ESG+ Newsletter – 07 May 2026
In this week’s newsletter, we examine escalating tensions between US regulators and proxy advisory firms. We also explore the outcomes of the first international summit focused on “transitioning away” from fossil fuels, where dozens of countries gathered outside the UN process in an effort to accelerate climate action. Elsewhere, we assess the SEC’s efforts to roll back Biden-era climate disclosure requirements and what this means for the future of ESG regulation in the United States. Finally, we consider the EU’s proposed overhaul of SFDR, as policymakers seek to tighten sustainability disclosure standards for financial products marketed in Europe.
This week’s poll
Will stricter SFDR rules help to build more trust in sustainable investment products?
- Yes
- No
- Remains to be seen
Last week’s poll
Glass Lewis challenges Indiana proxy advisory law
Glass Lewis announced on 30 April 2026 that it has filed a complaint in the US District Court for the Southern District of Indiana challenging House Bill 1273, scheduled to take effect on 1 July 2026. The proxy advisory firm argues the legislation violates its First Amendment rights by requiring “written financial analysis” exclusively for recommendations against management, while imposing no such requirement for pro-management positions.
The law mandates state-prescribed disclaimers for non-compliance, carries financial penalties, and enables litigation from officials, companies and shareholders. Notably, House Bill 1273 extends beyond Indiana’s borders, requiring disclosure for all 22,000 companies in Glass Lewis’ research universe regardless of location. Nichol Garzon, Glass Lewis’ Chief Legal Officer, characterised the legislation as reflecting “the legislature’s fundamental misunderstanding of how proxy research informs investor voting,” arguing it would undermine research objectivity and harm institutional investors’ ability to fulfil fiduciary obligations.
ISS, another leading proxy advisor, filed a similar complaint two weeks earlier. In December in ESG+, we reported on an executive order directing the Securities and Exchange Commission (SEC), Federal Trade Commission (FTC) and Department of Labor (DoL) to investigate proxy advisors’ influence, claiming they promote politically motivated ESG and DEI agendas rather than prioritising investor returns. These legal challenges and regulatory actions represent the latest developments in an ongoing standoff between proxy advisors and US authorities at both federal and state levels.
Key outcomes from first summit on ‘transitioning away’ from fossil fuels
Recently, Santa Marta, Colombia, hosted the first conference focused on “transitioning away” from fossil fuels. Held outside the United Nations process, the six-day summit—co-hosted by Colombia and the Netherlands—brought together 57 countries, representing one-third of the world’s economy, to discuss how to move away from coal, oil, and gas. The conference focused on accelerating climate action, though a key challenge remains in implementing these measures while avoiding the delays and divisions that have characterised global climate talks in previous years.
Reporting on the conference, E&E News suggests the summit successfully “highlighted for many what can happen when a group of countries come together to share experiences and seek ways forward”. Another summit is being planned next year in Tuvalu. Of the 57 countries in attendance, some of the world’s largest emitters were not present; however, the organisers described the summit as a success, driven by the high number of countries convening and their willingness to accelerate action on climate change.
Wall Street regulator moves to scrap climate disclosure rule
The US Securities and Exchange Commission (SEC) is developing regulations to eliminate a previously implemented climate disclosure rule that was designed to help investors assess companies’ climate-related risks and expenditures. According to a recent Reuters article, the SEC is working to walk back the rule to focus on the agency’s mandate of “requiring that corporate disclosures focus on information that is material to investors.” The original climate disclosure rule, adopted in 2024, required publicly traded companies to disclose climate-related risks, emissions, and spending to investors. The rule faced immediate legal challenges from Republican-led states and industry groups, leading the SEC to pause its implementation. The regulatory reversal reflects a continued federal-level shift away from ESG disclosure requirements under the current administration. Despite the absence of federal disclosure rules, many US states have active or pending legislation requiring companies to publicly disclose climate-related risks and/or emissions data to investors and other stakeholders. |
EU tightens SFDR rules to strengthen ESG transparency
The European Parliament is advancing tougher disclosure requirements for sustainable investment products through a draft update to the Sustainable Finance Disclosure Regulation (SFDR), ESG News reports. SFDR 2.0, due for committee review in June and a July vote, aims to address complexity and greenwashing risks in the current framework. The draft supports the European Commission’s three-tier system (“Sustainable,” “Transition,” and “ESG Basics“) while strengthening rules, such as mandatory Principal Adverse Indicator disclosures, reporting on engagement strategies, and disclaimers for products that reference sustainability without using the new labels. Fossil fuel expansion activities and companies without coal phase-out plans remain excluded from the top categories. Additionally, “ESG Basics” products would be required to exclude at least 20% of the lowest-rated securities relative to identified benchmarks. The proposal reflects increased scrutiny of how ESG credentials are communicated to investors. Ultimately, the revised framework aims to simplify compliance while helping investors better compare products and direct capital toward investment products with authentic environmental and social sustainability goals.
ICYMI
- A coalition of organisations has launched a new initiative to develop standardised corporate water stewardship guidance, including metrics for measuring and managing water risks and impacts across company operations and supply chains, according to ESG Dive.
- The International Sustainability Standards Board has agreed to move forward with proposed nature-related disclosure guidance through an IFRS Practice Statement, building on existing standards that already require companies to disclose material nature-related risks and opportunities.
| The views expressed in this article are those of the author(s) and not necessarily the views of FTI Consulting, its management, its subsidiaries, its affiliates, or its other professionals.
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