ESG+ Newsletter – 26 February 2026

UK latest country to adopt ISSB inspired sustainability reporting requirements 

On 25 February 2026, the UK Department for Business and Trade released the new UK Sustainability Reporting Standards (UK SRS), marking a significant step in modernising corporate reporting. The standards, reported on by Responsible Investor, align closely with the ISSB’s IFRS S1 and S2, ensuring international comparability while adapting to UK-specific needs. Building on the foundation of the Taskforce on Climate-related Financial Disclosures (TCFD), in becoming the latest jurisdiction to adopt ISSB standards, the UK SRS aims to strengthen the quality, consistency, and decision usefulness of corporate sustainability disclosures. 

The Financial Conduct Authority (FCA) is consulting on how UK SRS will be incorporated into listing rules, with the consultation closing on 20 March 2026. Organisations already reporting under TCFD will be familiar with the required governance, data systems, scenario analysis, and integration of climate risks into strategy; however, the UK SRS will introduce more detailed reporting requirements, while potentially extending reporting expectations beyond climate, depending on the final outcome of the FCA’s consultation.  

The UK SRS is part of broader efforts from the UK to ensure impactful sustainability reporting, with assurance engagements set to follow ISSA (UK) 5000 from December 2026, designed to support quality and consistency in assurance of sustainability reporting.  

South Korea continues its corporate governance reform

As reported by the Financial Times, the Korean National Assembly has passed a revision to the Commercial Act requiring listed companies to cancel newly acquired treasury shares within one year. The change ends a practice that investors argue has enabled controlling families to reinforce their control over their conglomerates at the expense of minority shareholders. Acquired shares have often been retained for intragroup mergers or as a defence against hostile takeovers. Because these shares were not cancelled, repurchases frequently failed to support share prices. The measure forms part of a broader effort to improve governance and reduce the so-called “Korea discount,” which has weighed on valuations relative to other markets. In July, the Parliament imposed a legal duty on directors to consider the interests of all shareholders, rather than just the company, in ways critics said favoured controlling families. Other changes included the introduction of cumulative voting, allowing minority shareholders to concentrate their votes on their preferred board candidates, and separate auditor elections. The reforms have coincided with strong performance in the Kospi Index, which is up 40% in 2026 after increasing by 76% last year. Further reform proposals aim to strengthen institutional investors’ fiduciary duties and promote more active shareholder engagement. At a time when corporate governance protections are often challenged in the name of competitiveness, South Korea continues its reforms to give minority investors a meaningful voice.  

US to West’s energy watchdog: scrap net zero focus or  we’ll quit  

The US Secretary of Energy, Chris Wright, threatened to pull the US out of the International Energy Agency (IEA) within the next year if the group does not end its support of goals to achieve net-zero energy emissions. A February 19th Reuters article reported that “European countries played down the threat at the agency’s biennial meeting and restated their commitment to pursuing cleaner fuel.” The IEA was formed following the 1970s oil supply crisis and provides research and data to industrialised governments to inform energy policy. President Donald Trump and his administration may also take issue with IEA’s fee structure, under which the US has paid ~$6M per year, as he has previously clashed with Europe and sought to minimise the US’s contributions to international organisations. In order to achieve net-zero energy emissions globally, the US will need to contribute to emissions reductions and remain a critical partner for global climate initiatives.  

ESG remains relevant while losing momentum among fund managers 

New data from the FT Fund Image UK 2025-2026 survey suggests ESG is no longer a decisive factor for most advisers, the Financial Times reports. Only 9% of IFAs and discretionary fund managers say ESG is very important in investment decisions, while 25% believe it has no impact at all. Although some still see value, with 22% viewing it as helpful but not critical, with a further 25% believing it is somewhat important. The findings come amid rising scrutiny of greenwashing and tighter oversight from the Financial Conduct Authority, alongside geopolitical pressures. Policy reversals by President Trump and developments at COP30 have added to uncertainty, contributing to weaker ESG fund flows in the US and sharp outflows in Europe during 2025. The ESG landscape has been more fragmented since pre-pandemic times, with many in the industry noting that pre-pandemic levels have not been reached again and that, since 2022, ESG fund flows have become uneven and less consistent. 

While there is a comparative slowdown to 2020, ESG remains financially and compliance relevant. Despite European cutbacks last year, there is still the continued introduction of sustainable finance regulation at a global level, such as new disclosure and labelling rules to improve transparency and restore trust in the UK and Australia, while pension bodies such as the UK Sustainable Investment and Finance Association are calling for climate risk to be embedded in long-term retirement planning. Attention is also shifting from mitigation to adaptation, with a greater focus on resilience and infrastructure investment as climate impacts intensify, with this topic at the forefront of COP30 discussions. In recognition that climate change is already happening and that mitigating future effects is not enough, investors must also allocate capital to address impacts already being felt, such as extreme heat, drought, and flooding. While ESG may no longer dominate marketing narratives, it continues to evolve within mainstream investment frameworks rather than disappearing altogether. 

Omnibus final approval to reduce sustainability reporting and due diligence requirements  

EU member states on 24 February 2026 gave final approval to the Omnibus I simplification package, significantly reducing sustainability reporting and due diligence obligations for companies across the bloc. The agreement, backed by the European Council following earlier approval by the European Parliament, overhauls key EU sustainability laws, notably the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).  

Under the new terms, the CSRD will apply only to very large firms (above 1000 employees and €450 million turnover), excluding around 90 % of companies previously in scope. Due diligence obligations under the CSDDD are limited to the largest firms (more than 5000 employees and €1.5 billion turnover), with compliance delays and reduced requirements agreed.   

Supporters argue the changes cut red tape and boost competitiveness, while critics warn they weaken corporate accountability for environmental and social impacts. 

Canada’s investors continue to integrate ESG, with transition plans in focus 

Integration of environmental, social, and governance factors into investment decision-making remains strong among Canadian institutional investors, according to Montreal-based sustainability advisory company Millani. Commissioning a report based on interviews with 36 Canadian institutional investors representing $10.3tn in assets under management, Millani found 75% of Canadian institutional investors maintain a 100% commitment to ESG integration, whilst a further 22% maintain a commitment between 75 – 100%, regardless of mounting political pushback and heightened regulatory scrutiny. Discussing the results, Sustainable Views suggests that the results counter narratives of a broad retreat from ESG instead highlighting a recalibration, embedding sustainability-related risks and opportunities within mainstream investment, risk management, stewardship, and governance functions, integral to core capital allocation and risk oversight. The findings also highlighted that investors are placing greater focus on developing and communicating climate transition plans, managing physical and transition risks, and integrating climate analysis at the portfolio level.  

ICYMI

• Over 250 investors have committed to a relaunched version of the Net Zero Asset Managers (NZAM) initiative, IPE reports.
• An official advisor has concluded that the Scottish Government can meet emissions targets for 2030, but “significant risks and gaps” remain in its carbon reduction policy framework from the period 2031 to 2045. According to Business Green, further work is needed to put country on track to meet these longer-term goals.