Emperor Sustainability Briefing 08.10.26

Issue #31

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The ‘greenest’ email you’ll read today! 

…is a headline that might get us in trouble in Europe, following the launch of a new Directive on evidencing green claims. Named “EmpCo”, its introduction at the end of last month following a long (and sometimes arduous) implementation period has meaningful consequences for sustainability claims. Separately, the UK FCA has now finalised its position on UK SRS, pivoting to a ‘comply or explain’ approach which is broadly in line with the government’s direction on limiting reporting to precisely what’s relevant.

Elsewhere, the EU launches new labels for data centres, the GRI initiates development on a new food and drink standard, and Canada looks to incorporate oil and gas into its sustainability taxonomy.

In this Briefing…

UK SRS – EmpCo launch

GRI standard – ISO and UN

Labour conference – EU data centres

Canada taxonomy – ESG investment trends

Regulation and frameworks

UK SRS timelines confirmed; shift to ‘comply or explain’ 

The FCA’s position on the UK Sustainability Reporting Standards (SRS) has now been confirmed via a much-anticipated policy statement, which – pending a short consultation – finalises the timeline for introducing the standards. The good news is that there’s no slippage or rollbacks. The timeline and scope we’ve known about for a while now are confirmed, with the climate standard S2 being introduced first (FY27 reporting) followed by S1 a few years later.

However, the FCA has also switched from SRS being mandatory for in-scope companies, to a ‘comply or explain’ approach. This naturally led to a lot of headlines around the UK “dropping” mandatory sustainability reporting. In reality, however, a shift to a comply or explain approach will not allow many, or any, companies to escape S2 reporting, with the approach also unlikely to change the reality around S1 reporting. A comply or explain approach technically means companies could not report so long as they duly “explain” why such information is genuinely not financially material. But seeing as TCFD was already comply or explain under current rules, and was robustly reported upon, it is now difficult for companies to turn around and claim that S2 (which is largely similar) is not material. Additionally, a concurrent Technical Note stipulates that the FCA expects high levels of detail on exactly why a company cannot comply, if it does end up choosing the ‘explain’ option.  

It seems comply or explain may have been selected to align with the UK’s move towards limiting corporate reporting to precisely what is relevant – but this will not remove the requirement for the large majority of companies.

It’s exciting (if you’re a Briefing writer, at least!) to see a finalised timeline. The runway for companies is now clearer than ever. If you’d like a run-through on what SRS might mean for your business given this announcement – or like to discuss what a dedicated workshop could look like for you – do be in touch with [email protected] and we’d be happy to set up a chat!

EU’s EmpCo launches, covering environmental claims

“EmpCo” might be a shorthand name for our own company, Emperor (although we’d probably come up with something catchier). But it actually refers to the EU’s newly launched Directive, Empowering Consumers for the Green Transition. With a lengthy implementation period lasting over two years, EmpCo is now in force, and introduces requirements around environmental marketing and sustainability-related communications. This includes bans on:

• Generic environmental claims like “green”, “sustainable”, unless excellent environmental performance can be evidenced to back this up

• Claims about future environmental performance, unless supported by targets and a detailed implementation plan, verified by an independent third party

• Product-level “carbon neutral”-type claims which are based only on offsetting schemes

• …and much more!

For emissions targets and transition plans, EmpCo will likely place greater legal pressure and scrutiny on EU companies to ensure properly costed and organised decarbonisation approaches. More broadly, it is important to note that while EmpCo intuitively refers to products on the shelf – for instance, a brand of washing-up liquid that claims to be the “greenest” – the scope of the Directive is wide enough to embrace corporate sustainability claims, such as what companies put on their websites or in reports.

Over the next few months and years we’ll get a clearer view into how regulators and consumer authorities will apply these rules in practice. But EmpCo could certainly represent a step-change within the broader direction of travel towards verifiable and thoroughly-evidenced sustainability claims.

GRI to develop new sustainability reporting standard for food and beverage sector

The Global Reporting Initiative (GRI), one of the world’s most influential disclosure standards bodies, has announced plans to develop a new sector-specific reporting standard for food and beverage companies. The standard will address material issues including climate change, biodiversity, labour practices and public health, and will consider links to agriculture, aquaculture and fishing. It will also be the first to use GRI's new streamlined approach to sector standard development, which is designed to speed up the delivery of industry-specific guidance. As the sector faces growing scrutiny over the environmental and social impacts of its operations and supply chains, a dedicated standard could help bring greater consistency to how those impacts are reported. It is worth noting that sector-specific GRI standards do tend to have good uptake by the companies that they are relevant to.

To start off, the GRI is looking for an expert body of 20 to join its review group. Depending on how “streamlined” the new approach is, it may still be a year or so before we see a first standard.

ISO and UN tie up on new SDGs standard

The UN Sustainable Development Goals (SDGs) have long been a somewhat uneasy part of corporate sustainability. Representing 17 categories of global ambitions for a more sustainable world, they’ve often been employed by companies more as “badges” than as strong evidence of sustainability action. This doesn’t make them unimportant, but it can lead to them being perceived as additional rather than as the foundations of a strategy. A newly launched ISO standard – ISO/UNDP 53001 – seeks to change this, by establishing a method for integrating SDG objectives into strategic management. If SDGs have served as a helpful blueprint for your own corporate action, it’s worth looking into this new ISO.

Shortlist

Crédit Agricole, the Paris-based investment group, announced the launch of a new natural capital division targeting nature restoration projects – which follows a similar move by JP Morgan.

Policy

UK Labour party links environmental priorities to economic renewal at party conference

Environmental and sustainability policy featured throughout Labour's 2026 conference in Liverpool, largely framed around lower costs, economic growth and a greater public role in key services. In his first conference speech as Prime Minister, Andy Burnham announced the Great British Grid, a publicly owned body within Great British Energy intended to speed up grid connections, increase competition with private network operators and bring down energy bills. A refreshed grid is sorely needed in the UK to support the energy transition, meaning this is (likely) welcome news for those in renewables.

The government also outlined a strengthened Water Bill, which would remove limits on public ownership of water companies, and provide extra powers to ensure accountability. Both sit within a wider pledge to increase public control over energy, water and housing. Discussions around nature recovery, sustainable farming and private investment in the transition to net zero largely sat within Labour's broader focus on growth, resilience and regional development.

The common thread was that climate and environmental policy was largely framed around bills and accountability, which may also make it more palatable to general audiences. This has so far been typical for how the current government has approached sustainability-related policy.

Sign of the times: EU to introduce sustainability labels for data centres

The European Commission has proposed  mandatory sustainability labels for EU data centres with capacities over 500kW, rating facilities on factors such as energy efficiency, water consumption, power sources, grid flexibility and waste heat reuse. The regulation still needs to pass through the European Parliament, but the proposal aims for the first sustainability labels to be displayed from August 2027. Alongside the proposal, a consultation on minimum performance standards for data centres has also been opened until mid- December.

The move demonstrates a tension that is emerging globally. The EU wants to triple its data centre capacity over the next five to seven years to strengthen technological independence and digital sovereignty, while also addressing the challenges created by that growth, including pressure on electricity grids, use of natural resources and carbon emissions. 

It will be interesting to follow both the regulation's progress through Parliament and the feedback the EU receives on what these expectations for data centres should be. So far – at risk of making a sweeping statement – it has generally been the case globally that driving growth in AI and computing power has taken precedence over sustainability objectives. Sustainability labels are a way to mitigate this effect, but they still represent a prioritisation of economic growth and technological security over net zero goals. 

Canada’s Sustainable Finance Taxonomy faces backlash over oil and gas inclusion

The development of Canada’s Sustainable Finance Taxonomy has faced significant pushback over its proposed inclusion of oil and gas production in its ‘Abatement’ category. Taxonomies are meant to provide a classification system for economic activities considered sustainable, with the justification being that investment in fossil fuels can ultimately support the wider transition towards a lower-carbon grid.

Around two-thirds of consultation respondents opposed the Abatement category, citing concerns that it could extend the life of fossil fuel assets, create carbon lock-in and reduce alignment with sustainable finance frameworks used in other markets. Notably, the taxonomy Chair has not ruled out the proposal, instead stating that there is still “work to do” to provide greater clarity on how the category would operate before a final decision is made.

Finance 

Younger investors continue to favour ESG voting over their older counterparts

New data from financial services company Vanguard suggests that younger investors remain significantly more likely to support ESG-focused proxy voting policies than older generations. According to the asset manager, in a recent test 38.8% of investors under 30, and 36.3% of those aged 31-45, preferred an ESG policy, compared with just 16.2% of those aged 62-80. Female investors were also more likely than male investors to choose ESG- focused voting approaches. Broadly speaking, this generational divide was well-known, but continued confirmation of it shows that it’s not a gap that is likely to close soon. As younger investors take on a larger share of capital over time, companies seeking to engage long-term investors should expect environmental, social and governance considerations to stay on the agenda, even if the tone of the debate varies by region.

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.