Emperor Sustainability Briefing 05.11.26

Issue #33

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Big plans

It’s been a major two weeks for national sustainability plans. The EU’s Climate Resilience Framework could well prove to be a milestone for how international plans for climate adaptation are approached, while the UK’s Budget holds firm to net zero.

It’s all systems go elsewhere too: EU’s generic green claims legislation begins to bite, the IFRS shares its much-anticipated nature guidance, and ESMA shares its focus areas for CSRD reporting. You’ll have to forgive us for the long wordcount!

In this Briefing…

EU climate framework – UK budget

Green claims – IFRS Nature

GHG Protocol – ESMA priorities

Short list

Deutsche Bank has reported its strongest sustainable finance quarter since 2020, with sustainable and transition financing reaching €32bn in Q3 2026, up 42% year-on-year. 

Meta has teamed up with low carbon cement maker Fortera on a multi-year deal, with Fortera touting a carbon footprint 70% lower than traditional cement. 

One Number

77%

The number of European experts reporting that they have experienced “backlash” against the sustainability agenda, according to a recent GlobeScan report. For Europe, this is actually up from the equivalent report last year – but the US remains the epicentre, with 84% of respondents reporting pushback.

Policy

EU launches much-anticipated Climate Resilience Framework for a 3°C future

Last week the EU unveiled its new Climate Resilience Framework, a sweeping set of laws and goals which aim to prepare member states for 3°C of global warming. Set to have consequences across policy, corporate action and geopolitics, the core aim of the framework is to integrate management of climate risk throughout EU systems and policies, including in energy, buildings, nature, agriculture and more. This will require significant investment, currently estimated at €70bn annually – although much of this investment will be aimed at reducing climate-change induced losses. 

From a corporate sustainability point of view, businesses will be expected to play a key role in developing and delivering adaptation services. The framework attempts to make the most of the global opportunity for the EU here, with the bloc wanting to become leaders in delivering climate-resilience products to the world, which is set to become a multi-trillion euro market. This will no doubt have to be led by EU companies providing the innovation and services required. And as the framework develops, we will likely see greater expectations placed on company communications on their own climate-change resilience, with such disclosures already forming a key part of CSRD and TCFD reporting.

The framework will primarily be implemented through amending the EU’s existing Governance Regulation, which will in turn provide a common reference warming trajectory and set the baseline for national resilience plans. While the Framework has been in the works for a while and builds on already-substantial EU climate regulation, it will be buoyed by a summer of heatwaves which pushed many European countries to their limits, putting the need for adaptation at the forefront. Make sure you’re subscribed to the Briefing as we bring you updates on the Framework’s implementation, and what it might mean for EU companies.

Green claims get a reality check as EU rules bite

Major consumer brands have rewritten their sustainability messaging in the same week, as the EU’s anti-greenwashing regime starts to change corporate behaviour.

Lufthansa is renaming its Green Fare, which lets passengers fund emissions reduction and removal initiatives, to Impact Fare, citing “new regulatory requirements for environmental communication”. The move follows the start of the EU’s Empowering Consumers for the Green Transition Directive (EmpCo), which bans unverified generic claims such as “environmentally friendly”. Read more on how EmpCo works in a previous Briefing. 

Meanwhile, Danone has agreed to revise recycling claims on its plastic water bottles after a complaint by the European Consumer Organisation (BEUC), joining Coca-Cola and Nestlé. With regulators now judging the overall impression a claim creates, as well as its wording, these companies won’t be the last to reconsider and tweak green claims in the wake of tougher EU scrutiny and regulation.

The Budget: UK Government “unshakably committed to net zero”

So said UK Chancellor John Healey as he laid out his first budget, which had a big focus on making energy cheaper in the wake of high energy bills. For sustainability experts, it will be encouraging to see the link between fossil fuel dependence and high energy prices being made explicit within the budget, with clean power front and centre of the government’s efforts to cut costs. The maintenance of the 2050 net zero target is similarly reassuring, particularly given calls from the right to scrap the target to cut energy prices. Instead, much of the budget’s focus was on support for household and business energy bills, with reference also given to Allocation Round 8, the government’s ongoing investment scheme for renewable energy.

However, as has already been seen with the current Labour government, progress on sustainability will remain balanced against other priorities. Healey welcomed the approval of the controversial North Sea Jackdaw gas project, notionally passed in order to increase energy security. The warm homes plan saw cuts to the tune of £1bn, endangering the Government’s heat-pump installation target, with carbon capture and hydrogen also seeing significant cuts.

Additionally, an excitingly-titled “data-centre covenant” will seek to address the hot topic of data centres, which have seen rapid build-out in recent years driven by the growth of AI. The “covenant” will require data centres to adhere to higher environmental standards, although there are still fears that allowances for “on-site power” for centres will be provided by fossil fuel generation rather than clean power. We’ll aim to bring you the latest on this and more as the policy consequences of the budget develop. 

Corporate 

ESMA puts balance and targets under the spotlight

The EU’s markets regulator has set out where it will look hardest in this year’s sustainability statements, and the message for reporters is clear: balance and consistency matter.

In its annual enforcement priorities, ESMA said materiality remains essential, with a focus on impacts, risks and opportunities (IROs) and the double materiality assessment process. A key finding was that some companies disclose far more about positive impacts than negative ones, which may not give users a balanced view. Enforcers have said that on this front, they will pay particular attention to ESRS E1 Climate Change and S1 Own Workforce disclosures.

Targets are another focus. ESMA criticised companies that reference “science-based” or “1.5 degrees” without explaining whether and how their targets meet these characteristics, and reminded them to disclose if a target has been missed or abandoned.

Although ESMA lacks the power to punish companies directly, its point of view is generally taken seriously within the market, with its enforcement priorities helping to set the tone for the next year of reporting. At the core of the priorities is a simple message: focus on transparent, consistent reporting of material issues.

Regulation and frameworks

IFRS Sustainability publishes draft nature-related disclosure guidance

The ISSB (the IFRS’ Sustainability board) has published its long-awaited exposure draft on nature-related disclosures, setting out how companies should report to investors on risks and opportunities tied to nature.

To address perhaps your first question: This will not become an “S3”, following IFRS S1 on sustainability and S2 on climate. Nature risks and opportunities are instead intended to become a part of S1 reporting (as was expected). Additionally, nature guidance will very much be guidance rather than an addition to the core standards, and companies will be able to fully comply with S1 and S2 without referring to it. In short, the IFRS is aiming to build-in high-quality and consistent nature disclosures without disrupting or complicating alignment with the core standards.

The guidance itself is close to the TNFD recommendations, which had also been known for a while, not least as the TNFD’s materials had been officially absorbed into the ISSB. As the world is still getting to grips with S1 and S2, we don’t expect companies to leap at nature-related IFRS reporting from the moment that it’s officially approved. Companies who were looking to report on nature may already have done so through TNFD, and indeed these companies will be ahead of the curve for the IFRS’ guidance. However, the inclusion of nature alongside S1 and S2 will have a meaningful effect on reporting expectations over the next five years or so, particularly as companies build out their full S1 disclosures.

The consultation period will run until February 2027, with a final publication date some time in 2027 seeming likely. TNFD recently received an update to its core assessment process – you can read about this in the previous edition of the Briefing. 

GHG Protocol delays scope 2 revision after pushback

Results from a recent consultation showed that the vast majority of companies (82%) opposed the Protocol’s planned changes to scope 2 reporting rules, which would’ve required clean energy matching. Matching is a more advanced form of emissions accounting that links an energy purchase to its specific time and place to create more specific environmental benefit reporting. However, many respondents felt that greater specificity would discourage broader energy investment. Learnings from the consultation will feed into the upcoming GHG Protocol-ISO Corporate Standard, which still targets a Q4 2028 publication date. 

To discuss any of these topics in more detail or speak to one of our Sustainability team about how to better your corporate sustainability efforts, email [email protected] -we'd love to hear from you.