David Henry Doyle
Outgoing Co-Chair of the Policy and Regulatory Working Group
Will Goodhart
Executive Director
This article reflects the personal opinions of the authors and does not necessarily represent the views of FoSDA or its members.
This year marks a turning point for the sustainable finance information system. Many of the frameworks developed over the past five years are no longer in the design or consultation phase. They are moving into application, review, or recalibration.
For the sustainable finance information system — including data, labels, ratings, disclosures and analytics — this shift has practical consequences, making this a timely point to take stock of recent developments and emerging priorities.
ESG ratings: entering the regulatory phase
One of the most significant changes concerns ESG ratings. In the EU, the ESG Ratings Regulation will become applicable during the summer of 2026. This will bring providers of ESG ratings within a formal regulatory framework. In the United Kingdom, the Financial Conduct Authority has consulted on the detailed regime to extend the regulatory perimeter to ESG ratings and expects the regulation to come into force by June 2028
For the sustainable information ecosystem, this marks a structural shift. ESG ratings are transitioning to become a supervised activity, raising practical questions around cross‑border provision, regulatory coherence, and supervisory coordination. Ensuring interoperability of the EU and UK regimes is now a priority.
The ecosystem for sustainable information has been a highly innovative field. These regulatory frameworks open a new chapter in which innovation and oversight advance together to tackle sustainability challenges and reinforce trust.
SFDR: learning from implementation
A second major development is the EU’s review of the Sustainable Finance Disclosure Regulation (SFDR). Experience over recent years has shown that the framework has been used in ways that extend beyond its original purpose as a disclosure framework, particularly through the widespread unintended adoption of Articles 8 and 9 classification as product labels.
The European Commission’s proposed reforms to aim to simplify SFDR disclosures, reduce certain entity‑level requirements, and introduce clearer product categories. The underlying objective is to improve clarity and comparability, as well as to align regulatory requirements more closely with how information is used by investors and supervisors in practice.
For the sustainable finance information system, this recalibration is material and will require close dialogue between the investment management and sustainable information provider communities
Supervisory expectations and the use of sustainability data
Alongside changes to market‑facing frameworks, supervisors are increasingly embedding sustainability information into prudential and conduct oversight. A growing number of supervisory authorities have formally communicated that sustainability data is not only a disclosure input, but a core component of prudential risk management.
At the European level, the European Central Bank and the European Banking Authority have set expectations for banks to use climate‑ and environment‑related data in the identification and assessment of risks. This includes use of this information in forward‑looking analysis such as stress testing, scenario analysis, as well as in governance and internal control frameworks. Parallel developments in insurance supervision are visible through the European Insurance and Occupational Pensions Authority’s (EIOPA) use of sustainability‑related data to analyse exposures to biodiversity risks.
In the United Kingdom, the Bank of England’s Prudential Regulation Authority has established similar expectations for banks and insurers. Firms are expected to demonstrate how climate‑ and sustainability‑related risks are identified, assessed and managed within existing risk management frameworks and how these processes are supported by credible data, methodologies, and senior management oversight.
In Asia, the Singapore Monetary Authority of Singapore has integrated sustainability considerations within its environmental risk management expectations. Assessments of climate and biodiversity‑related factors as inputs into underwriting risk, investment risk, and operational resilience will be expected within existing governance and risk management frameworks.
For the sustainable finance information system, these developments reinforce the importance of data quality, methodological transparency, and clear accountability across the value chain.
Disclosure frameworks: convergence without uniformity
At the corporate level, sustainability-related disclosure and reporting continues to evolve across jurisdictions. This creates new challenges as well as opportunities for dialogue on how to ensure that high quality data is available to all stakeholders.
In the EU, the Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards are moving towards implementation. Recent adjustments to scope and timing through the Omnibus Package have created a different reality to the original legislation. Whether the revised scope will materially impact the availability and comparability of disclosure is a space to watch closely.
In the UK, Sustainability Reporting Standards aligned with the ISSB global baseline have been finalised, while at the international level global adoption of ISSB‑based standards continues to expand across jurisdictions.
The result is both a patchwork of new disclosure requirements at national level as well as increasing alignment around core concepts. Interoperability between these disclosure regimes — and the ability to interpret and compare information across standards — will therefore becoming a defining feature of the system going forward. Here, there are positive discussions about the emerging role of Artificial Intelligence tools to bridge potential gaps but widespread recognition that technology by itself is not a substitute for robust, standardised, and interoperable reporting frameworks.
Global coordination: opportunity and challenge
These developments highlight the dual nature of international progress. On the one hand, there is growing convergence around principles, definitions, and core disclosures. On the other, differences in regulatory design, supervisory practice and changes in implementation timelines risk adding complexity for the information system supporting global markets.
This reality creates both a challenge and an opportunity. Effective coordination can support market stability, comparability, and cross‑border investment. By contrast, divergence may lead to fragmentation of key nodes of the information system. Constructive dialogue between regulators, supervisors, market participants, and the sustainable information sector will be critical in shaping how this balance is struck.
Why this moment matters
While this is just a snapshot of regulatory and policy shifts underway, taken together, they point to financial markets, companies, and the information providers that support them moving into a new phase of active system governance with many moving parts. In this future, the effectiveness of policy and market outcomes increasingly depends on how information is produced, governed, and used in practice.
From FoSDA’s perspective, this makes 2026 an important moment not only to take stock, but to support informed and open dialogue. Through our Policy & Regulatory Working Group, FoSDA remains committed to ensuring that the sustainable finance information system navigates these changes, supports policy debates, and continues to evolve in a globally connected way.
