3 August – 3 September 2026
Link to Introduction 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 August 2026 – 3 September 2026, from the UK, France, EU, the Netherlands, the US, Australia as well as other key international regulators.
Link to This month’s highlight This month’s highlight
Beyond the score: How ESG ratings regulation is being reshaped
Asset managers have long relied on third-party ESG ratings to inform investment decisions, construct portfolios, and satisfy regulatory reporting obligations. Yet the ESG ratings market has operated with limited oversight, and the issues this creates are now attracting regulatory attention across multiple jurisdictions.
The core problem is one of transparency and consistency. ESG ratings providers often use divergent methodologies, weighting systems, and data sources, meaning that the same company can receive markedly different scores from different providers. For asset managers, this inconsistency complicates investment decision-making and creates a risk that ESG claims made to clients — whether in fund marketing or regulatory disclosures — cannot be adequately substantiated. Conflicts of interest compound the difficulty: some providers both rate companies on ESG performance and advise those same companies on improvements, raising questions about the independence of the ratings produced.
In the UK, the government brought ESG ratings providers within the Financial Conduct Authority’s regulatory remit through legislation laid before Parliament in October 2025 (The Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025). The FCA published its consultation paper (CP25/34) in December 2025, proposing rules requiring providers to manage conflicts of interest, disclose their methodologies, and implement governance and quality-control arrangements. Final rules are expected in Q4 2026, with providers needing FCA authorisation by June 2028. With approximately 5,400 UK financial firms spending a combined £622 million annually on external ESG ratings, the stakes for asset managers are significant.
The EU has moved on a parallel track. The EU ESG Ratings Regulation entered into force in January 2025, with ESMA as the designated supervisory authority. Delegated regulations setting detailed requirements on public disclosures and the separation of business activities have applied since July 2026. Asset managers operating across both the UK and EU must navigate two regimes that, whilst broadly aligned with IOSCO principles, differ in important respects — not least the EU’s shorter notice period requirements for rated entities.
In the United States, the regulatory approach has been less prescriptive. The SEC has focused on enforcement against greenwashing by fund managers rather than direct regulation of ratings providers. However, political scrutiny of ESG ratings has intensified, with congressional hearings questioning the methodologies and influence of ratings agencies on capital allocation decisions, particularly regarding fossil fuel divestment.
Australia has taken an active enforcement approach to greenwashing by fund managers. Greenwashing was a named ASIC enforcement priority in 2024 and 2025, though it was removed from the 2026 priorities list as the regulator considers the issue to have matured into an ongoing compliance expectation. A formal regulatory regime for ESG ratings providers has not yet been established in Australia.
For asset managers globally, the message is clear: reliance on third-party ESG ratings without robust internal due diligence is increasingly untenable, both commercially and regulatorily. Firms should consider conducting independent assessments of the ratings they use, documenting their due diligence processes, reviewing contractual arrangements with ratings providers, and ensuring that any ESG claims made to clients can be substantiated independently of a single rating. Asset managers should also assess, where relevant, the impact of incoming regulatory regimes, review fund documentation and marketing materials for compliance with anti-greenwashing rules, and build governance frameworks that will withstand regulatory scrutiny.
Link to United Kingdom United Kingdom
4 August 2026 – New FCA webpage – Climate adaptation and resilience
The Financial Conduct Authority (FCA) published a new web page providing information for regulated firms on how physical risks from climate change, such as flooding, may impact the property insurance and mortgage markets and how the FCA can help.
Among other things the FCA’s web page notes that the regulator’s engagement with mortgage lenders identified a number of themes that firms may wish to consider:
- Many firms are reflecting on how flood risk and other climate-related risks could affect lending decisions, property values and customer outcomes.
- They are also considering how changes in the availability and affordability of property insurance could affect future mortgage lending. This includes having regard to Flood Re’s scheduled expiry in 2039, and the increasing number of properties built since 1 January 2009 that do not qualify for the scheme.
- Some firms are exploring how greater household resilience could be supported where demand for adaptation finance and uptake of flood resilience measures remain limited. Incentives may be available at no cost to the homeowner but are still not taken up, potentially reflecting a low awareness of flood risk and the options that are available to address it.
- Mortgage lenders should be mindful of their obligations to deliver good outcomes under the Consumer Duty. Outcomes monitoring should be a key source of intelligence and should be used to help identify emerging issues.
Link to European Union European Union
1 September 2026 – Commission Delegated Regulation on authorisation and recognition applications under ESG Ratings Regulation published in OJ
There was published in the Official Journal of the EU (OJ) Commission Delegated Regulation (EU) 2026/1119 setting out regulatory technical standards (RTS) specifying the information to include in applications for authorisation or recognition as an ESG rating provider, supplementing the ESG Ratings Regulation ((EU) 2024/3005).
Summary
The Delegated Regulation specifies common requirements for EU and non-EU applicants, plus additional information that non-EU entities must provide for recognition, in particular applicants must provide comprehensive information on:
- Corporate identity and ownership: legal status, group structure, shareholders, governance arrangements and organisational structure.
- Senior management and key personnel: details of directors and senior managers, including evidence of good repute and the absence of relevant criminal convictions.
- Resources and staffing: information on ESG rating analysts and other personnel involved in rating activities, including experience, skills, training and full-time equivalent staffing levels.
- Methodologies and rating processes: descriptions of ESG rating methodologies, models, controls, review procedures and systems used to develop, issue and monitor ratings.
- Internal governance and controls: policies and procedures covering compliance, risk management, record keeping, complaints handling and oversight arrangements.
- Conflicts of interest management: information demonstrating how the provider identifies, manages and mitigates conflicts, particularly where it carries out activities in addition to ESG rating services.
- Operational systems and technology: details of the systems, resources and procedures supporting ESG rating activities.
- Business separation arrangements: evidence that ESG rating activities are appropriately separated from any incompatible or potentially conflicting activities.
- Application formalities: all submissions must be machine-readable, clearly referenced, supported by documentary evidence and accompanied by a senior management attestation confirming that the information is complete and accurate.
For non-EU providers seeking recognition, additional information is required regarding their third-country operations and the conditions for recognition in the EU. Providers seeking to endorse ratings from non-EU group entities or to provide benchmarks must also supply further information set out in dedicated annexes.
Next steps
The Delegated Regulation entered into force on 2 September 2026. It applies from 2 July 2026, which aligns the application date of the Delegated Regulation with the application date of the ESG Ratings Regulation.
Link to France France
There have been no reported updates this month.
Link to The Netherlands The Netherlands
There have been no reported updates this month.
Link to Australia Australia
24 August 2026 – Australia moves to cut climate reporting costs
The Australian government has opened consultation on proposed reforms to Australia’s mandatory sustainability reporting regime under the Corporations Act 2001 (Cth). The government intends to lower costs for businesses while still keeping reports high-quality, credible and comparable with other countries.
As set out in the 2026-27 Australian Budget, these reforms focus on three key areas:
- Adjusting assurance settings to ensure proportionality and practicality.
- Improving the consistent application of the reporting requirements by clarifying key concepts.
- Clarifying boundaries on supplier information requests.
The Treasury has presented three potential options for reform to the assurance settings:
- Maintain the limited assurance requirement, removing the transition to reasonable assurance entirely.
- Delay the transition to reasonable assurance from 2030 until 2035.
- Require reasonable assurance only for sustainability reporting metrics that are relatively mature (e.g., for Scope 1 and 2 emissions, but not Scope 3).
In addition, the Treasury is recommending further guidance and support for reporters around key terms, such as “undue cost or effort”. This is intended to improve consistency in the application of existing requirements.
Finally, in order to reduce the burden of information requests within reporting entities’ value chains, the Treasury is proposing to:
- Prepare additional guidance on what constitutes a reasonable request for information from a reporting entity’s value chain.
- Reduce supply chain administrative burdens through improving domestic emissions factors.
Submissions for consultation close on 2 October 2026.
Please see link to our briefing note, providing further information.
Link to United States- SEC and CFTC United States- SEC and CFTC
There have been no reported updates this month.
Link to International regulators – FSB, IOSCO, Basel Committee, NGFS, SASB, IFRS, ISSB International regulators – FSB, IOSCO, Basel Committee, NGFS, SASB, IFRS, ISSB
There have been no reported updates this month.