December 2025 marked a pivotal transition from regulatory design to practical implementation in the ESG compliance landscape. The most significant developments that will influence reporting and governance in 2026 include:
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CBAM’s operational rules and simplifications have been formalised, confirming the shift from reporting-only requirements to substantive compliance obligations for importers.
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EU Taxonomy reporting has been simplified, reducing administrative burden and introducing materiality thresholds and more proportionate DNSH criteria.
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ESG stress testing expectations have been harmonised across the EU financial sector through joint guidelines by the European Supervisory Authorities (ESAs).
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Regulatory oversight of ESG rating providers is taking shape, with ESMA’s authorisation framework and planned workshops signalling stronger governance expectations.
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Global alignment on sustainability reporting continues, with major markets such as China introducing climate disclosure standards influenced by international frameworks.
These developments underline the shift in 2026 toward data quality, governance integration, and preparedness for compliance obligations.
Transition from regulation to implementation
As 2025 ended, key ESG regulatory initiatives in both the EU and the UK reached critical milestones, transitioning from design and consultation phases to more concrete requirements that will shape the compliance landscape in 2026.
Companies under the scope of CSRD, as well as those preparing for future reporting obligations, must now integrate these changes into operational processes, data governance frameworks, and risk management systems to support accurate and robust sustainability reporting.
This update covers:
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CBAM and supply-chain emissions
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EU Taxonomy simplification
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ESG stress testing
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ESG ratings oversight
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UK regulatory signals
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International reporting trends
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ESRS simplification and EFRAG implementation support
CBAM: simplification and operational rules for emissions reporting
In October 2025, the EU formally adopted amendments to the Carbon Border Adjustment Mechanism (CBAM) Regulation (Regulation (EU) 2025/2083), which entered into force on 20 October 2025. These amendments introduce significant simplifications ahead of the compliance phase starting 1 January 2026.
Key elements of the amendments include:
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A ‘de minimis’ exemption for importers of up to 50 tonnes per year of CBAM-covered goods, targeting the removal of obligations for small volumes while keeping coverage of at least 99 % of emissions in scope.
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Adjustments to reporting timelines and procedural aspects to reduce administrative burden.
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Continued emphasis on data collection and quality for embedded emissions, as outlined in Commission Implementing Regulation (EU) 2025/2547 (methods for calculating embedded emissions to be applied from 2026).
These changes reinforce the need for structured data collection from suppliers and careful preparation of internal reporting systems, especially for companies with complex value chains.
Source: EU Taxation and Customs Union – Officially published simplifications for the CBAM
https://taxation-customs.ec.europa.eu/news/officially-published-simplifications-carbon-border-adjustment-mechanism-cbam-2025-10-20_en
EU Taxonomy: formal simplification and reporting burden reduction
In 2025, the European Commission adopted a Delegated Act under the Omnibus simplification package to streamline the application of the EU Taxonomy reporting requirements. These measures aim to reduce the reporting burden for companies while retaining the Taxonomy’s core environmental objectives.
Key points of the simplification include:
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Introduction of materiality thresholds that allow companies to exclude economic activities representing less than 10 % of turnover, CapEx or OpEx from Taxonomy assessment.
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Simplifications to DNSH criteria, particularly for pollution prevention and control, making compliance more proportionate.
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Reduced data points in disclosure templates and adjusted KPI requirements for financial undertakings under specific conditions.
These simplifications are designed to support companies in focusing on material Taxonomy-aligned activities without compromising overall transparency.
Source: European Commission Taxonomy simplification Delegated Act (Omnibus package)
ESG stress testing: joint supervisory expectations
The European Supervisory Authorities (EBA, EIOPA and ESMA) have published joint Guidelines on ESG stress testing, setting a harmonised baseline for integrating ESG risks into the stress testing frameworks of banks and insurance companies.
These guidelines clarify how ESG risks should be incorporated into prudential assessments and outline governance and organisational expectations for effective integration. While targeted at financial supervisors and institutions, these standards will indirectly influence corporate requirements, as financial counterparties increasingly expect consistent ESG data from corporates.
Source: European Supervisory Authorities – Joint Guidelines on ESG stress testing
https://www.eba.europa.eu/publications-and-media/press-releases/esas-publish-joint-guidelines-esg-stress-testing
ESMA and ESG ratings: governance and authorisation
ESMA is advancing the regulatory framework for ESG rating providers, reflecting the EU’s focus on improving transparency and reliability in sustainability assessments. A dedicated workshop on the authorisation process for ESG ratings providers is scheduled for 31 March 2026, with both on-site and remote participation expected.
This initiative is part of broader EU efforts to ensure that ESG ratings, which feed into investment decisions and corporate risk assessments, meet consistent standards of quality and governance.
Source: ESMA Events – Workshop on the authorisation of ESG rating providers
https://www.esma.europa.eu/events
UK signals: sustainability reporting standards and ESG ratings regulation
In the UK, regulatory developments continue to shape the sustainability reporting landscape:
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The FCA has consulted on a regulatory regime for ESG ratings, proposing authorisation and oversight measures for providers of ESG data and scores that support UK regulated activities.
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The UK Sustainability Reporting Standards (UK SRS) initiative remains on track for publication and early adoption phases in 2026, aligning with broader global reporting expectations.
These signals indicate the UK’s intention to maintain robust oversight of ESG disclosures while fostering comparability with international frameworks.
Sources:
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FCA consultation on ESG ratings (CP25/34 – Proposed approach to ESG ratings regulation)
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UK Government updates on UK SRS
(Link: FCA/GOV.UK on respective official sites)
International alignment: China’s climate disclosure standard
Outside Europe, China has introduced the Corporate Sustainable Disclosure Standard No. 1 – Climate (Trial), developed by the Ministry of Finance and other regulatory bodies. This standard draws on the structure of IFRS S2 and embeds a double materiality perspective, requiring companies to disclose both the impact of climate risks on financial performance and the effects of company activities on the climate.
Although currently in a trial, voluntary phase, this standard signals growing global convergence around climate disclosure expectations, supporting comparability and transparency internationally.
Reference: IFRS Foundation – ISSB Standards (including IFRS S2)
https://www.ifrs.org/issued-standards/issb-standards
ESRS: EFRAG support for simplified reporting
EFRAG has published a suite of documents to facilitate stakeholder understanding of simplified drafts of the European Sustainability Reporting Standards (ESRS). These materials include the basis for conclusions, cost-benefit analyses and comparative tables, and are designed to support companies implementing CSRD-aligned reporting.
Source: EFRAG – Draft simplified ESRS supporting materials
https://www.efrag.org/en/draft-simplified-esrs
2026 is the year of ESG implementation
The December 2025 regulatory updates, from CBAM simplifications and Taxonomy reporting changes to supervisory guidance and global disclosure trends, confirm that 2026 will be a year of action and integration. Regulatory requirements are becoming more concrete and expectations around governance, data quality and operational readiness are rising.
For companies, the priority will be to embed these changes in robust processes, with clear governance structures and reliable data flows that support both compliance and strategic decision-making.
Synesgy helps you align data, reporting and governance across your ESG landscape, from supply chain visibility to regulatory readiness.
Explore how Synesgy supports your 2026 compliance journey: www.synesgy.com
Frequently Asked Questions (FAQ)
What are the most relevant ESG regulatory changes for companies in 2026?
The most significant changes stem from the transition from regulatory design to implementation. In 2026, companies will face clearer and more operational requirements related to CBAM emissions data, simplified but still robust EU Taxonomy reporting, strengthened ESG risk integration expectations, and increasing scrutiny of ESG ratings and disclosures.
What should companies prioritise now to prepare for 2026?
Companies should focus on strengthening ESG data governance, improving traceability across supply chains, aligning internal processes with regulatory definitions, and ensuring cross-functional coordination between sustainability, finance, risk and compliance teams.
How can digital platforms support ESG regulatory compliance?
Digital ESG platforms can support compliance by enabling structured data collection, supplier engagement, continuous monitoring and alignment with regulatory frameworks. This helps companies move from ad hoc reporting to a scalable and auditable ESG governance approach.
