Policy Digest: February 2026

As we enter 2026, global sustainability regulation focus has shifted from expanding the volume of disclosures to improving the quality, reliability, and comparability of data. Regulators are now balancing the need to reduce the administrative "red tape" for companies with oversight of the ESG ratings ecosystem. Simultaneously, sustainability is being integrated into prudential supervision, treating climate change not just as a reporting requirement, but as a core risk to global financial stability.

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Key trends & highlights

• From Disclosure to Supervision: Regulation is moving beyond corporate reporting to prudential supervision, with the EBA issuing Guidelines for embedding climate risk into financial oversight and systemic risk buffers.
• Long-Term Resilience: NGFS’s Monetary Policy Toolkit highlights increased focus on maintaining financial sector stability across monetary cycles by treating climate change as a systemic financial risk.
• The Proportionality Dilemma: Regulators are simultaneously ‘simplifying’ corporate disclosure with stricter oversight of ESG data and ratings providers, as new regulatory regimes emerge across the EU and UK.
• ISSB as the ‘Global Baseline’: Rapid adoption of IFRS sustainability standards is creating a “global baseline," evidenced by:
  
  • UK: Implementation of UK SRS for listed issuers.
  • China: Alignment with IFRS S2 standards.
    
  • Nigeria: Amended roadmap for ISSB adoption with first reporting from 2028 for public interest entities.
    
  • Hong Kong: Expansion into Phase 2 of its Sustainable Finance Taxonomy.

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International

NGFS releases Monetary Policy Toolkit

The Network for Greening the Financial System’s (NGFS) Toolkit recommends that central banks adopt a "holistic and inclusive" approach by integrating climate factors into both the asset and liability sides of their balance sheets. While previous efforts focused primarily on asset-driven measures, such as greening bond portfolios, these become less effective during periods of tight liquidity when asset holdings are unwinding. By leveraging liability-side measures—particularly for banks with structural excess reserves—central banks can maintain greening efforts throughout various points in the monetary cycles. Although this shift requires careful assessment of legal mandates and changes the nature of balance sheet protection, a dual-sided strategy ultimately allows central banks to better manage climate-related risks while supporting low-carbon capital allocation. Read more

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Europe

EBA revises Guidelines on the use of systemic risk buffer to incorporate climate risk

The European Banking Authority’s (EBA) has developed draft Guidelines in accordance with the Capital Requirements Directive (EU) 2024/1619 (CRD VI), which clarifies that the systemic risk buffer may be used by competent or designated authorities to address risks stemming from climate change. The revised Guidelines would add granularity to identifying exposures relating to physical and transition risks, through advanced sectoral and geographical classifications. Additionally, amendments seek to incorporate lessons learned on the implementation of systemic risk buffer measures across Member States to ensure more effective design and risk management. The EBA is welcoming comments on the consultation paper until 30th April 2026, and will hold a public hearing on 9th April 2026 from 15:00 to 16:00 CET. Read more

EU publishes Draft Delegated Act establishing supervisory fees for authorization of ratings providers

The European Commission has released a draft Delegated Regulation establishing a fee-based funding model for the supervision of ESG rating providers by the European Securities and Markets Authority (ESMA). Fees are structured proportionally: annual supervisory charges are generally tied to a provider’s ‘applicable turnover’ (defined as revenue derived from ratings products), while one-time authorization and registration fees range from €5,000 for small firms to €40,000 for larger or complex entities. Importantly, the regulation includes specific exemptions for micro-providers and capped fees for small firms to prevent market entry barriers and foster innovation. This harmonized system centralizes all fee-charging competence under ESMA, ensuring a consistent regulatory environment across the Union. In parallel, the European Commission has introduced rules on the procedure for ESMA to impose fines and periodic penalties on ratings providers for violations of the ESG Ratings Regulation which emphasizes transparency of ratings methodologies and conflict of interest prevention through separation of business activities (e.g., consulting, benchmark provision). Read more

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United Kingdom

UK FCA proposes UK SRS reporting requirements for listed issuers

The Financial Conduct Authority (FCA) has released proposed rules replacing the previous TCFD-aligned climate disclosure rule for listed companies with the UK Sustainability Reporting Standards (UK SRS) aligned with the ISSB standards, aiming to promote international alignment and comparability. The FCA’s regime underscores proportionality of burden by proposing a mandatory reporting approach for climate-related disclosures (UK SRS S2) for commercial companies, while maintaining a ‘comply or explain’ basis for general sustainability-related risks (UK SRS S1). The proposed regulation would require listed issuers to disclose Scope 1&2 GHG emissions from 2027 for FY2026, with Scope 3 reporting requirements kicking in a year later from 2028 on a "comply or explain" basis to alleviate the burden for first preparers. While disclosing entities can opt-in to report Scope 3 emissions earlier, the FCA clarifies that such early adopters cannot utilize the 2027 transitional reliefs. Despite an emphasis on climate reporting, the regulator has maintained that credible transition plans can be disclosed on a comply or explain basis, requiring a statement on the reason and location of disclosure. The implementation timeline showcases that sustainability disclosures beyond climate (e.g., water, biodiversity) will be phased in from 2029 onwards due to a two-year transition relief for non-climate information. Meanwhile, the status of external assurance must be disclosed in the annual report, although assurance itself is not mandated and no explanation is required if it is not obtained. Read more  

FCA launches consultation on ESG Ratings regime

Following a mandate from HM Treasury, the Financial Conduct Authority (FCA) is now consulting on a formal regulatory framework for ESG Ratings providers. To ensure international alignment and comparability, the proposed regulation is built upon the IOSCO recommendations (2021) and the ICMA Code of Conduct (2023). The regime is anchored by four key pillars:

• Transparency in Methodologies: Ensuring clear rating objectives and eliminating "black-box" approaches, focusing on source data.
• Systems and Controls: Implementing robust oversight to monitor data accuracy and the appropriate use of estimates.
• Governance: Operational arrangements, auditing and review that guarantee the delivery of independent and reliable ratings.
• Conflict of Interest Prevention: Mitigating risks through the separation of business lines to maintain the integrity of rating activities.

The FCA is adopting a dual approach, with detailed rules regarding methodological transparency, while other areas—such as stakeholder management and conflict of interest—will follow a more flexible, principles-based approach. The FCA is inviting feedback from stakeholders on the proposed regulation until March 30th, 2026. Read more

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Asia-Pacific

China launches ‘ambitious’ Sustainability Disclosure Standards

China began the year by launching landmark climate reporting standards heavily influenced by the IFRS S2 (Climate-related Disclosures). This "trial" standard is designed to mobilize capital for sustainable finance and accelerate the transition to a low-carbon economy. By providing consistent and comparable data, the framework aims to curb greenwashing and bridge the gap between national targets and policy at the macro level and micro level private sector action. The standards are initially voluntary, with plans to become mandatory as corporate adoption matures. The Chinese government and relevant ministries will soon release tailored guidelines for carbon-intensive sectors, including coal, petroleum, cement, and automobiles. The Chinese climate disclosure standard also emphasizes double materiality for the reporting of climate-related impact information, including value chain activities. Read more

Hong Kong launches Taxonomy Phase 2A

On January 22th 2026, the Hong Kong Monetary Authority (HKMA) published Phase 2A of the Hong Kong Taxonomy, expanding the original framework’s scope beyond the initial sectors of transportation, waste, energy, and construction. This latest phase shifts the focus toward transition-driven capital allocation by defining and classifying new categories for transition activities and measures. To better support decarbonization and informed investment, the framework now includes the Manufacturing and Information and Communications sectors, while also refining green and transition criteria for the existing Energy and Transportation sectors. To ensure regional scalability and global comparability, the HKMA remains committed to interoperability, continuing its alignment with the Common Ground Taxonomy and other regional and global taxonomies. Read more

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Middle East & Africa

Nigeria amends roadmap for adoption of ISSB aligned standards

The Financial Reporting Council of Nigeria (FRCN) has launched a consultation on an amended roadmap for the adoption of the ISSB-aligned Sustainability Reporting Guide in Nigeria (SRG-1). Following the global trend of phased implementation, Nigeria plans to begin with Public Interest Entities (Wave 1) applying the standards from 2028, followed by SMEs (Wave 2) from 2030. The amended roadmap provides additional "runway time" by delaying the transition from limited to reasonable assurance requirements by one year. It also clarifies which complex disclosures—specifically Scope 3 emissions and scenario analysis—will require assurance. The consultation period for these proposals closed on 20th January 2026. Read more

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Other News & Resources

• TNFD releases draft Sector Guidance for Technology & Communications. Read more
• IPSASB issues SRS 1, Climate-related Disclosures for public sector entities. Read more
• IPSAS issues IPSAS 51 on tangible natural resources held for conservation. Read more
• WBCSD publishes new guidelines ‘Making it count: the financial quantification of sustainability’. Read more

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