Monthly Updates on Regulatory Developments in Environmental, Social, and Governance (ESG) Issues for Financial Services Industry

Monthly Updates on Regulatory Developments in Environmental, Social, and Governance (ESG) Issues for Financial Services Industry

In a concerted effort to combat climate change and promote sustainable finance, regulatory bodies around the world have been actively shaping the landscape. Here's a roundup of some significant developments:

Australia

The Australian Competition and Consumer Commission (ACCC) has given the green light for the Australian Sustainable Finance Institute (ASFI) to collaborate on sustainable finance initiatives in Australia. Additionally, the ACCC issued a trade ban against misleading environmental claims in advertising in July and August 2025. The ASIC, Australia's corporate regulator, has also announced its 2025 Enforcement Priorities, highlighting an ongoing focus on greenwashing. ACCR, a consumer advocacy group, has launched greenwashing proceedings against Santos, an Australian energy company.

Europe

The European Commission has published a Commission Notice on the interpretation and implementation of certain legal provisions of the Disclosures Delegated Act under Article 8 of the EU Taxonomy Regulation. The European Council agreed on a position to simplify sustainability reporting and due diligence requirements in the EU. The European Banking Authority released a consultation paper on draft implementing technical standards amending Commission Implementing Regulation (EU) 2024/3172 in the EU. The European Securities and Markets Authority has launched a Call for Evidence on the integration of sustainability preferences in the suitability assessment and product governance arrangements.

The European Commission has adopted the European Sustainability Reporting Standards (ESRS), and the European Commission adopted a recommendation for voluntary sustainability reporting for Small and Medium Enterprises (SMEs) in the EU. The ESAs in the EU have published a joint report on PAI disclosures under the SFDR for the UK. The Financial Conduct Authority and the Prudential Regulation Authority have launched consultations to introduce a new regulatory framework on diversity and inclusion in the financial sector.

United Kingdom

The UK Financial Conduct Authority (FCA) has been actively enforcing anti-greenwashing rules for a year. The FCA has published final rules and guidance on Sustainable Disclosure Requirements (SDR) and investment labels. The FCA's multi-firm review of climate reporting in the UK highlighted progress in integrating climate change risks but noted challenges with data availability and reporting complexity. The UK government is working on a UK Green Taxonomy and has issued consultations aimed at helping large banks and companies develop climate transition plans.

United States

The Securities and Exchange Commission (SEC) in the US has issued a stay on its climate reporting rules for public companies. The SEC has charged for misleading ESG claims, and Wisdom Tree, a US-based investment firm, has paid out $4 million over SEC 'greenwashing' charges. The development of US Sustainability Reporting Standards is in progress.

Global Initiatives

GFANZ has provided guidance and support for net-zero transition and real-economy decarbonisation. The Transition Plan Taskforce has published its final report on the private sector's transition plans. The Taskforce on Nature-related Financial Disclosures has published recommendations. The International Sustainability Standards Board (ISSB) has published its inaugural standards. The NGFS has published an information note on "Improving Greenhouse Gas Emissions Data". The Transition Finance's Market Review findings and the FCA's response have been discussed.

In a significant move, the International Court of Justice (ICJ) issued a judgment affirming states' obligations to protect the climate from greenhouse gas emissions. The HMT has responded to an earlier consultation on the future regulatory regime for ESG ratings providers. The Netherlands is consulting on the implementation of the Corporate Sustainability Due Diligence Directive into Dutch law. The Dutch central bank, DNB, has urged pension funds to address ESG risks.

The UK government will not pursue a UK Taxonomy and will be focusing on the delivery of its commitments on transition plans and sustainability reporting standards. The European Commission has published its sustainable finance package. The AMF in France has found issues in three supervisory initiatives on sustainable finance. The Federal Court in Australia ruled that the government does not owe a duty of care to Torres Strait Islanders regarding climate change.

In a positive step towards transparency, the European Commission has published a Commission Notice on the interpretation of certain legal provisions in the Accounting Directive, Audit Directive, Audit Regulation and Transparency Directive. The Netherlands' AFM has conducted an exporative study into ESG data risk management. The Transition Finance's Market Review findings and the FCA's response have been discussed. The FCA has proposed new guidance on the anti-greenwashing rule. The FCA's culture and non-financial misconduct survey results have been discussed.

The TNFD has drafted guidance on nature transition planning at COP16. The SEC's charges for misleading ESG claims in the US have been discussed. The ESMA in the EU has published its annual report on EU carbon markets and their implementation timeline on sustainable finance. The European Commission has published a notice on the interpretation of certain legal provisions in the Accounting Directive, Audit Directive, Audit Regulation and Transparency Directive. The Transition Plan Taskforce has published the final version of its Disclosure Framework.

The FCA has given a speech on sustainable investment finance. The FCA has published three new Climate Financial Risk Forum guides. The European Commission has adopted a recommendation for voluntary sustainability reporting for Small and Medium Enterprises (SMEs) in the EU. The FCA's multi-firm review of climate reporting in the UK highlighted progress in integrating climate change risks but noted challenges with data availability and reporting complexity. The FCA has proposed new guidance on the anti-greenwashing rule. The ACCC in Australia has issued a draft guidance "Sustainability collaborations and Australian competition law".

In a notable legal development, ClientEarth has attempted to judicially review a decision of the Financial Conduct Authority to approve the prospectus of a UK oil and gas company, Ithaca Energy plc. The development of Australian Sustainability Reporting Standards is in progress. The FCA has published final rules and guidance on Sustainable Disclosure Requirements (SDR) and investment labels. The European Banking Authority released a consultation paper on draft implementing technical standards amending Commission Implementing Regulation (EU) 2024/3172 in the EU. The European Council has agreed on a position to simplify sustainability reporting and due diligence requirements in the EU. The European Banking Authority has released a consultation paper on draft implementing technical standards amending Commission Implementing Regulation (EU) 2024/3172 in the EU.

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