ESG+ Newsletter – 19 February 2026

EU to review its Shareholder Rights Directive  

On 11 February 2026, the EU launched a public consultation to support an evaluation for a possible revision of the Shareholder Rights Directive (SRD). The consultation is open until 6 May 2026. Originally adopted in 2007, the SRD set minimum standards to facilitate the exercise of shareholder rights at general meetings of companies incorporated in the EU and listed on EU-regulated markets. In 2017, the SRD was amended to promote long-term shareholder engagement and strengthen corporate governance. The revised framework introduced measures on shareholder identification and information flows, enhanced oversight of directors’ remuneration, rules on related party transactions, and increased transparency requirements for institutional investors, asset managers, and proxy advisors.  

The EU is now seeking feedback from stakeholders and is particularly interested in evidence on shortcomings in the current regime, barriers to efficient cross-border investment within the EU, and potential changes that could “unlock investment, increase Europe’s competitiveness, streamline and digitalise processes, simplify rules and reduce administrative and financial burdens.” This consultation adds to a growing list of developments that are reshaping the investment stewardship landscape. A notable development in June 2025 saw the Financial Reporting Council (FRC) update the UK Stewardship Code with a new definition of stewardship, removing references to the delivery of sustainable benefits for the economy, the environment and society, and instead placing greater emphasis on generating sustainable value for clients and beneficiaries. It will be interesting to see whether, following the outcome of its consultation, the EU takes a similar route or maintains a broader focus on stakeholder value.  

Investor views on ESG continue to evolve  

As stakeholders continue to focus on the role of ESG, the Harvard Business Review details a view from leading academics that shifting investor attitudes toward ESG, from early enthusiasm to a more pragmatic, risk-focused orientation. Countless surveys of US retail investors and institutional asset managers since 2022 show that the initial generational divide – where younger investors expressed stronger ESG commitments and willingness to sacrifice returns – has significantly narrowed. By 2025, it appears younger and older investors increasingly shared similar priorities, aligning around a view of ESG as one factor within broader risk and return considerations rather than a standalone moral or values driven imperative. The data indicates that enthusiasm for ESG has not disappeared but has converged around a financially grounded interpretation, suggesting investors now evaluate ESG primarily through its relevance to long-term value and risk mitigation. In response, companies can expect ESG scrutiny to continue; however, its framing tends to be less around ideology and more around material risk, operational resilience, and financial performance, reinforcing the importance of high-quality, decision useful ESG disclosures.  

Repeal of EPA endangerment finding triggers legal action  

Last week, President Trump and US Environmental Protection Agency (EPA) Administrator Lee Zeldin announced the repeal of the Greenhouse Gas Endangerment Finding, originally established during the Obama administration in 2009. According to Impakter, the scientific finding directed the federal government to regulate methane, carbon dioxide, and four other greenhouse gases, citing their threat to public health. In response, the EPA issued regulations requiring the reduction of emissions from various sectors, power plants, and the transport sector. Administrator Zeldin claimed, “the Endangerment Finding has been the source of 16 years of consumer choice restrictions and trillions of dollars in hidden costs for Americans.” The development is the latest effort from the Trump administration’s effort to roll back climate regulations in the US. Following the repeal, a coalition of health and environmental groups sued the EPA, describing the findings’ elimination as the largest rollback of federal climate authority in US history, with courts ultimately set to rule on the extent to which US companies will be required to disclose emissions. 

The business case for sustainability, again  

In the face of economic constraints and the sustainability backlash, Sustainable Views reports that sustainability teams are being asked to make a business case to Boards for why their work is valuable, says the head of education at the Cambridge Institute for Sustainability Leadership.  In line with the evolution of investor considerations (detailed above), an ability to demonstrate that embedding sustainability offers a more resilient or efficient business model makes it easier to sell to the Board and to secure the necessary funding to action sustainability strategy and plans.   

She also warns that this retraction is not international, however, and while the US is “stuck” and Europe embarks on a series of regulatory rollbacks, other regions are pushing ahead. Asia-Pacific and the Middle East are challenging Europe’s historical position at the forefront of sustainability. If companies want to be well-positioned to take advantage of a green economy worth $7tn annually by 2030, doubling down on sustainability as part of core business strategy is a must.   

Australia further advances sustainable investment fund labelling framework 

Australia’s federal government has launched a second public consultation on its proposed sustainable investment fund labelling regime, Responsible Investor reports. The framework aims to introduce clearer standards governing how sustainability-focused funds are marketed, named, and described, with the objective of providing investors with more consistent and reliable information on ESG strategies and claims. 

The consultation, released in February this year, builds on an initial phase held in 2025 that focused on core design questions and the overall structure of the regime. This second will focus on strengthening transparency, flexibility, and integrity within the proposed guidelines, with particular emphasis on ensuring that sustainability claims are credible and comparable across products. Feedback from this round will inform a refined design proposal, which is expected to undergo further consultation later this year. The government intends to finalise the fund labelling regime by 2027 as part of a broader package of sustainable finance reforms aimed at improving clarity and trust in the Australian market. 

ICYMI

• ESG Today reports on the European Central Bank warning that the EU’s simplified sustainability reporting standards would significantly reduce transparency for investors.