Sustainability & Stewardship in Financial Services Regulation — October 2026

International

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ISSB

The International Sustainability Standards Board Consults on Nature-related Disclosures

The International Sustainability Standards Board (ISSB) published an exposure draft of IFRS Sustainability Disclosure Practice Statement 1 Nature-related Disclosures on October 22. The proposals are intended to help companies disclose material information about nature-related risks and opportunities, including how dependencies and impacts on nature give rise to risks and opportunities that could affect their prospects.

According to the ISSB, the proposed Practice Statement builds on IFRS S1 and draws extensively on the framework developed by the Taskforce on Nature-related Financial Disclosures (TNFD), with particular emphasis on location-specific information and interactions with Indigenous Peoples, local communities, and affected stakeholders. Unlike an ISSB Standard, compliance with the Practice Statement would not be necessary for a company to state that it complies with ISSB Standards. The ISSB is therefore also seeking views on whether the proposals should ultimately be issued as a Practice Statement or in another form, including as a Standard. The consultation closes on February 19, 2027.

TNFD

The Taskforce on Nature-related Financial Disclosures, Science Based Targets Network, and Nature Positive Initiative Publish Aligned Nature Guidance

The Taskforce on Nature-related Financial Disclosures (TNFD), Science Based Targets Network (SBTN), and Nature Positive Initiative published aligned guidance on October 13 to support a more consistent approach to nature-related assessment, target-setting, and corporate reporting. The releases comprise TNFD’s updated LEAP v2.0 assessment approach, Science-Based Targets for Nature 2.0, and a common set of State of Nature Indicators and Metrics developed by the Nature Positive Initiative.

LEAP v2.0 introduces additional guidance on measuring the state of nature, environmental crime, invasive species, risk and opportunity assessment, financial institutions’ portfolios, and nature transition planning. Science-Based Targets for Nature 2.0 provides more flexible pathways for companies to begin setting targets, extends the coverage of freshwater and land targets, and introduces additional implementation resources. The State of Nature Indicators and Metrics establish four core indicators covering ecosystem extent, ecosystem condition, species extinction risk, and species populations, which are intended to provide a common measurement foundation across the TNFD and SBTN frameworks.

SBTi

The Science Based Targets initiative Confirms Continued Availability of Near-Term Criteria for Financial Institutions

The Science Based Targets initiative (SBTi) announced on October 8 that its Financial Institutions Near-Term Criteria will remain available without a specified end date. Financial institutions may therefore continue to set near-term-only targets or use the Financial Institutions Net-Zero Standard, aligning the SBTi’s financial-sector framework with the proposed structure of the Corporate Net-Zero Standard Version 2.0.

The SBTi also updated its Mandatory Five-Year Review Guidance to clarify review timelines for financial institutions approaching the end of their target cycles. A five-year review will not automatically require targets to be updated: financial institutions whose targets continue to meet the applicable criteria may retain them. The SBTi also published updated implementation resources and target-setting tools and released four finance-specific learning modules through the SBTi Academy.

GRI

The Global Reporting Initiative Calls for Recognition of Existing Sustainability Reporting under Draft ESRS 40a

The Global Reporting Initiative (GRI) published on October 19 its response to the European Financial Reporting Advisory Group’s (EFRAG) consultation on the draft European Sustainability Reporting Standard for certain non-EU undertakings (ESRS 40a). GRI called for non-EU companies to be permitted to refer to existing disclosures prepared under the GRI Standards when complying with ESRS 40a, to reduce duplication and the associated reporting burden.

GRI recommended that ESRS 40a recognize existing GRI reporting as a means of compliance, clearly explain its interoperability with global standards, and maintain a consistent approach to impact reporting. GRI’s analysis found that its standards cover, fully or partially, 97% of ESRS 40a disclosure requirements and 79% of its data points. The EFRAG consultation on the draft standard closes on October 31.

Asia Pacific

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Singapore

The Monetary Authority of Singapore Consults on Updates to Corporate Governance Requirements for Financial Institutions

The Monetary Authority of Singapore (MAS) launched on September 30 a public consultation on targeted amendments to the corporate governance requirements for banks, insurers, and designated financial holding companies. The proposed changes would refine the criteria for determining director independence, increase the minimum board size, and require a majority of independent directors for domestic systemically important banks and insurers and full banks.

MAS also proposes to require prior approval for additional key appointments, including the chairperson of the nominating committee at locally incorporated banks and insurers and the chief information officer of domestic systemically important banks. Conversely, certain prior-approval requirements for board and senior management appointments would be removed for financial institutions with less retail reach or lower systemic importance. The consultation closes on December 9.

Hong Kong

The Securities and Futures Commission Strengthens Tools to Address IPO-Related and Other Corporate Misconduct

The Securities and Futures Commission (SFC) published consultation conclusions on October 12 concerning amendments to the Securities and Futures (Stock Market Listing) Rules. The amendments will enable the SFC to impose conditions on listing applicants that continue to apply after listing and to impose post-listing conditions on listed issuers as an alternative to immediately suspending trading. They will also streamline procedures for resuming trading.

The amendments will introduce an independent merits-review mechanism through the Securities and Futures Appeals Tribunal for SFC decisions under the Listing Rules, including decisions concerning the imposition of conditions and the suspension or resumption of trading. The amended rules and related amendments to the Securities and Futures Ordinance are expected to take effect in the first quarter of 2027, subject to legislative approval.

India

The Securities and Exchange Board of India Consults on Reforms to the SME IPO Framework

The Securities and Exchange Board of India (SEBI) published a consultation paper on October 14 proposing amendments to the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018 concerning initial public offerings by small and medium-sized enterprises (SMEs). The proposals would replace the existing paid-up-capital eligibility criteria with post-issue market-capitalization thresholds. Issuers valued at up to ₹1,000 crore would generally be required to use the SME platform, while those valued above ₹1,000 crore and up to ₹4,000 crore could choose between the SME platform and the Main Board, subject to additional financial-reporting requirements.

SEBI also proposes to introduce an average annual operating-profit threshold of ₹3 crore over the preceding three financial years, with an alternative route for issuers that allocate at least 75% of a book-built offer to qualified institutional buyers. Other proposals include reducing the minimum application value to ₹1 lakh, increasing the minimum number of allottees from 200 to 500, introducing a one-share trading lot, and discontinuing compulsory market making. The proposals would also revise underwriting, lock-in, and migration requirements. The consultation closes on November 4.

Malaysia

The Joint Committee on Climate Change Announces Initiatives to Strengthen Climate and Nature Finance

The Joint Committee on Climate Change (JC3) announced several initiatives on September 30, following its Journey to Zero Conference 2026, focused on mobilizing capital, improving project bankability, and strengthening climate and nature resilience. These initiatives include the planned establishment of the Association of Sustainability Professionals, an industry initiative supported by the Securities Commission Malaysia that will recognize and accredit sustainability competencies and is expected to launch by the end of 2026.

The JC3 is also strengthening collaboration between Malaysia’s financial sector and six universities through the JC3-University Collaboration Programme, which will support applied research, talent development, and practical solutions to climate- and nature-related challenges. In addition, the JC3 continues to develop a pipeline of potentially investable climate and nature projects through its Climate Finance Innovation Lab, which aims to help marginally bankable projects progress towards funding.

New Zealand

The Financial Markets Authority Extends No-Action Relief for Certain Climate Reporting Entities

The Financial Markets Authority (FMA) announced on September 29 that it would extend its no-action approach for climate reporting entities expected to be removed from New Zealand’s mandatory climate-related disclosure regime. The relief applies to listed issuers with market capitalization below NZ$1 billion, investment scheme managers, and health and life insurers, following the failure of proposed legislation confirming their removal from the regime to pass before the upcoming election.

The extended relief covers all requirements under Part 7A of the Financial Markets Conduct Act for the first five 2026/2027 reporting periods, covering balance dates from March 31, 2027, to January 31, 2028. The FMA stated that it may provide further relief if the incoming Government progresses the proposed reforms. If the reforms do not proceed, the FMA will work with affected entities to support their transition back to mandatory climate reporting.

Europe

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EU

The European Supervisory Authorities Set Joint Priorities for 2027

The European Supervisory Authorities (ESAs) published their Joint Committee Annual Work Programme for 2027 on October 13, setting out priorities for addressing cross-sectoral risks and strengthening supervisory coordination across the EU financial sector. The programme highlights digital operational resilience, technological innovation, sustainable finance, securitization, consumer protection, and cross-sectoral risk monitoring as key areas of focus.

Under the Digital Operational Resilience Act (DORA), the ESAs will continue their oversight of critical ICT third-party service providers and work to strengthen the financial sector’s preparedness for cyber threats. The ESAs will also assess the implications of artificial intelligence and other digital innovations and support the consistent application of the EU sustainable finance framework across sectors. According to the ESAs, the programme supports the European Commission’s objectives of developing the Savings and Investments Union and simplifying regulation and supervision.

The European Securities and Markets Authority Sets Its Priorities for 2027

The European Securities and Markets Authority (ESMA) published its 2027 Annual Work Programme on September 28, outlining its supervisory priorities for the coming year. According to the Annual Work Programme, in 2027 ESMA will advance its supervision of consolidated tape providers and external reviewers of European Green Bonds, begin supervising ESG ratings providers, and adapt to its expanded responsibilities for benchmark administrators.

Other priorities include implementing the European Single Access Point (ESAP), supporting the EU’s transition to T+1 settlement, and preparing for potential changes to ESMA’s mandates under the Market Integration and Supervision Package (MISP). ESMA will also seek to advance simplification initiatives covering transaction reporting, fund reporting, the retail investor journey, and risk-based supervision, while expanding its use of data and artificial intelligence in supervision.

ESMA Publishes Its Green Finance Dashboard for the Second Quarter of 2026

ESMA published its Green Finance Dashboard for the second quarter of 2026. The report finds that sustainable finance in the EU continued to demonstrate resilience, although developments varied across market segments. Funds classified under Articles 8 and 9 of the Sustainable Finance Disclosure Regulation (SFDR) accounted for 62% of UCITS assets under management. Assets managed by Article 8 and Article 9 funds increased by 6.7% and 7.7%, respectively, compared with December 2025.

According to ESMA, the value of ESG bonds outstanding from EU issuers reached €2.824 trillion in June, representing an increase of 7.5% from June 2025. Green-bond issuance totalled €105 billion during the quarter, 16% higher than in the second quarter of 2025. Issuance under the European Green Bond Standard reached €12 billion and accounted for 11% of EEA green-bond issuance, up from 6% during the same period in 2025. The dashboard also found that venture-capital investment in EU clean-technology companies reached €3.5 billion during the first half of 2026, exceeding the total raised during 2025.

ESMA Publishes Guidance on Impact and Climate Transition Claims

ESMA published two thematic notes on October 12 concerning positive impact and climate transition claims. The notes provide practical examples of good and poor practices intended to help market participants ensure that their non-regulatory communications are clear, fair, and not misleading.

For impact claims, ESMA encourages market participants to explain the change they expect to generate, the mechanism through which that impact will be achieved, and how the results will be measured. For climate transition claims, market participants should clearly describe their transition ambition, implementation approach, and methods for assessing progress, including relevant assumptions, dependencies, and data limitations. The notes do not establish new regulatory requirements or prescribe a particular level of sustainability ambition, but clarify ESMA’s expectations under the existing principle that communications must be clear, fair, and not misleading.

ESMA Proposes Simpler EU Taxonomy Reporting Requirements

ESMA submitted final technical advice to the European Commission on October 29 proposing targeted simplifications to reporting under the Taxonomy Disclosures Delegated Act. In the final technical advice, ESMA recommends limiting the mandatory operational expenditure KPI to non-capitalized research and development expenditure, removing the weighted-average KPI for group reporting, and introducing further measures to simplify disclosure templates and methodologies. According to ESMA, the proposals aim to reduce reporting burdens while maintaining the relevance, comparability, and reliability of Taxonomy disclosures for investors. As per procedure, the European Commission will now consider the advice as it contemplates further simplifications to the EU Taxonomy Disclosure Delegated Act.

ESMA Sets Enforcement Priorities for 2026 Corporate Reporting

ESMA published its European Common Enforcement Priorities for 2026 annual financial reports on October 13. The priorities identify the areas on which ESMA and national enforcers will focus when reviewing the financial and sustainability reporting of issuers admitted to trading on EEA regulated markets.

For sustainability statements, ESMA will focus on companies’ continued progress in applying materiality assessments and the provision of connected information concerning impacts, risks and opportunities, policies, actions and targets, and related metrics. The priorities for IFRS financial statements address geopolitical risks and uncertainties, restructuring provisions, and debt restructuring, while the digital-reporting priority concerns common ESEF filing errors in statements of changes in equity. ESMA has encouraged issuers, auditors, and supervisory bodies to apply the recommendations, where material and relevant, when preparing and reviewing 2026 annual reports.

The European Financial Reporting Advisory Group Consults on Its Sustainability Reporting Agenda for 2027–2029

The European Financial Reporting Advisory Group (EFRAG) launched on October 16 a public consultation on its planned sustainability reporting activities and priorities for 2027–2029. The consultation seeks views on EFRAG’s strategic direction, future implementation-support activities, technical issues requiring further guidance, and priority topics for research on emerging sustainability reporting trends.

According to EFRAG, the consultation takes account of the reporting landscape resulting from the Omnibus I Directive, experience from the first two reporting cycles for the largest companies, growing interest in voluntary sustainability reporting, and developments in international standards. It also considers future support for ESRS 40a, interoperability with global standards, voluntary reporting, and digital tools, including EFRAG’s Knowledge Hub. The consultation closes on February 15, 2027.

United Kingdom

The Financial Reporting Council Publishes Its Annual Review of Corporate Reporting

The Financial Reporting Council (FRC) published its Annual Review of Corporate Reporting 2025/26 on September 29. The review found that the quality of corporate reporting by FTSE 350 companies remained high, while the quality gap between larger listed companies and other companies continued to narrow. The proportion of reviews resulting in substantive enquiry letters also declined for the second consecutive year.

According to the review, cash-flow statements, financial instruments, asset impairment, fair-value measurement, and revenue were the areas most frequently subject to substantive questions. The FRC encouraged companies to establish robust review processes capable of identifying common technical compliance issues and to present consistent, coherent, and understandable information across their annual reports and accounts. It also advised companies to prepare for forthcoming reporting developments, including IFRS 18, revisions to FRS 102 and Provision 29 of the UK Corporate Governance Code concerning material internal controls.