26 Predictions for ’26 for Sustainability Legal and Compliance Professionals

We are ringing in the New Year with our annual predictions for sustainability legal and compliance professionals. In this post, we provide 26 predictions to inform sustainability compliance in 2026 (and beyond), in particular for companies operating in the United States and US-based multinationals active abroad.

Some of this year’s predictions reflect a continuation of multi-year trends, while others are keyed off of specific 2025 developments. Other predictions come from our extensive ongoing engagement with corporates, asset managers and asset owners, the political class, trade associations and civil society organizations around the world. Besides perhaps death and taxes, the only certainty is that 2026 will be another evolving – and challenging – year for sustainability compliance.

The Outlook for Climate-related Disclosures Remains Largely Sunny, with Some Storm Clouds on the Horizon

1. Climate disclosure requirements will continue to increase. New requirements in Australia and Spain, among other jurisdictions, are impacting US-based multinationals in 2026. Looking further ahead, significant climate-related disclosures are still contemplated under the revised European Sustainability Reporting Standards that are being streamlined as part of the EU Corporate Sustainability Reporting Directive Omnibus simplification process (see here for the draft simplified ESRS E1 Climate Change standard). Other jurisdictions also will continue to adopt the IFRS S2 Climate-related Disclosures standard. In addition, at least one more US “blue” state may adopt climate disclosure requirements in 2026. With the increase in climate-related disclosure requirements, voluntary climate reporting will continue to converge with both the substance and form of mandatory disclosures. In the other direction, the US Securities and Exchange Commission is likely to take steps this year to definitively get rid of its Biden-era climate disclosure rules, which have been stayed in connection with the currently unresolved legal challenge.

2. Full interoperability will remain elusive. Although climate reporting requirements across jurisdictions will significantly overlap – since they are largely based on the TCFD framework and GHG Protocol – differences will remain, including relating to reporting boundaries, materiality determinations and assurance requirements.

3. Expect to hear a lot more about the Carbon Measures initiative in 2026. Announced in late 2025, Carbon Measures is a coalition representing large companies from diverse industries and geographies that seeks to “establish a more accurate carbon accounting framework and drive market-based solutions to reduce emissions at the lowest cost.” According to the press release announcing the coalition, its “work will leverage sound science and the principles of financial accounting to help enable a ledger-based carbon accounting framework that is substantially more accurate, eliminates double counting and addresses current information gaps.”‍

California on My Mind

4. California’s greenhouse gas emissions and climate risk disclosure mandates (SB 253 and SB 261, respectively) are likely to survive legal challenge. However, expect the challenges to drag on into 2027. Following their expected adoption in late February, the SB 253/261 regulations adopted by the California Air Resources Board are likely to be challenged in court.

5. The preliminary injunction of California’s enforcement of SB 261 will continue at least into the summer, and probably longer. Most companies will not voluntarily submit SB 261 reports to CARB's public docket (only 51 have thus far been submitted). As the August 10, 2026 first SB 253 compliance date draws closer, there will be another request for a preliminary injunction of that reporting requirement. In the meantime, most companies will continue to prepare for SB 253 GHG emissions reporting (taking CARB’s enforcement guidance into account).

6. CARB will hold additional public workshops on SB 253 and SB 261, as soon as the first quarter of 2026. Other things to look for from CARB this year: a finalized Year 1 GHG emissions reporting template, a second set of proposed regulations addressing some of the details of GHG emissions reporting and additional CARB guidance and FAQs (see here for a discussion of the current guidance and FAQs).

There Oughta be a Law, Or Not

7. Notwithstanding the hard-fought Omnibus agreement reached last month, we have not heard the last word on EU Corporate Sustainability Reporting Directive/Corporate Sustainability Due Diligence Directive simplification. Expect calls for further simplification to continue, especially concerning the CSDDD. Calls for simplification will continue to come from both within and outside the EU. The US will continue to be the loudest ex-EU critic of the CSDDD. It is an open question whether the US will seek to use the August 2025 trade framework political agreement to further blunt the impact of the CSDDD on US companies, or the US will consider the outcome of the Omnibus simplification sufficient to address US concerns. Also in 2026 watch for changes to the EU’s Sustainable Finance Disclosure Regulation, environmental regulation simplification and potentially further changes to the EU Deforestation Regulation.    

8. This will be another year of lawfare in the United States. As more Trump 2.0 energy and environmental policy initiatives and other initiatives intersecting with sustainability matters are implemented, opponents will bring legal challenges. Agency rulemaking is likely to pick up during 2026 to get through both the rulemaking process and the inevitable legal challenges while the current Administration is in office.

9. Numerous “anti-ESG” bills across a range of topics will be introduced in Congress and there are likely to be more “anti-ESG” hearings. Consistent with last term, some bills will pass in the House, but it is unlikely that any of the bills will overcome the hurdle of Senate approval. This will make durable agency action – regulations that will be harder to undue than less formal policies and guidance – that much more important to executing on and preserving the Administration’s agenda. Asset managers are likely to receive additional ESG-related information requests from Congressional Republicans (as well as from Republican state attorneys general and/or treasurers). 

The Year of…

10. Governance. After years in which environmental and social matters sucked up most of the oxygen in sustainability compliance circles, this will be the year of governance. Expect significant rulemaking initiatives from the US SEC addressing shareholder proposals, periodic reporting, proxy advisors and proxy voting, which may result in a once-in-a-generation realignment of governance regulation. On the investor side, governance will remain the primary focus of mainstream institutional investors (in both the public and private markets), with many continuing to narrow their environmental and social focus areas. The number of environmental and social proposals that will be submitted and brought to a vote in the US is likely to further decrease this year, and support is likely to be low, as further discussed in this Ropes & Gray post.

11. EPR. Extended producer responsibility regimes have started to take effect in a number of jurisdictions, both within and outside the United States, with more on the way. This year, a significant number of companies will prioritize getting their arms around the EPR compliance landscape and starting to focus on ways to reduce associated fees through packaging and product redesign. As companies get into the weeds of EPR requirements, many will conclude that these regulations are highly significant to their business. Given the potential financial and operational impacts of EPR compliance, it also will be an increasing focus of institutional investors.

12. AI. AI is going to have an everything everywhere all at once feel this year. Sustainability compliance professionals will increasingly harness the power of AI to do their jobs better. For example, they will be able to more efficiently and effectively map supply chains and assess supply chain risks in furtherance of regulatory requirements. More significantly, increasing AI use by companies will present new sustainability-related legal and compliance challenges and risks. AI use will blow a hole in many corporate energy and GHG emissions reduction plans and targets. On the social side, companies will need to address workforce disruption, as well as bias, discrimination and privacy issues stemming from AI use. Data centers will need to address community concerns relating to resource use. Regarding governance: ethics, regulatory compliance and oversight mechanisms will need to be strengthened. Public markets institutional investors already are starting to focus on many of these considerations in their corporate engagements. Adding to the complexity, AI-related concerns are not neatly compartmentalized along partisan lines. Sustainability legal and compliance professionals will not necessarily be responsible for, or even have a role, in helping to address all of the AI topics that intersect with sustainability but, like other emerging areas, many companies are struggling to figure out where responsibility should sit.

13. Advocacy and Lobbying. Corporate advocacy and lobbying on sustainability regulation was fairly successful in 2025. Given those successes and the number of consequential requirements in play this year around the world, many companies will stay engaged in the legislative and rulemaking process, either through their trade associations or directly. 

Preparation for Some, but Not All, Reporting Mandates Will Kick Up a Notch

14. With the CSRD/CSDDD Omnibus simplification nearing completion, Wave 2 companies will resume their CSRD compliance preparations in earnest. Most new double materiality assessments and refreshes will utilize the more streamlined top-down approach contemplated in proposed draft simplified ESRS 1. The draft simplified ESRS delivered to the European Commission by EFRAG in early December will be adopted largely as is. The changes to the Taxonomy Regulation also will soon be formally adopted, jumpstarting that workstream at Wave 2 companies.   

15. Companies will continue preparing for sustainability assurance, both for the CSRD and other sustainability reporting mandates. Sustainability controllers and other sustainability data management professionals will continue to be in high demand. Audit committees will continue to get more involved in oversight of sustainability reporting, including the sufficiency of reporting processes and controls.

16. With the reduction in nature-related reporting requirements in the draft simplified ESRS and the folding of the Taskforce on Nature-related Financial Disclosure’s new technical guidance work into the ISSB, most companies will de-prioritize nature-related reporting until there is more clarity on where requirements may land. The ISSB has indicated it is targeting having an Exposure Draft of incremental disclosure requirements ready by the Convention on Biological Diversity COP17 in October 2026.

17. Multinationals will continue to centralize sustainability reporting compliance (as well as other aspects of sustainability compliance) in response to the continuing increase in and complexity of compliance mandates globally, as well as due to the significant overlaps across jurisdictions. Multinationals also will continue to enhance enterprise-wide controls relating to the collection, validation and reporting of sustainability data, beyond just climate information. 

A Mixed Bag for Supply Chain- and Human Rights-Focused Legislation

18. Preparation for mandatory human rights and environmental due diligence legislation will largely remain paused in 2026. With a further one-year delay in the CSDDD until mid-2029 and the German government’s de-prioritization of LkSG reporting and enforcement, most companies will direct their limited compliance resources elsewhere. However, shifting supply chains resulting from US tariffs will place additional pressures on voluntary supply chain compliance programs (and ultimately regulatory compliance), as new suppliers in new locations bring new compliance challenges.

19. Expect enforcement of Section 307 of the Tariff Act and the Uyghur Forced Labor Prevention Act to increase this year (the UFLPA and related US government compliance guidance are discussed in detail in our Alerts here, here and here). Enforcement is likely to be focused on foreign producers perceived to be undercutting US companies. With the EU Forced Labor Regulation set to take effect late next year, companies will start to take preparatory compliance steps this year, with most waiting until expected compliance guidelines and other European Commission resources are published.

20. Asia will take the lead on mandatory human rights and environmental due diligence legislation in 2026, with bills in play in Indonesia, South Korea and Thailand.

Continuing Blind Spots for Companies

21. Greenwashing claims will continue their steady rise. The risk of being tagged will grow as plaintiffs’ lawyers increasingly harness the power of AI to help them identify potential claims.

22. Social media campaigns will continue to be a favored tactic for influencing corporate action, including with respect to sustainability-related matters. Look for the left to try to regain some of the momentum that has been ceded to the right over the last few years. 

And the Not-So-Hot in 2026

23. Doorstop, kitchen-sink sustainability reports with lots of pictures of trees, blue sky and smiling people are out of favor at many companies. The evolution to more data driven reporting aligned with regulatory reporting requirements will continue.

24. DEI (diversity, equity and inclusion) will remain on the outs in the US. US federal government scrutiny of D, E and I practices will continue.

25. Sustainability-related compensation metrics were a fad for a few years. Their use will continue to recede. However these metrics will not entirely disappear.

26. ESG as an overarching principle is passé, but the targeted focus on individual relevant environmental, social and governance factors will continue, both as part of corporate practice and investment stewardship.   

About our Practice 

Ropes & Gray has a leading ESG, CSR and business and human rights compliance practice. We offer clients a comprehensive approach in these subject areas through a global team with members in the United States, Europe and Asia. Senior members of the practice have advised on these matters for more than 30 years, enabling us to provide a long-term perspective and depth and breadth of experience that few firms can match. 

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