Global Sustainability & ESG Insights - February 2026

Global

SBTi Launches Consultation on Updated Automotive Net Zero Standard 

On February 3, the Science Based Targets initiative (SBTi) released an updated draft of its Automotive Sector Net Zero Standard for a second consultation. The Standard aims to support automakers and auto parts manufacturers in setting science based net zero targets aligned with the 2050 goal. Once finalizes, it will replace automotive sections of the existing Land Transport Guidance. The consultation will close March 22. 

Asia

Hong Kong

Electric vehicles roadmap updated

On February 12, the Hong Kong SAR Government released an updated Roadmap on the Popularisation of Electric Vehicles (EVs). The Roadmap reaffirms the target to cease new registrations of fuel propelled private cars by 2035 or earlier, and builds on the 2024 Green Transformation Roadmap for Public Buses and Taxis. The updated Roadmap sets out 28 measures across five areas, including policy promotion, electric private cars, electric commercial vehicles, charging networks, and supporting measures. Key actions include expanding fast charging infrastructure, internationalizing and piloting next generation charging standards, and launching Hong Kong’s first large scale EV battery recycling facility in 2026.

Europe

Omnibus I Package: Sustainability Reporting and Due Diligence Rules Simplified

On February 26, the Omnibus I package simplifying sustainability reporting and due diligence rules was published in Official Journal. The reforms significantly narrow the scope of both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), aiming to reduce administrative burdens. 
Under the CSRD, reporting now applies only to companies with more than 1,000 employees and over €450 million in net annual turnover, with tighter thresholds for third country groups. Transitional exemptions apply to certain companies that began reporting in 2024, and some financial holding companies are excluded from consolidated reporting.
The CSDDD now applies only to very large companies (over 5,000 employees and €1.5 billion turnover), allows risk based prioritization in value chains, removes the climate transition plan requirement, limits liability exposure, and caps penalties at 3% of global turnover. 

Climate Law

On February 10, the European Parliament approved amendments to the EU Climate Law. The amendments introduce a legally binding target to cut net greenhouse gas emissions by 90% by 2040 compared with 1990 levels. The target acts as a bridge between the existing 2030 goal (‑55%) and the 2050 climate‑neutrality objective. To support implementation, lawmakers agreed a package of flexibilities: from 2036, up to 5% of emissions reductions may come from high‑quality international carbon credits; domestic permanent carbon removals may be used for hard‑to‑abate emissions; and EU’s ETS2 covering buildings and road transport is postponed from 2027 to 2028.

Ecodesign for Sustainable Products Regulation 

On February 9, the European Commission adopted new measures under the Ecodesign for Sustainable Products Regulation (ESPR) to stop the destruction of unsold clothing, accessories and footwear. The rules aim to cut waste, reduce environmental harm and support circular business models. Under the ESPR, businesses must disclose the volume of unsold goods they discard using a new standardized reporting format from February 2027. A ban on destruction will apply to large companies from July 19, 2026, extending to medium‑sized companies in 2030. New Delegated and Implementing Acts set out limited exemptions and specify reporting requirements. 

Standard for Carbon Removal Projects Published

On February 3, the European Commission adopted the world’s first voluntary certification methodologies for permanent carbon removals, establishing a unified EU standard under the Carbon Removals and Carbon Farming Regulation. The rules define how permanent removals must be quantified, verified, and monitored, and set criteria for managing key risks such as leakage and liability. They initially cover Direct Air Capture with Carbon Storage, Biogenic Carbon Capture and Storage, and Biochar Carbon Removal.

UK 

Sustainability Reporting Standards Published

On February 25, the UK Government published the UK Sustainability Reporting Standards S1 and S2, establishing the UK’s core framework for sustainability and climate related financial disclosures. UK SRS S1 sets the overarching rules requiring businesses to report all material sustainability related risks and opportunities affecting cash flows, access to finance or cost of capital, structured around governance, strategy, risk management, and metrics and targets. It mandates connected, decision useful disclosures aligned with financial statements, with an emphasis on materiality, fair presentation, comparability and clarity.

UK SRS S2 adds detailed requirements for climate related disclosures, including physical and transition risks, climate-related opportunities, financial impacts, resilience assessments using scenario analysis, and Scope 1, 2 and 3 GHG emissions (primarily using the Greenhouse Gas Protocol). Businesses must also disclose climate transition plans and climate related targets. Transitional relief applies for first year reporters, including delayed Scope 3 disclosure.

Draft Deposit Return Scheme for Drinks Containers (Wales) Regulations 2026 Published 

On February 12, the Welsh Government laid the draft Deposit Return Scheme (DRS) for Drinks Containers Regulations 2026. The regulations would introduce a Wales‑wide DRS from October 1, 2027, aligned with the other UK schemes. They require deposits on in‑scope single‑use and reusable PET plastic, glass, aluminum and steel drinks containers between 150ml and three liters, refundable on return. The framework enables appointment of a Deposit Management Organization, sets governance and deposit‑setting duties, and establishes recycling targets, enforcement mechanisms, exemptions for low‑volume products, and an appeals process. Unlike the England and Northern Ireland schemes, the Welsh DRS will include glass. 

Biodiversity Beyond National Jurisdiction Act Finalized

On February 12, Biodiversity Beyond National Jurisdiction Act received royal assent. This decision marks a key step forward in ratifying the Biodiversity Beyond National Jurisdiction (BBNJ) Agreement, also known as the High Seas Treaty. The Agreement is the first international mechanism enabling marine protected areas on the high seas and requires environmental impact assessments for activities that could harm marine ecosystems. Secondary legislation is now needed to operationalize requirements under the Agreement. 

Carbon Border Adjustment Mechanism Development

On February 10, the UK Government published a policy summary and opened a consultation on three sets of draft regulations for the carbon border adjustment mechanism (CBAM), which is scheduled to commence on January 1, 2027. The policy summary outlines how the CBAM will operate under the Finance (No 2) Bill 2026 and accompanying regulations, including its scope, liability calculation and administration. The draft regulations cover:

• administrative requirements for registration, returns and record‑keeping
• the methodology for calculating the CBAM rate and determining carbon price relief
• transitional adjustments to registration, payment dates, accounting periods and penalties from January 2027 to June 2028

HM Treasury also published draft notices with legal effect to support interpretation of the regime. The consultation closes on March 24, 2026, with further draft secondary legislation expected in spring 2026 and final regulations to be laid later in the year.

Forever Chemicals Action Plan Published

On February 3, the UK Government published its first plan to address forever chemicals (PFAS), setting out coordinated action by government, regulators and industry to reduce risks to public health and the environment. The plan includes assessing PFAS in coastal waters, consulting on statutory limits for drinking water, improving monitoring across soils and packaging, and developing safer product alternatives. New guidance will target industrial emissions and contaminated land. 

FCA Consultation on Sustainability Disclosures for Listed Companies

On January 30, The Financial Conduct Authority (FCA) published Consultation Paper CP26/5 proposing to replace TCFD‑aligned Listing Rule disclosures with reporting aligned to the UK Sustainability Reporting Standards (UK SRS). The proposals would require mandatory climate disclosures under UK SRS S2 (with Scope 3 emissions on a comply‑or‑explain basis) and broader sustainability disclosures under UK SRS S1 on a comply‑or‑explain basis. The regime would apply to most UK‑listed companies, with a transparency approach for secondary listings. Subject to finalization, the rules would apply for financial years beginning on or after January 1, 2027.

For more information, view our briefing.

US 

EPA Finalizes Rule Adding Chemical to the Toxics Release Inventory

On February 23, the US Environmental Protection Agency (EPA) finalized a rule adding sodium perfluorohexanesulfonate (PFHxS‑Na) to the Toxics Release Inventory, expanding federal reporting requirements for the family of PFAS chemicals. Businesses in covered sectors must now track and disclose any use or release of PFHxS‑Na, with reporting year beginning January 1, 2026, and first submissions due July 1, 2027. As a chemical of special concern, PFHxS‑Na carries a lower reporting threshold of 100 lbs.

2009 Endangerment Finding rescinded 

On February 12, the Trump administration announced the revocation of the Environmental Protection Agency’s (EPA) 2009 Endangerment Finding, which served as the legal foundation requiring the federal government to regulate greenhouse gas emissions. The decision removes the EPA’s statutory authority to set GHG standards for light, medium, and heavy duty vehicles and engines. This action is only related to GHG emissions and does not affect regulations addressing criteria pollutants and air toxics. The EPA decision has been challenged in federal court.

New York Advances Climate & Environmental Protection Package 

On February 10, the New York State Senate passed a wide ranging package of environmental legislation. The measures build on the state’s broader environmental agenda, including the Environmental Bond Act, the Environmental Protection Fund, and the Climate Superfund Program. Key measures include:

• Climate Corporate Data Accountability Act (S.9072A): Mandates annual Scope 1, 2 and 3 emissions disclosure for companies with over $1 billion in annual revenue
• Indirect Source Review for Warehouses (S.1180B): Requires large distribution warehouses to obtain permits demonstrating reduced hazardous air pollution and compliance with federal air quality standards
• PFAS Product Ban (S.9073A): Prohibits and penalizes the sale of certain consumer and household products containing PFAS
• Emission Tampering Act (S.9074): Makes it unlawful to disable or interfere with emission control systems
• PFAS Discharge Disclosure Act (S.4574B): Requires testing and reporting of PFAS in wastewater discharges by industrial facilities and treatment plants

The bills have not yet been approved by the New York assembly.

Co-authored by Nathan Handoll (ESG Researcher in Knowledge).

Further reading and listening

Global sustainability and ESG themes for 2026

EU AI Act: Prohibited and high-risk systems in employment

Managing M&A uncertainty in the EU’s evolving regulatory landscape

Quick Guide: UK Employment Rights Act 2025

Switched on to the energy transition: A year in review and look ahead to 2026

EU Roundup: January 2026