Global Sustainability & ESG Insights - June 2026

Global

SBTi Corporate Net-Zero Standard V2.0 Published

On June 11, the Science Based Targets initiative (SBTi) published its Corporate Net-Zero Standard Version 2.0. The Standard introduces flexible target-setting options reflecting differing business contexts while maintaining scientific rigor. It prioritizes direct emissions reductions, complemented by systemic interventions where direct decarbonization is not feasible. Targets are set on a "best efforts" basis, acknowledging factors outside a company's control. A voluntary recognition mechanism encourages action on ongoing emissions. The Standard applies to companies with existing targets and those developing or renewing targets under Version 1.3.

Asia

China

Enhanced Initiative on Corporate Value Including ESG Disclosure Issued

On June 23, the Shanghai Stock Exchange issued an initiative to all listed businesses titled "Corporate Value and Return Enhancement" 2.0. The updated initiative covers five areas: business operations, corporate governance, information disclosure, investor returns, and social responsibility. The fifth pillar specifically encourages businesses to enhance their willingness and quality of ESG report disclosure, identify material ESG topics, and objectively reflect environmental, social, and governance practices. The initiative aims to strengthen corporate governance standards and the compliance awareness of directors and senior management. The Shenzhen Stock Exchange launched a parallel initiative, titled the Special Campaign for the Dual Enhancement of Corporate Quality and Investor Returns, on March 3, 2026, which applies to all companies listed on the Exchange.

Singapore

Updated Information Paper on Disclosure Practices for Retail ESG Funds Published

On June 10, the Monetary Authority of Singapore published an updated information paper on good disclosure practices for retail ESG funds. The paper supplements mandatory requirements under Circular No. CFC 02/2022, which has applied to authorised or recognised ESG-focused schemes since January 1, 2023. It sets out supervisory observations on good practices and recommended disclosures across the areas of investment focus and strategy, reference benchmarks, risks, and additional information. The guidance aims to promote clear and substantiated disclosures to investors and to reduce greenwashing risks. While non-binding, the paper reflects growing expectations of ESG funds.

Europe

Rules on Plastic Bottle Recycling Published

On June 30, the European Commission adopted new rules establishing a methodology to calculate, verify and report chemically recycled content in single-use plastic beverage bottles made primarily of polyethylene terephthalate (PET). The implementing act applies to any recycling technology, including chemical and mechanical recycling, and aims to help Member States meet the recycled-content targets set under the Single-Use Plastics Directive. The rules aim to provide investment security and a level playing field for the plastic recycling sector.

Guidelines on EU Forced Labour Regulation Published

On June 26, the European Commission published guidelines on the implementation of the EU Forced Labour Regulation, which applies from December 14, 2027. The Regulation prohibits economic operators from placing on the EU market or exporting products made with forced labour at any stage of the supply chain. The guidelines clarify the Regulation's scope, covering all products across all sectors and geographies, and its risk-based enforcement regime, under which competent authorities may request extensive supply chain information and impose binding decisions, fines and product withdrawal. While the Regulation does not impose mandatory due diligence obligations, the guidelines emphasise risk-based supply chain due diligence as a key compliance mechanism. The Commission has also launched a Forced Labour Single Portal to support businesses in preparing for compliance.

Simplification of Environmental Rules Under Omnibus VIII

On June 24, the European Council agreed its position on a proposal to simplify environmental rules, as part of the Omnibus VIII simplification package. The position covers targeted amendments to six legislative acts, including reduced reporting under the Batteries Regulation, simplified removability and replaceability requirements for light means of transport battery packs, and streamlined reporting for livestock and aquaculture operators under the Industrial Emissions Portal Regulation. The Industrial Emissions Directive amendments introduce a simplified chemicals inventory and a compliance deadline of July 2030 for environmental management systems.

Council Agrees Position on Revised SFDR

On June 24, the European Council agreed its position on revising the Sustainable Finance Disclosure Regulation (SFDR). The revised framework introduces three new product categories: sustainable; transition; and ESG basics. The Council's position reinforces these categories by requiring mandatory use of at least three adverse impact indicators from a Commission-provided list. It clarifies that fossil fuel companies allocating 20% of capital expenditure to taxonomy-aligned activities with a clear emissions reduction strategy may qualify for the transition category.

Vehicle Circularity Regulation Approved by European Parliament

On June 18, the European Parliament approved new EU circularity rules covering the entire vehicle lifecycle, from design to end-of-life treatment. The regulation requires all new vehicles to be designed to maximise the re-use, recycling and recovery of parts and components. Binding targets mandate a minimum of 15% recycled plastic content in new vehicles within six years, rising to 25% within ten years, with at least 20% sourced from end-of-life vehicles or used parts.

Position on Strengthening the Carbon Border Adjustment Mechanism Agreed

On June 12, the Council agreed its position on strengthening the Carbon Border Adjustment Mechanism (CBAM). The revised framework extends CBAM's scope beyond raw materials to downstream products, particularly those containing significant proportions of iron, steel and aluminium. The Council also refined the mechanism for temporarily exempting goods under serious and unforeseen circumstances causing severe harm to the internal market. A final agreement on the this is expected before the end of 2026.

Consultation on CSDDD Guidelines Launched

On June 12, the European Commission launched a public consultation on the development of guidelines to support the implementation of the Corporate Sustainability Due Diligence Directive (CSDDD). Under Article 19 of the CSDDD, the Commission is required to issue guidelines on fulfilling due diligence obligations, covering how to identify, assess and prioritise adverse impacts, adapt purchasing practices, responsibly disengage from suppliers, and provide appropriate remediation. The guidelines will also address sector-specific guidance, the use of digital tools and data sources, information sharing for compliance purposes, and stakeholder engagement throughout the due diligence process. The guidelines are scheduled for adoption in two tranches, with core due diligence guidance due by July 2027 and supplementary implementation and stakeholder-engagement guidance due by July 2028. The consultation closes on July 24, 2026. Member state transposition of the CSDDD is due by July 26, 2028, with compliance required by July 26, 2029.

EU Pay Transparency Directive Transposition Deadline Passes

On June 7, the deadline for EU member states to transpose the Pay Transparency Directive into national laws passed. Only Italy, Slovakia, Lithuania, and Malta fully transposed the Directive on time, with the legislative progress remaining ongoing in most other Member States, some of which have confirmed delayed implementation dates into 2027.  The Directive seeks to strengthen the application of equal pay for equal work or work of equal value between men and women through pay transparency and enforcement mechanisms, including by requiring employers to provide initial pay or pay range information to job applicants, prohibiting questions about applicants' pay history, providing pay and pay gap information to employees, reporting on gender pay gap data, and conducting joint pay assessments where pay gaps of 5% or more cannot be objectively justified.

UK

Government Publishes Approach to Deforestation Regulations

On June 23, the Government published a policy paper setting out its approach to deforestation regulations across the UK. The Government intends to introduce regulations under the Environment Act 2021 and strengthen the UK Timber Regulation. It will require businesses in Great Britain with annual turnover exceeding £1 million to conduct due diligence on forest risk commodities, including wood, cattle, cocoa, coffee, palm oil, rubber, soy and certain derived products, to ensure compliance with relevant local laws. Businesses who use these products would need to ensure that they establish due diligence systems, report on activity and hold geolocation data on product origins. The regime is designed to operate consistently alongside the EU Deforestation Regulation, which will apply in Northern Ireland from December 30, 2026. Legislation implementing the framework is expected in 2027.

Biodiversity Gain Statements Published for Nationally Significant Infrastructure Projects

On June 2, the Department for Environment, Food and Rural Affairs published biodiversity gain statements setting out biodiversity net gain (BNG) requirements for Nationally Significant Infrastructure Projects (NSIPs). The statements cover sectors including energy, national networks, airports, ports, data centers and water resources. They specify how developers must calculate, deliver and report on biodiversity net gain. BNG will be mandatory for new NSIP applications from November 2, 2026. The biodiversity gain objective is retained at 10%. Developers must use the statutory biodiversity metric and may deliver on-site or off-site gain. Outline biodiversity gain plans must be submitted at the NSIP application stage.

UK Government Proposes Seventh Carbon Budget

On June 2, the UK Government set out its proposed level for the seventh Carbon Budget. The target requires approximately 87% emissions reduction in the period 2038 to 2042. It is endorsed by the Environmental Audit Committee and the Climate Change Committee. The target sets out to be consistent with the Paris Agreement aim to limit warming to 1.5 degrees.

US

California Corporate GHG Reporting Deadline Deferred

On June 24, the California Air Resources Board (CARB) announced it is deferring the Scope 1 and Scope 2 greenhouse gas emissions reporting deadline under SB 253 from August 10, 2026 to November 10, 2026. CARB has withdrawn the Initial Regulation from the Office of Administrative Law to make limited clarifying changes, which will be subject to a 15-day public comment period. The Initial Regulation, approved by the Board on February 26, 2026, establishes a fee component and sets the first-year reporting deadline under Health and Safety Code § 38532. The three-month deferral is intended to provide reporting entities additional clarity following approval of the final regulation before reporting is due.

SEC Formally Proposes Rescission of Climate-Related Disclosure Rules

On June 3, the Securities and Exchange Commission proposed rescission of climate rules was published in the Federal Register. The rules require registrants to disclose climate-related information in registration statements and annual reports. The 2024 rules mandated disclosure of material Scope 1 and Scope 2 GHG emissions, climate-related risks, governance structures and financial statement effects of severe weather events. The rules have been stayed pending litigation. Public comments on the proposal are due by August 3, 2026.

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

Further reading and listening

Carbon Trading: Navigating Voluntary and Compliance Markets

China: Counter-sanctions and EU due diligence obligations

EU Tightens Control Over Critical Raw Materials

Federal Act on Sustainable Corporate Governance: Due Diligence, Liability and Sanctions for Swiss Companies