ESG+ Newsletter – 22 January 2026

The WEF’s top global risks for 2026   

Geopolitical uncertainty is the defining theme of the global risks outlook in 2026, with Geoeconomic confrontation top of mind for respondents to the World Economic Forums global risk survey. Declining trust, diminishing transparency and respect for the rule of law, along with heightened protectionism, are found to be threatening longstanding international relations, trade and investment and increasing the propensity for conflict. While these developments may appear to reduce the prioritisation of environmental concerns among corporates and investors, they have not gone far, with extreme weather events ranked third overall in the short term and elevated to the number one risk when considering the long term. The top three risks over the long term are environmental risks: extreme weather events, biodiversity loss and, and critical changes to earth’s systems.  

From a Board perspective, the past 18 months could perhaps be characterised as a period in which geopolitics became a material risk for companies in many jurisdictions, one which has to be actively discussed and managed. Regardless, though society (including Boards) will need somewhere inhabitable to live in the coming years, the impact of climate change will remain a pronounced risk for companies and stakeholders. The WEF Report does point to a modicum of optimism: that this future is not inevitable and “order can be restored if nations choose strategic collaboration even amid competition”, reminding readers that our shared responsibility will shape what comes next.  

US house limits ESG factors in retirement investing  

In a narrow vote, the United States House of Representatives passed the Protecting Prudent Investment of Retirement Savings Act late last week. According to Politico, the bill seeks to restrict when fiduciaries can consider ESG factors for Employee Retirement Income Security Act (ERISA) governed retirement funds. If enacted, the bill would reinforce that those managing ERISA funds must prioritise retirement performance rather than pursue ESG related objectives. “H.R. 2988 ensures that retirement plan sponsors make investment decisions exclusively based on economic factors and financial returns—protecting the retirement security of those saving for a brighter future,” says  Representative Rick Allen  from Georgia, who sponsored the bill. This proposal targets the Biden administration’s Department of Labor ESG fiduciary rule, which allows consideration of financially material climate-related ESG factors as a tiebreaker for competing investments. The GOP’s push to narrow the role of climate, social risk, and governance in U.S. capital markets is one of many bills proposed in a broader agenda of the House Education and Workforce Committee’s financial governance measures. This particular bill may have implications for ESG, as it could limit institutional integration of ESG data in long-term portfolio construction. The next steps in the bill’s progression remain unclear, with a challenging Senate review and debate ahead.  

ESMA warns ESG claims are often unclear and risk misleading investors  

ESMA has published new guidance warning that ESG claims are often unclear and risk misleading investors, according to  Responsible Investor. The regulator states that sustainability claims must be accurate, accessible, substantiated, and kept up to date, with ESG terminology and imagery aligned with the actual sustainability profile of the product. Highlighting common issues such as “cherry picking, exaggeration, omission, vagueness, inconsistency, lack of meaningful comparison or thresholds, and misleading imagery or sounds”. The guidance notes that there are wide differences in how firms apply ESG integration and exclusions, which are often not clearly explained. Firms are expected to clearly state whether ESG is a binding part of the strategy, how it affects portfolio construction, and whether they follow single or double materiality. In addition, firms must specify how they define ESG integration when disclosing alignment among AUM, specifying whether products exclusively integrate ESG considerations or take less stringent approaches.  

EU-Mercosur deal and climate  

As President of the European Commission, Ursula von der Leyen, headed to Paraguay to formally sign the EU-Mercosur Partnership Agreement, Deutsche Welle (DW) reported on the potential environmental impact of the deal. The article examines whether the EU-Mercosur trade agreement can balance economic integration with environmental protection, amid strong criticism from environmental groups. DW reported that opponents fear the deal will accelerate deforestation in South America by boosting exports of beef, poultry, sugar and soy linked to land clearing in sensitive ecosystems such as the Amazon, the Cerrado savanna and Gran Chaco, which also act as some of the world’s largest carbon sinks. While the agreement includes sustainability commitments and references to the Paris Climate Agreement, critics argue these provisions lack strong enforcement mechanisms and could undermine both EU climate goals and domestic environmental standards, which have already been diluted due to pressure from the political right and industry over the last year. Supporters counter that the deal could encourage cooperation on sustainable development and give the EU greater leverage to influence environmental practices in Mercosur countries, but DW concludes that the environmental outcome will ultimately depend on whether safeguards are meaningfully enforced rather than remaining largely symbolic.  

Conflict zones remain on investors’ ESG agenda  

Dutch asset manager Robeco has recently announced that it will deepen its engagement on human rights due diligence in high-risk and conflict-affected areas, as reported by SustainableViews. The move signals that investors continue to demand ESG insights on companies operating in or connected to conflict-affected regions. While Robeco has not made public the detailed methodologies underpinning its assessments, it has indicated that companies connected to the conflict are evaluated using a structured framework that considers different levels of involvement. Its approach is intended to inform stewardship actions aligned with international human rights standards.  

The announcement is notable against the backdrop of recent decisions by large ESG data and ratings providers to scale back or exclude analysis relating to conflict zones. Although Robeco is not among the largest ESG data providers, it delivers ESG research and advisory services to a number of clients, including multiple UK pension schemes. Robeco’s decision is also to be understood in the context of a reallocation of assets from European asset owners away from large US managers perceived as less active on ESG issues towards European managers with stronger ESG strategies. While transatlantic ESG differences are often framed around climate and diversity issues, Robeco’s move highlights that human rights risks in conflict settings are also part of the divide.  

ICYMI

• MENA sustainable finance reached $35bn in 2025, up sevenfold since 2020 despite a slowdown from 2023 levels, Gulf Business reports.