ESG+ Newsletter – 08 January 2026

Groundswell of mandatory sustainability reporting globally 

China’s Ministry of Finance has released its first Corporate Sustainable Disclosure Standard No. 1: Climate Trial, a voluntary climate reporting framework aligned with the ISSB’s IFRS S2. As ESG Today reports, the current phase will remain voluntary and focuses on qualitative disclosures; however, over time, the Ministry has detailed plans to scale to quantitative reporting, larger scopes of companies, including SMEs and non-listed firms, eventually moving toward mandatory compliance.  

The standard aims to embed climate risk and impact into corporate governance and capital allocation, as a means of reducing greenwashing and increasing transparency to stakeholders. For firms operating in or exporting to China, complying with or anticipating this disclosure framework is essential to secure financing, mitigate regulatory risk, and align with both international counterparts and China’s carbon neutrality goals by 2060.

The Philippines took similar steps this week, also covered by ESG Today, publishing standards based on the ISSB’s S1 and S2 standards, while Responsible Investor confirmed that the UK will publish its version by the end of the month. The debate around ESG and sustainable investing continues; however, governments and regulators across the globe plough ahead. Regardless of individual views, mandatory reporting on sustainability – in some form or another – is here to stay. 

Sustainable investing grows despite political headwinds   

According to  ESG Dive, the US Sustainable Investment Forum’s report released last month detailing annual SIF trends suggests that sustainable investing in the United States is demonstrating resilience with modest asset growth to $6.6 trillion in 2025. Despite recent political opposition, including cuts to the Inflation Reduction Act’s clean energy tax credits and proposed elimination of the EPA’s GHG Reporting Program, active stewardship continues to gain traction, now covering over two-thirds of assets in the US investment market. The report also found that UN Sustainable Development Goals are becoming increasingly influential in guiding investments, with utilization rising to 50% among surveyed asset managers. However, many respondents expressed pessimistic sentiments about the sustainable investment market overall, with only 53% expecting the sustainable investment market to grow in 2026. Despite short-term caution, respondents maintain long-term confidence, with most viewing anti-ESG pressure as purely cyclical. Cyclical changes noted include strategic language shifts, such as moving away from “ESG” terminology or placing more focus on demonstrating financial materiality. Overall, the gap between overall US investment market growth (17.5%) and US sustainable asset growth suggests uncertainty ahead. Ultimately, the  2025 US Sustainable Investment Forum (SIF) Trends Report  demonstrates  continued demand for sustainability considerations in investing, finding that investors want data-driven approaches that consider environmental risks.  

CEO-worker pay gap under the spotlight ahead of AGM season 

As a significant proportion of UK companies are set to put remuneration policies to shareholder votes in 2026, analysis from the  High Pay Centre  (reported by the   Guardian), has sought to shine a light on growing disconnect between executive pay and that of the average worker. The analysis states that, by midday on Tuesday 6 January, the average FTSE 100 CEO had earned more than the average UK worker will earn in the whole of 2026. Median annual pay for FTSE 100 CEOs  stands at  £4.4 million, 113 times higher than the £39,039 earned by the median full-time worker. While the ratio is unchanged from last year, Paul Nowak, general secretary of the Trades Union Congress, argued that the government needed to “act to rein in boardroom greed” by giving workers a seat on companies’  remuneration  committees.  Against the backdrop of discussions of competitiveness of pay, particular in comparison to the US, the arguments from the High Pay Centre serve as a reminder of the broader stakeholder focus on remuneration at listed companies. Notably, it comes only a couple of weeks after the  Financial Times  reported that large asset manager Fidelity International had written to UK company chairs to warn them against approving excessive pay packages in the year ahead.  

AI in ESG Reporting   

As artificial intelligence becomes increasingly embedded in  sustainability data and  ESG reporting,  Reuters  suggests that it  remains  imperative that humans are “kept in the loop” to ensure accuracy and data security. Sustainability regulations, particularly in Europe  through frameworks such as  CSRD and CSDD, require firms to work with larger volumes of data from more sources, often under tight timelines.   

AI’s ability to interpret unstructured data, compare disclosures at scale and identify  patterns makes it well suited to helping  organisations  navigate these pressures; however, human oversight  remains  critical. Different AI models can produce materially different results, underscoring the need for rigorous validation. Ultimately, people are needed to cross-check outputs, strategically filter vast amounts of noisy data, and ensure internal datasets are properly version-controlled and auditable.  

AI can also support the application of sustainability data to inform financial decisions, supervision and strategy. Yet the signals generated by AI still require human judgment to assess their implications and integrate them effectively into decision-making processes. While AI plays an increasingly  important role  in managing sustainability risks, humans  remain  integral to ESG reporting,  ensuring data accuracy and security, both of which are essential for high-quality decision-making.  

Canadian companies pulled backed ESG commitments in 2025 

Investor and political pushback that began in the US is now influencing how Canadian companies approach and report on ESG and DEI, The Logic reports. References to net zero in corporate disclosures fell from around 3,500 in early 2024 to 1,700 by late 2025, a 51% drop, while mentions of DEI declined by 79%. Canadian companies had previously maintained ESG commitments to ensure alignment with the evolution of regulatory and stakeholder pressures. 2025 marked a turning point though, as sustainability rules were rolled back domestically. Nadia Narain, a capital markets lawyer at Aird and Berlis, described this regulatory retreat across the US, Canada, and the EU as a domino effect. 

While the pullback in Canada is less severe than in the US, according to Manifest Climate founder Laura Zizzo, evidence of a step back is clear, including the countries six largest banks exiting the Net Zero Banking Alliance in early 2024. Narain notes that where sustainability is clearly linked to financial value, commitments have remained relatively strong. The main change has been in language, with companies avoiding ESG and DEI terms and reframing their efforts under broader sustainability narratives. 

ICYMI

• The European Commission’s proposed changes to the EU Taxonomy will be adopted and published shortly as no objections were raised by the European Parliament or the Council of the EU, according to Responsible Investor. The new delegated act introduces a financial materiality threshold making alignment disclosure voluntary for companies with less than 10% eligible activities and simplifies the Do No Significant Harm provisions.
• The Japan Times reports that despite global pushback and slowing fund flows, ESG investing remains a core long-term framework, with Japan emphasising practical implementation and measurable progress.