Germany's Federal Administrative Court has ordered the government to overhaul its 2023 Climate Protection Programme. The programme fails to meet the legally binding target of cutting emissions by 65% by 2030 – the shortfall amounts to 200 million tonnes of CO₂ equivalents. The court also affirmed NGOs' right to sue for climate enforcement. For companies, this underscores the importance of robust transition plans.

Read more: Federal Administrative Court

EBA, EIOPA and ESMA have published joint guidelines for ESG stress testing, effective January 1, 2027. The initial focus is on climate risks. For companies, this means financial partners will increasingly rely on consistent ESG data from their business partners.

Read more: EBA Press Release

 Despite increased clarity, some dossiers remain dynamic:

• On EUDR, the Commission is expected to present simplification proposals by April
• On CBAM, implementation is becoming more serious, with plans to extend the regulation to additional downstream product categories

ESG remains political in 2026 – but far less opaque than in the year before.

 The ECB has fully integrated climate and nature risks into its supervisory processes. From 2026, it will conduct informal dialogues with banks on prudential transition plans. Climate-related transition risks will also be incorporated into the collateral framework from the second half of 2026.

Read more: ECB Press Release

ESMA has expanded its guidance on sustainability-related claims. Terms like "ESG integration" are frequently used inconsistently, according to the regulator. 64% of affected funds have changed their names, mostly to avoid ESG terminology.

Read more: ESMA Thematic Note

 The UK's FCA is proposing new reporting requirements under UK Sustainability Reporting Standards for listed companies from January 2027. Climate disclosures will be mandatory, with Scope 3 emissions following on a comply-or-explain basis. The consultation runs until March 20, 2026.

Read more: FCA Consultation

Hong Kong Expands Taxonomy: The HKMA has published Phase 2A of its Sustainable Finance Taxonomy. Transition activities and climate adaptation measures are now classified – covering 25 activities across six sectors.

Read more: HKMA Press Release