How Companies Can Navigate the Changing Rules on Sustainability Reporting, Climate Disclosure and ESG

Environmental, Social and Governance (ESG) regulation has entered a new phase.

What began largely as voluntary sustainability reporting is increasingly becoming a regulated corporate-reporting, investment and supply-chain requirement. However, there is no single global ESG law. Instead, companies are facing a complex combination of sustainability-reporting standards, securities regulations, climate-disclosure rules, sustainable-finance requirements, due-diligence obligations and anti-greenwashing measures.

For multinational companies, the challenge is therefore not simply to understand ESG. It is to determine which requirements apply, in which country, to which entity and from which reporting year.

The global direction is also not uniform. The European Union has substantially narrowed and simplified its sustainability-reporting regime in 2026. The United States remains fragmented between federal and state requirements. The UK is moving toward an ISSB-based framework. Australia, Singapore and Japan are progressively implementing climate-disclosure regimes, while India and other Asian economies are developing their own approaches.

The IFRS Foundation’s jurisdictional work shows the growing number of countries developing regulatory approaches based on, or influenced by, the ISSB Sustainability Disclosure Standards.

1. Is there a single global ESG regulation?

No.

There is currently no single international ESG law applicable to all companies worldwide.

Instead, the global ESG landscape consists of several layers:

• National corporate reporting laws
• Securities-market regulations
• Climate-disclosure standards
• Sustainability reporting standards
• Green-finance regulations
• Supply-chain due-diligence requirements
• Environmental laws
• Human-rights requirements
• Anti-greenwashing rules
• ESG fund and investment-product regulations

A multinational company may therefore be subject to different requirements in its home country, the country where it is listed, the country where it has subsidiaries and the markets where it sells products.

2. The Global ESG Regulatory Map

This table should be treated as a high-level map. Applicability ultimately depends on the company’s size, listing status, industry, jurisdiction, reporting period and other conditions.

3. European Union: One of the Most Developed ESG Frameworks

The European Union remains one of the world’s most influential ESG regulatory jurisdictions.

Its framework includes:

• Corporate Sustainability Reporting Directive (CSRD)
• European Sustainability Reporting Standards (ESRS)
• EU Taxonomy Regulation
• Corporate Sustainability Due Diligence requirements
• Sustainable Finance Disclosure Regulation (SFDR)
• Anti-greenwashing and consumer-protection measures

However, the EU framework changed significantly in 2026.

The Omnibus I simplification package narrowed the scope of CSRD. Under the revised rules, CSRD reporting is focused on EU companies with more than 1,000 employees and more than €450 million in net annual turnover, with corresponding changes for certain non-EU groups.

The European Commission also adopted revised ESRS in July 2026. The revised standards reduce mandatory datapoints by more than 60% and total datapoints by more than 70%, with the Commission expecting significant reductions in reporting costs.

What multinational companies should watch

Companies doing business in Europe should assess:

• CSRD applicability
• ESRS requirements
• EU Taxonomy
• Supply-chain information requests
• Due-diligence obligations
• Sustainable-finance requirements
• Product and marketing claims

The EU therefore remains a critical jurisdiction even though the regulatory burden has been reduced.

4. United Kingdom: Moving Toward ISSB-Based Reporting

The UK’s ESG framework combines company law, financial-market regulation, climate reporting and sustainability standards.

Key components include:

• Companies Act requirements
• Streamlined Energy and Carbon Reporting (SECR)
• FCA sustainability-related requirements
• UK Sustainability Reporting Standards (UK SRS)
• Climate-related disclosures

The UK Government finalised UK SRS S1 and S2 in February 2026. These standards are based on the ISSB framework.

In September 2026, the Financial Conduct Authority finalised rules requiring in-scope listed companies to report against UK SRS S1 and S2 on a comply-or-explain basis for accounting periods beginning on or after 1 January 2027.

UK significance

The UK is important because it illustrates a broader international trend:

ISSB → national endorsement → local regulatory implementation.

5. United States: A Fragmented ESG Environment

The United States presents a very different picture.

There is no single comprehensive federal ESG reporting law covering all companies.

The Securities and Exchange Commission (SEC) remains central to corporate disclosure regulation, but the federal climate-disclosure position has become highly uncertain.

The SEC adopted climate-related disclosure rules in March 2024, subsequently stayed them during litigation, and in May 2026 proposed rescinding them entirely.

Consequently, multinational companies should not assume that the United States has one uniform ESG reporting requirement.

Instead, companies need to examine:

• Federal securities requirements
• State-level legislation
• Industry requirements
• Investor requirements
• Customer requirements
• Contractual ESG requirements

6. California: A Major Climate-Disclosure Jurisdiction

California has become particularly important for corporate climate reporting.

California’s climate legislation includes:

• SB 253 – climate-related emissions disclosure
• SB 261 – climate-related financial-risk reporting

SB 253 targets large U.S. business entities doing business in California based on revenue thresholds and introduces Scope 1 and Scope 2 emissions reporting, followed by Scope 3 reporting.

This means a company headquartered outside California may still need to consider California requirements if it meets the applicable conditions.

For multinational companies, California demonstrates an important principle:

Corporate ESG obligations can arise from the market in which a company operates—not only from its headquarters jurisdiction.

7. India: BRSR and BRSR Core

India has developed a distinct ESG reporting framework through the Securities and Exchange Board of India (SEBI).

The key framework is the:

Business Responsibility and Sustainability Report (BRSR).

BRSR became mandatory from FY 2022–23 for the top 1,000 listed entities by market capitalisation.

India subsequently introduced BRSR Core, consisting of selected ESG KPIs and metrics for enhanced credibility and assurance.

SEBI established a phased assurance requirement extending BRSR Core coverage to the top 1,000 listed entities by FY 2026–27.

India’s framework is notable because it follows a climate-plus approach, incorporating significant environmental and social metrics rather than focusing exclusively on climate-related financial risk.

Why India matters to global companies

Foreign companies operating supply chains in India may increasingly encounter requests for:

• Emissions information
• Energy data
• Labour information
• Supplier information
• Water and waste data
• Governance information

Indian suppliers therefore need to prepare for ESG data requirements from large customers.

8. China: Building a National Sustainability Disclosure System

China is developing a national sustainability disclosure framework involving multiple government and regulatory institutions.

In 2024, China issued its Corporate Sustainability Disclosure Standards – Basic Standard (Trial).

The framework was developed by the Ministry of Finance together with several other government agencies and regulators.

The Basic Standard provides a foundation for China’s broader sustainability disclosure system.

China also issued an application guide in 2025 and a climate-specific sustainability disclosure standard in 2026, although implementation remains dependent on applicable scope and requirements.

Key themes

China’s sustainability framework increasingly addresses:

• Climate change
• Environmental impacts
• Social issues
• Governance
• Value chains
• Sustainability-related risks and opportunities

The direction is toward greater standardisation while retaining features suited to China’s domestic regulatory environment.

9. Japan: ISSB-Aligned Sustainability Reporting

Japan is developing sustainability disclosure requirements through the Sustainability Standards Board of Japan (SSBJ).

The Japanese approach is strongly influenced by IFRS S1 and IFRS S2.

The framework is particularly relevant to companies listed on the Tokyo Stock Exchange Prime Market, with phased application based on company size and market capitalisation.

Japan demonstrates another major global trend:

National sustainability standards increasingly use ISSB as their starting point while adding local implementation requirements.

For multinational companies, this creates opportunities for common global data systems rather than completely separate reporting architectures.

10. Australia: Mandatory Climate Reporting

Australia introduced mandatory climate-related financial reporting from 1 January 2025, with implementation occurring in phases.

The Australian regime is based around climate-related financial reporting and AASB S2.

The three implementation groups begin from:

• Group 1 – 1 January 2025
• Group 2 – 1 July 2026
• Group 3 – 1 July 2027

ASIC administers the reporting requirements, while the Australian Accounting Standards Board has developed the relevant sustainability reporting standards.

Assurance requirements are also being phased, beginning with limited assurance and moving toward reasonable assurance over time.

Business implication

Australian companies need strong systems for:

• Climate-risk identification
• GHG measurement
• Scenario analysis
• Governance
• Climate targets
• Scope 1 and 2 emissions
• Scope 3 emissions where applicable

11. Singapore: Climate-First ESG Reporting

Singapore has adopted a phased sustainability-reporting framework.

All companies listed on the Singapore Exchange are within the sustainability-reporting roadmap, with requirements differentiated by company tier. Large non-listed companies meeting specified revenue and asset thresholds are also brought into the framework on a phased basis.

Singapore’s approach is described as climate-first.

This means companies should prioritise:

• Climate governance
• Climate strategy
• Climate risks
• GHG emissions
• Climate targets
• Relevant Scope 3 information

Singapore is also progressively introducing assurance requirements.

12. Malaysia: National Sustainability Reporting Framework

Malaysia has established the National Sustainability Reporting Framework (NSRF) using IFRS S1 and S2 as its baseline.

Bursa Malaysia has implemented phased sustainability-reporting requirements.

The approach generally moves from larger listed companies toward other listed entities and large non-listed companies.

Malaysia is therefore another example of an emerging-market jurisdiction adopting international sustainability standards while creating a domestic implementation roadmap.

13. New Zealand: Climate-Related Disclosures

New Zealand has one of the more established mandatory climate-disclosure systems.

Its Climate-related Disclosures regime applies to specified large entities known as Climate Reporting Entities.

The framework is built around:

• Governance
• Strategy
• Risk management
• Metrics and targets

The Financial Markets Authority supervises the regime, while the External Reporting Board develops the climate standards.

New Zealand’s framework is primarily climate-focused rather than a comprehensive mandatory ESG reporting regime covering every environmental, social and governance topic.

14. Canada: A Mixed Regulatory Approach

Canada does not currently have one nationwide ESG reporting law applicable to all companies.

The framework combines:

• Securities regulation
• Federal financial-sector requirements
• Climate-risk guidance
• Corporate governance requirements
• Provincial regulation

The Canadian Sustainability Standards Board has developed sustainability standards aligned with ISSB.

For federally regulated financial institutions, OSFI’s climate-risk framework is particularly important.

Canadian companies therefore need to distinguish between:

general corporate sustainability reporting and sector-specific climate-risk requirements.

15. Brazil and Latin America

Latin America is also moving toward ISSB-aligned sustainability reporting.

Brazil has been particularly significant because its securities regulator has incorporated sustainability reporting requirements based on international standards.

Brazil’s approach is important for multinational companies with operations or listings in Latin America because sustainability reporting is gradually moving from voluntary disclosure toward regulated reporting.

Other Latin American jurisdictions are also developing or considering ISSB-based approaches.

16. What is happening across Asia?

Asia is not following a single ESG model.

Instead, several approaches are emerging:

Mature mandatory systems

• Japan
• Australia
• Singapore
• New Zealand

Developing national frameworks

• China
• South Korea
• India

ISSB-based transition

• Malaysia
• Hong Kong
• Japan
• Australia

The common theme is increasing attention to:

• Climate-related financial risk
• GHG emissions
• Sustainability governance
• Investor decision-useful information
• Assurance
• Value-chain data

17. Is ISSB becoming the global ESG baseline?

Increasingly, yes.

The International Sustainability Standards Board has established:

• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information
• IFRS S2 – Climate-related Disclosures

Many jurisdictions are using these standards directly or as a basis for their domestic requirements.

However, ISSB does not automatically become law in a country.

A national regulator or government normally needs to adopt, endorse or incorporate the standards into its domestic regulatory framework.

Therefore:

ISSB = global baseline

does not necessarily mean:

ISSB = identical law everywhere.

The IFRS Foundation’s jurisdictional profiles are specifically intended to track how individual jurisdictions are adopting or otherwise using ISSB Standards.

18. What are the major ESG regulatory themes globally?

Despite differences between jurisdictions, several common themes are emerging.

Climate Risk

Companies are increasingly expected to identify and disclose:

• Physical climate risks
• Transition risks
• Climate opportunities
• Business resilience

GHG Emissions

Scope 1 and Scope 2 emissions are increasingly common reporting requirements.

Scope 3 is becoming increasingly important, particularly for large companies and value-chain reporting.

Governance

Regulators increasingly expect companies to explain:

• Board oversight
• Management responsibility
• Risk-management processes
• Internal controls
• ESG targets

Assurance

ESG reporting is moving toward greater external assurance.

The direction is similar to financial reporting:

Voluntary information → structured disclosure → assurance → greater credibility.

Greenwashing

Regulators are increasingly scrutinising unsupported sustainability claims.

Companies need evidence for statements such as:

• Carbon neutral
• Net zero
• Sustainable
• Green
• Environmentally friendly
• Climate positive

19. Why multinational companies face a difficult challenge

A multinational organisation may simultaneously face:

EU CSRD/ESRS

UK SRS

U.S. requirements

California climate laws

Indian BRSR

Australian climate reporting

Singapore requirements

Customer and investor requirements

The challenge is therefore not merely compliance.

The challenge is data interoperability.

The same emissions, employee, supplier and governance information may need to be calculated differently or disclosed through different reporting formats.

20. Should companies create a separate ESG system for every country?

Ideally, no.

A multinational company should develop a global ESG data architecture with country-specific reporting layers.

For example:

Global layer

• GHG inventory
• Energy
• Water
• Waste
• Employees
• Safety
• Governance
• Supply chain

Regional layer

• EU
• Asia-Pacific
• Americas

Country layer

• India BRSR
• EU ESRS
• UK SRS
• Australian requirements
• Singapore requirements
• California requirements

This approach reduces duplication and improves data consistency.

21. What should CFOs and finance teams do?

ESG is increasingly becoming a finance issue.

CFOs should consider:

• ESG data controls
• Carbon accounting
• ESG budgeting
• Climate-risk modelling
• Sustainable finance
• ESG-linked financing
• Internal audit
• Assurance readiness
• Investor reporting
• Regulatory compliance

The finance function can help establish the same discipline around ESG information that already exists around financial information.

22. What should CA and CMA professionals know?

For CA and CMA professionals, the global ESG regulatory shift creates a significant new professional opportunity.

Relevant skills include:

• ESG reporting
• BRSR
• ISSB
• ESRS
• Carbon accounting
• ESG assurance
• Sustainability costing
• Climate-risk analysis
• ESG internal controls
• Sustainable finance
• ESG due diligence
• ESG performance measurement

The professional who understands both finance and sustainability can increasingly become an important link between the board, sustainability team, finance department, auditors and regulators.

23. What should exporters and suppliers do?

Companies do not have to be directly regulated to feel the impact of ESG regulation.

A small or medium-sized supplier may receive ESG data requests from a large multinational customer.

Requests may include:

• Carbon emissions
• Energy consumption
• Employee information
• Labour practices
• Health and safety
• Human rights
• Environmental permits
• Waste management
• Governance policies

Therefore, ESG regulation is increasingly creating a supply-chain effect.

24. The Emerging Global ESG Compliance Model

The global ESG regulatory landscape can be understood through five layers:

Layer 1 – Corporate Reporting

Sustainability and climate disclosures.

Layer 2 – Financial Markets

Investor, listed-company and financial-institution requirements.

Layer 3 – Sustainable Finance

Green bonds, sustainability-linked finance, ESG funds and taxonomy requirements.

Layer 4 – Supply Chain

Supplier ESG, human rights, emissions and due diligence.

Layer 5 – Consumer Protection

Green claims, environmental advertising and anti-greenwashing rules.

A company may be affected by all five layers simultaneously.

25. What should multinational companies do now?

A practical global ESG compliance strategy should include:

Step 1: Create a regulatory inventory

List every country in which the group:

• Is incorporated
• Has subsidiaries
• Has employees
• Is listed
• Generates significant revenue
• Operates manufacturing facilities
• Has major suppliers

Step 2: Identify applicable ESG regulations

Map each entity against:

• Reporting thresholds
• Listing requirements
• Industry requirements
• Climate regulations
• Supply-chain laws

Step 3: Build one global ESG data dictionary

Define:

• What is measured
• How it is measured
• Who owns the data
• Which methodology is used
• Which reporting standard applies

Step 4: Establish internal controls

Create controls over:

• ESG data
• Emissions calculations
• Estimates
• Supporting documentation
• Management review

Step 5: Prepare for assurance

Do not wait until external assurance becomes mandatory.

Build an audit trail from the beginning.

Step 6: Develop a global ESG reporting architecture

Use one central ESG data system and create country-specific reporting outputs.

26. What will ESG regulation look like in the future?

The future is likely to involve greater convergence but not complete uniformity.

The direction of travel appears to be:

Voluntary ESG reporting

↓

Standardised sustainability information

↓

ISSB-based national standards

↓

Mandatory climate/sustainability reporting

↓

External assurance

↓

Integration with financial reporting and enterprise risk management

At the same time, political and economic developments may cause some jurisdictions to simplify or delay requirements, as demonstrated by the EU’s 2026 simplification and the current U.S. federal climate-disclosure uncertainty.

27. Global ESG Compliance Checklist

Multinational companies should ask:

☐ Which countries do we operate in?

☐ Which entities are listed?

☐ Which entities exceed local reporting thresholds?

☐ Which ESG regulations apply?

☐ Which climate disclosures are mandatory?

☐ Do we need Scope 1 and Scope 2 data?

☐ Do we need Scope 3 data?

☐ Are suppliers included?

☐ Are ESG claims adequately supported?

☐ Do we need external assurance?

☐ Is board oversight documented?

☐ Are ESG risks included in enterprise risk management?

☐ Are ESG data controls established?

☐ Can our global ESG data support multiple reporting frameworks?

☐ Are we prepared for regulatory changes?

Conclusion: ESG Compliance Is Becoming a Global Business Capability

The global ESG regulatory landscape is no longer a collection of isolated sustainability initiatives.

It is becoming an important component of corporate reporting, financial markets, risk management, supply chains and business strategy.

Yet the world is not moving toward one identical ESG rulebook.

The European Union is pursuing a comprehensive but recently simplified sustainability regime. The UK is moving toward ISSB-based reporting. The United States remains fragmented. California has established significant climate-reporting requirements. India has developed BRSR and BRSR Core. Australia, Singapore, Japan and Malaysia are progressively implementing ISSB-influenced frameworks. China is building its own national sustainability disclosure architecture.

For multinational companies, the winning strategy is therefore not to create hundreds of disconnected compliance processes.

It is to build a single, reliable global ESG data and governance system capable of producing different regulatory outputs for different jurisdictions.

The future ESG leader will not simply ask:

“What does our ESG report say?”

The more important question will be:

“Can our organisation prove, measure, control and manage its sustainability performance across every market in which it operates?”

That is the real transformation taking place in global ESG regulation.