Emperor Sustainability Briefing 21.05.2026

Issue #21

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Less is more

In this edition we’re bringing you the latest on the EU’s streamlining of its main sustainability reporting standards, with the Commission having released the final standards in draft form. The streamlining doubles as a sign of the times. While comprehensive coverage was once the goal, in 2026 we’re seeing Europe celebrate a much-touted 60% reduction in mandatory datapoints, alongside greater flexibility and reliefs. Making things simpler, more concise, and more impact-focused is now one of sustainability’s common aims, a potential panacea to compliance fatigue.   

“Less is more” was also the takeaway from our recent event on FTSE reporting, where we enjoyed a panel discussion on clarity and transparency in the context of AI data-scraping – you can read a summary here. Elsewhere, the King’s Speech shares energy bills for the UK, and a CDP report counts the cost of extreme weather globally. 

One number:

100+

The European Securities and Markets Authority (ESMA) had to play bad cop with quite a few EU companies last year, as it took enforcement activity on over 100 published sustainability reports. 40% of these enforcement actions related to climate disclosures, with the bulk of ESMA’s actions requiring a company to make a correction in a future sustainability statement. ESMA did not name any of the companies.  

Short list:

Lightrock have launched a new emerging-markets focused energy fund, investing $500m in companies supporting accessible and sustainable energy

Sandoz has successfully secured SBTi target validation for its scope 1 & 2 emissions, alongside a supply chain emissions target covering 79% of its suppliers 

M&S has begun construction on a new food distribution centre, targeting a BREEAM ‘Outstanding’ rating and prioritising sustainability through recycled materials, rooftop solar and more

Stories:

Regulation and Frameworks

Revised ESRS: New drafts published, and consultations launched

In an important piece of news for companies in scope of the EU’s CSRD reporting directive, the European Commission has released draft final versions of both the revised ESRS standards, and the VS (Voluntary Standards) for smaller companies. The consultations are here and here. The Commission says that it will have the standards enter force as soon as possible after the consultation closes in June, meaning that the revised standards will very likely be effective for financial years beginning 1st January 2027 – i.e. for FY27 reporting.

The headline revisions to ESRS, which you may remember from the original announcement, still stand: they boast a 60% reduction in mandatory datapoints and a streamlining of materiality assessments, alongside being made shorter and clearer overall. 

The revisions also contain a raft of smaller, but still meaningful changes, with the key ones summarised below:

• For GHG reporting, companies can use either the financial control or operational control approach, most important for sectors such as energy and extractives where asset or project control is often split between several actors

• An allowance for omissions of information that might be “seriously prejudicial” to the reporter’s commercial position (a point of controversy, as it is currently unclear how much companies might be able to omit using this allowance)

• Companies must state if their transition plan is not 1.5C aligned

• If a company has reported on an anticipated financial effect, and has used estimates in order quantify the effect, then in it is allowed to update these estimates in subsequent reporting without this revision constituting an ‘error’ – a useful relief for companies having report complex or uncertain financial impacts 

If you are set to report CSRD in FY28 it’s worth reviewing the revised ESRS closely, and we would recommend performing an initial gap-analysis to identify where your reporting burden will reduce. Feel free to be in touch with us if this is something you’d like to look into. 

Corporate

CDP: companies are anticipating $900 Billion in losses from extreme weather 

According to a new report released by CDP, the popular sustainability reporting platform, companies fear that extreme weather events such as flooding or extreme heat have the potential to drive nearly $900 billion in financial losses. CDP also added that the cost to companies to mitigate environmental risks was around 13 times lower than the anticipated financial impact. 

While the systemic threat posed by the physical effects of climate change is now well-recognised – if not always well-acted upon – this news has particular resonance for companies reviewing their climate disclosures in light of the incoming IFRS S2 standard. In requiring more detailed financial disclosures on the risks of extreme weather, and the associated costs for mitigation, those who have identified significant exposures will have to think carefully about the scale and positioning of their disclosures. If you’d like to talk physical risk reporting (or UK SRS, in light of this) then do be in touch with our sustainability team and we can set up a chat. 

Policy

US set to scrap ‘Climate Rule’ 

In some past Briefings, we’ve been able to bring you some positive climate-related stories emerging from the US, despite the political environment. However, we can’t say the same for this edition. 

While New York had previous made progress with their introduction of GHG reporting regulation, last week saw a deal agreed to significantly roll back their climate goals. The 2030 economy-wide GHG emissions reduction target will now be pushed back to 2040, with the state claiming the goal had become ‘costly and unattainable’. 

Almost immediately after, the U.S. Securities and Exchange Commission (SEC) declared plans to scrap its Climate-Related Disclosure Rules – a.k.a. the ‘Climate Rule’. The Rule would have mandated TCFD-style climate-related risk disclosures, alongside a few other requirements. While the writing has been on the wall for this piece of regulation since the election in 2024, the news is concerning for the overall pace of corporate sustainability action in America. 

EU, China and Brazil team up on Carbon Market knowledge-share

The launch of the wordily-titled ‘Open Coalition on Compliance Carbon Markets’, set to be Chaired initially by Brazil, is hoped to strengthen cooperation on approaches to domestic carbon markets and carbon pricing policies worldwide. With carbon markets being relatively nascent and criticised for irregularity, and mechanisms like the EU’s Emissions Trading System (ETS) under pressure, the Coalition will hope to instate global consistency in order to strengthen domestic systems. China, for one, said it would hope to share its own practices in low-carbon development and carbon market construction. 

EU ETS update: €4bn in carbon allowances

We’ve made a habit of bringing you EU Emissions Trading System (ETS) updates in the Briefing, and don’t plan to stop now! Last week, the European Commission announced measures which will expand carbon allowances by €4bn – effectively providing permissions for companies to emit more carbon without penalty. The aim is to reduce pressure on companies during a time of high energy costs, while aligning with the EU’s wider plan of boosting global competitiveness. 

Energy

UK: King’s Speech 2026 features energy security and nuclear regulation

This year’s King’s Speech – which shares the policy agenda of the UK government over the next year – featured a number of energy bills which, taken together, can be seen as a promising continuation of the country’s meaningful progress towards a green grid. The new ‘Energy Independence Bill’ is targeted at accelerating clean energy deployment to help reduce exposure to fossil fuel markets, a position likely to be popular in the current environment. The Electricity Generator Levy Bill, meanwhile, will aim at taxing “excess profits” made by generation companies – which may prove more controversial. Separately, a Nuclear Regulation Bill will streamline the process for approving new nuclear energy projects. 

However, we also note in the Speech a lack of extended commentary on climate change or sustainability more widely, which in the current environment is perhaps predictable. The UK Green Buildings Council has a good summary. 

23% global YoY increase in wind turbine installations

The Global Wind Energy Council found that 2025 saw a 23% global increase in the number of new wind turbines installed, hitting an average of around one installation every 20 minutes. With some governments globally, including the US, blowing cool air onto the rate of renewable build out in the last few years, it’s promising to see the underlying progress. Council CEO Ben Backwell commented that the "impressive growth comes despite years of challenging business conditions and supply chain disruptions.”

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.