The European Commission adopted the revised European Sustainability Reporting Standards (ESRS) on 3 July 2026 under the Omnibus I simplification package. The two-month scrutiny period ended on 3 September, so the standards will enter into force once they are published in the Official Journal.
The revisions remove around 70% of datapoints and introduce new reporting reliefs aimed at lowering compliance costs.1 Separately, the European Financial Reporting Advisory Group (EFRAG) published an exposure draft of standards for large non-EU groups (ESRS-40a) on 23 July. The draft would apply to around 1,200 entities with significant EU operations, with reporting starting for beginning on or after 1 January 2028, and it uses impact materiality only rather than double materiality. Consultation closes on 31 October 2026.2
The streamlined ESRS should ease the burden on preparers, but investors should expect fewer datapoints to compare across companies. Coming after the Commission’s May decision not to create a direct compliance pathway between the ESRS and ISSB standards, interoperability will remain a practical challenge for multinational reporters.3
UNEP concludes that exceeding 1.5°C is now unavoidable
On 2 September, the UN Environment Programme (UNEP) released Limiting Overshoot, a report concluding that exceeding 1.5°C of warming is unavoidable in the next several years, with peak warming of 1.8°C in the most optimistic scenario. UNEP maintains that 1.5°C remains the foundation of international climate policy and sets out an “overshoot, peak and decline” pathway that depends on rapid emissions cuts, together with carbon dioxide removal. It also warns that the risk of crossing tipping points, including ice sheet destabilisation and Amazon degradation, rises with both the level and duration of warming.4
For investors, the report strengthens the case for scenario analysis that goes beyond 1.5°C aligned pathways and for greater attention to physical risk and adaptation. It may also raise the profile of carbon removal within credible transition plans.
Sustainability executives expect commercial drivers to sustain investment
The World Economic Forum published its inaugural Chief Sustainability Officers Outlook on 15 September. Among respondents, 63% expected global sustainability progress to remain steady or accelerate over the next year, while three in four expected companies’ transition-related investment to do the same. Respondents identified commercial considerations and increasingly usable technologies as drivers, despite geopolitical uncertainty and pressure for short-term results.5
The survey provides a measure of executive expectations, rather than evidence of completed investment or future returns. For investors, the useful question is whether transition plans are supported by competitive project economics, allocated capital and delivery milestones. Companies able to demonstrate those links may be better positioned to maintain investment through changes in political support and market conditions.
Treasury consults on easing climate reporting settings
In late August, Treasury released a consultation paper on changes to Australia’s mandatory climate reporting regime, following through on the targeted consultations promised in the Federal Budget. The paper seeks views on whether to keep, delay or narrow the move to reasonable assurance, whether more guidance is needed on the undue cost or effort test, and whether there should be clearer limits on value chain information requests ahead of Scope 3 reporting.6,7
Submissions closed on 2 October. For investors, the key question is whether a longer runway to reasonable assurance weakens confidence in reported data, particularly for Scope 1 and 2 emissions where methods are most mature.
Draft fifth edition of the ASX Corporate Governance Principles released
On 21 July, the Advisory Group on Corporate Governance released a consultation draft of the fifth edition of the ASX Corporate Governance Principles and Recommendations. The draft retains the eight principles and the ‘if not, why not’ reporting approach removes some duplication with the law and introduces more specific disclosure requirements in certain areas. The Advisory Group intends to make its recommendation to the ASX Board by the end of 2026, with the new edition applying to financial years commencing on or after 1 July 2027.8
Australia pilots certification against its sustainable finance taxonomy
On 10 August, Climate Bonds announced Australia as the first jurisdiction selected to pilot certification using recognised criteria from a national sustainable finance taxonomy. Its proposed Equivalence Methodology was open for consultation until 4 September. The initiative is intended to let eligible investments aligned with the Australian Sustainable Finance Taxonomy obtain Climate Bonds Certification while reducing duplicated assessment.9
The proposal could make Australian green debt easier to assess across domestic and international frameworks. Its value for investors depends on the final equivalence criteria, verification and reporting. Selection for a pilot does not mean every taxonomy-aligned bond is already certified, and neither taxonomy alignment nor certification replaces credit analysis or examination of how proceeds are used.
