can email VRcontactlist@efrag.org by 20^th April 2026. Following the Omnibus I Package, far fewer companies fall within the scope of mandatory ESRS reporting, but companies outside the scope may still disclose voluntarily. The European Commission is expected to publish the VS later this year as a Delegated Act, building on EFRAG’s Voluntary Standard for SMEs (VSME) issued in December 2024 and endorsed in July 2025. EFRAG, which already maintains ongoing dialogue with SMEs and users of their reporting, is now extending that engagement to non‑SME companies considering voluntary adoption of the new standard. Read more

• European Commission publishes draft revisions to EU Taxonomy delegated acts

On 17^th March 2026, the European Commission published draft revisions to the EU Taxonomy Climate Delegated Act and Environmental Delegated Act.These draft revisions are designed to simplify criteria where experience has shown that requirements are overly complex, duplicative or difficult to apply consistently, including in relation to the ‘do no significant arm’ criteria. This includes clarifying provisions, streamlining assessment steps and improving the internal consistency of the criteria across environmental objectives and sectors, without reducing the level of environmental ambition. The feedback period closes on 14 April 2026.

• EU Commission sets technical standards for external reviewers of European Green Bonds

On 12^th March 2026, the European Commission adopted a Delegated Regulation supplementing the framework for European Green Bonds (EuGB). The Delegated Regulation introduces regulatory technical standards for external reviewers, which are responsible for assessing whether bonds labelled as “European Green Bonds” meet the required environmental criteria. 

• Slovenia proposes banking ESG risk rules for banks

The Slovenian government has adopted the Banking Act (ZBan-4), implementing the EU banking package (CRD VI and CRR III) and introducing a prudential regulatory framework for climate and broader ESG risk management, governance, and disclosures for banks. The law mandates training for board members and senior management to oversee ESG risks, as well as remuneration policies linked to measurable and proportionate ESG objectives. It also requires ESG integration into ICAAP across short-, medium-, and long-term horizons, alongside long-term stress testing in line with EBA guidelines to support business model resilience. The EBA Guidelines on ESG risk management will apply from January 2026 for large institutions and from 2027 for small and non-complex institutions (SNCIs), while the EBA is expected to finalize its ESG supervisory reporting framework and related Implementing Technical Standards under CRR by Q3 2026. In practice, Slovenian banks will need to strengthen systems, governance, data capabilities, and internal capacity to meet these evolving ESG requirements. Read more 

• Italy to align national law with the EU ESG Ratings Regulation

The Italian Parliament has mandated the Government to align the national regulatory framework with Regulation (EU) 2024/3005 on the transparency and integrity of ESG rating activities within 12 months, without allowing for gold-plating. As a next step, the Government must amend existing provisions in the Italian Financial Act (Legislative Decree No. 58 of 24 February 1998) to ensure full and accurate implementation of the Regulation. In line with the EU Regulation, Italy must also designate a competent national authority, expected to be CONSOB (the Italian Financial Market Authority). Read more

UNITED KINGDOM

• UK Government publishes response to proposed mandatory ethnicity and disability pay gap reporting

The UK government’s March 2026 consultation response confirms it will introduce mandatory ethnicity and disability pay gap reporting for large employers (250+ employees), closely mirroring the existing gender pay gap framework in scope, calculations, timelines, and enforcement. Employers will be required not only to report pay gaps but also to publish action plans to address any gaps identified. The government also noted in its consultation response the need to improve declaration rates (declaration of disability/ethnicity) to improve transparency and data reliability. Ethnicity reporting will follow standardized classifications with both binary (White vs. all other groups) and broader group comparisons, while disability reporting will use a binary approach based on the Equality Act 2010 definition. The regime will be introduced through the forthcoming Equality (Race and Disability) Bill, supported by secondary legislation and guidance, though implementation is unlikely before 2027, giving employers time to strengthen data collection and prepare. Read more

NORTH AMERICA

• California to phase in Scope 3 reporting requirements

On 25^th March, the California Air Resources Board (CARB) held a workshop on advanced development of Scope 3 rules under SB 253, California’s Corporate Climate Data Accountability Act, which applies to companies with over $1 billion in annual revenue that are doing business in California. Although enforcement of SB 253 is currently paused pending litigation, companies may still voluntarily report. Building toward a 2027 launch of full-value‑chain disclosure, CARB outlined emerging concepts for phasing in Scope 3 reporting and for defining organizational boundaries using either an equity share approach (emissions allocated based on ownership percentage) or a control approach (100% of emissions from operations under financial or operational control). Staff presented three potential phase‑in models: a broad applicability pathway requiring all Scope 3 categories from all entities in 2027 with limited de minimis exclusions; a sectoral phase‑in prioritizing transportation, industrial, technology, and energy sectors due to their emissions magnitude and transition risk; and a category phase‑in starting with the most widely reported, feasible categories—purchased goods and services, business travel, fuel and energy‑related activities, employee commuting, and operational waste—before expanding to the full set. CARB emphasized its intention to align with global GHG accounting practices while balancing comparability, feasibility, and cost as rulemaking proceeds. Read more

• CFTC withdraws request for information on climate-related financial risk

The request originated from a Biden-era executive order mandating U.S. financial regulators to assess climate-related financial risks. However, the Commodity Futures Trading Commission (CFTC) has now withdrawn this request following President Trump’s revocation of Executive Order 14030 on 20 January 2025. On March 18^th, the CFTC formally announced in the Federal Register that it was withdrawing its June 2022 request for information on climate-related financial risks in derivatives and underlying commodities markets, effective March 16^th. The decision follows Executive Order 14154, which revoked the earlier climate risk mandate. The CFTC cited both this revocation and its existing regulatory framework for financial risk oversight as reasons for withdrawing the request.  Read more

• Canada set to launch Sustainable Finance Taxonomy 

The newly established Taxonomy and Transition Planning Council comprises the Canadian climate-focused investor initiative Business Future Pathways (BFP) and the government-appointed Canadian Climate Institute (CCI). BFP will use CCI's foundational research to develop a classification system for identifying green and transition investments, supplemented with sector-specific transition planning guidance. The council announced that it will establish criteria for green and transition investments across six priority Canadian sectors. The first phase will cover three sectors, to be finalized by year-end, with the remaining three to follow by the end of 2027. Canada has faced setbacks and delays in developing its sustainable finance taxonomy since 2023, and this latest move establishes a definitive timeline to mobilize capital toward net-zero goals. Read more

Other News & Resources

• China adopts new Ecological and Environmental Code. Read more
• NZAOA publishes Target-Setting Protocol Fifth Edition. Read more
• NZAM initiative has been relaunched. Read more
• GRI consults on pollution standards. Read more
• ISSB proposes amendments to three SASB standards. Read more