Climate and Energy: EU Policy and Regulation Update for 28 October 2026

As policy and regulatory landscapes evolve, this publication will provide insights to navigating emerging risks and opportunities in the energy transition. Read previous issues here.

European Union/International

• ESMA promotes clarity in claims on impact and transition
• EBA updates technical framework for Pillar 3 ESG disclosures
• ESMA sets out sustainability reporting enforcement priorities for 2026
• European Supervisory Authorities set joint priorities for 2027, including sustainable finance
• UNEP FI highlights nature-finance gaps and insurers’ role
• ECB’s Frank Elderson delivers a keynote speech on climate and nature risks, economic resilience and competitiveness
• Platform on Sustainable Finance publishes a report on monitoring capital flows to sustainable investments
• EU Commission reports continued growth in sustainable investments across the EU
• ISSB consults on its proposals for nature-related disclosures
• EFRAG highlights tools and guidance for voluntary sustainability reporting
• Platform on Sustainable Finance raises concerns over proposed reporting standards for non-EU companies
• EFAMA, AFME and Eurosif set out priorities for SFDR trilogues
• TNFD updates disclosure recommendations and completes its metrics framework

France

• AMF publishes its conclusions on the revision of the SFDR Regulation (incl. EUROSIF, AFME and EFAMA priorities for the trilogue negotiations)
• Banque de France publishes a study on the evolution of supervisory expectations regarding banks’ climate and nature risks
• ISR Label committee consults on and presents its new private equity framework
• AMF highlights ESMA’s priorities for upcoming sustainability statements
• French Treasury outlines revised ESRS and voluntary reporting framework

European Union/International

12 October 2026 [EU] – ESMA promotes clarity in claims on impact and transition

The European Securities and Markets Authority (ESMA) published two thematic notes on sustainability claims.

On claims on impact [available here], ESMA emphasizes divergences in how market participants interpret “positive impact” in relation to impact claims made through funds and bonds. Positive impact is defined:

• without clearly explaining whether it stems from the underlying company itself (i.e. investee impact) or from their own contribution (i.e. investor impact); and
• without providing solid evidence to back the claim up.

Firms are therefore asked to be upfront about whether they genuinely set out to create impact from the start, whether their involvement makes a real difference, and how they measure results. Among the practical examples ESMA gives a fund should spell out exactly which environmental or social challenge its impact objective addresses, and should never imply that simply owning listed shares delivers impact by itself.

The second note [available here] covers climate transition claims across funds, bonds and benchmarks, recognising these as inherently forward-looking and uncertain. ESMA still expects transparency on three fronts: what the transition ambition is and how it ties to recognised climate pathways; how it will be delivered; and how progress will be tracked and reported, including assumptions and limitations.

Both notes illustrate good and poor practices, with the aim of clarifying existing clear communication expectations, including for the ongoing SFDR review, rather than prescribing any particular approach.

12 October 2026 [EU] – EBA updates technical framework for Pillar 3 ESG disclosures

The European Banking Authority (EBA) published the final technical package for the first phase of release 4.4 of its reporting and disclosure framework [available here]. The package provides the data structures and technical specifications needed to implement updated requirements, including Pillar 3 disclosures on ESG risks, equity and shadow banking exposures. It also introduces templates supporting IFRS 18 reporting and makes corrections across several other reporting modules.

For ESG disclosures, the release updates the Data Point Model (DPM) and XBRL taxonomies used to organise information in a standardised, machine-readable format. It also refines the conversion file linking the previous and current DPM glossaries, with changes primarily relating to ESG disclosures. These updates support the technical implementation of the revised disclosure framework rather than introducing standalone substantive ESG obligations.

The package incorporates feedback on the draft published in July 2026 and is accompanied by an updated list of known technical issues and revised implementation FAQs. A second phase, expected in early 2027, will address the remaining elements of the supervisory reporting simplification package consulted on earlier in 2026. The EBA may also issue a targeted corrective release in January 2027 if early implementation reveals critical issues.

13 October 2026 [EU] –ESMA sets out sustainability reporting enforcement priorities for 2026

ESMA published its European common enforcement priorities for 2026 corporate reporting [available here]. On sustainability reporting, the priorities concern double materiality assessments and consistency between disclosed impacts, risks and opportunities and the related policies, actions, targets and metrics, with a particular focus on climate change and own workforce disclosures when assessing reporting consistency.

ESMA calls for:

• equally rigorous assessments of positive and negative impacts;
• balanced disclosures covering issuers’ operations and value chains; and
• greater transparency where policies or actions address only part of a material sustainability issue.

Issuers should also explain the significant current and future financial resources allocated to their key actions.

On climate targets, ESMA stresses the need to explain whether and how emissions reduction targets are science-based and compatible with limiting global warming to 1.5°C, distinguish gross reduction targets from net targets, and report targets that have been missed, abandoned or are no longer expected to be met. Issuers should clearly identify the ESRS version applied during the 2026 transitional year.

13 October 2026 [EU] –European Supervisory Authorities set joint priorities for 2027, including sustainable finance

The Joint Committee of the European Supervisory Authorities (ESAs) published its 2027 work programme [available here], retaining sustainable finance as a key priority. The ESAs will monitor the SFDR review and, where mandated, develop technical standards or advice, potentially including consumer testing of proposed changes. In parallel, they will continue monitoring existing SFDR obligations and providing practical guidance to promote consistent supervision and application.

The ESAs will begin preparing the data collection needed for a report, due in December 2028, on developments in the securitisation bond market under the European Green Bond Standard. The programme places these activities within a broader drive to simplify requirements, reduce reporting overlaps and improve regulatory consistency.

16 October 2026 [International] – UNEP FI highlights nature-finance gaps and insurers’ role

Ahead of the UN Biodiversity Conference (COP17) in Yerevan, UNEP FI published a series of reports and briefings examining progress in nature finance and how insurance can support biodiversity protection and climate resilience:

• the first report [available here] finds that progress since COP16 in developing nature-finance frameworks and instruments has not yet translated into sufficient changes in capital allocation. Based on 2023 data, financing for nature-harmful activities outweighed investment in nature-based solutions by approximately 30 to 1, while private finance contributed only around 10% of investment in nature-based solutions. It highlights incomplete tracking of private financial flows and uneven policy frameworks, calling for clearer government policies and better data and reporting;
• the second report [available here] explains how ecosystem degradation can amplify climate-related hazards and claims costs, arguing that healthy ecosystems should be treated as critical infrastructure complementing emissions reductions and engineered defences. It presents the Climate-Nature Nexus Atlas, part of the PSI Nature-Aware Underwriting Toolkit, which maps 148 significant relationships between ecosystems and 12 climate-related perils to support risk assessment and underwriting; and 
• the third report [available here], jointly prepared by UNEP FI’s Principles for Sustainable Insurance and UNDP’s Insurance and Risk Finance Facility, outlines how insurers can support biodiversity objectives through risk management, insurance cover and long-term investment. Its recommendations include incorporating insurance and risk transfer into national biodiversity finance plans, clarifying how insurance contributes to biodiversity-finance monitoring, and aligning biodiversity, adaptation and disaster-risk strategies. Scaling these approaches will require clear policy signals, credible sectoral transition pathways, coherent regulation and effective public-private collaboration.

19 October 2026 [EU] – ECB’s Frank Elderson delivers a keynote speech on climate and nature risks, economic resilience and competitiveness

Frank Elderson, Member of the ECB’s Executive Board and Vice-Chair of its Supervisory Board, addressed the Green Swan 2026 Conference on the economic implications of climate change and nature degradation [available here]. He argues that their effects on output, inflation and financial stability make them central to the work of central banks and supervisors.

He calls for adaptation and mitigation to advance together, combining investment in resilient infrastructure, water management and energy systems with emissions reductions, without which adaptation becomes increasingly difficult and costly. He also presents the green transition as a competitiveness strategy, as renewable energy and electrification can reduce dependence on imported fossil fuels and exposure to price volatility while supporting productivity and long-term prosperity.

The speech identifies policy uncertainty and access to finance as major obstacles to transition investment. Given the substantial upfront costs and long payback periods of many projects, Frank Elderson calls for greater policy certainty and deeper capital markets to complement bank lending.

20 October 2026 [EU] – Platform on Sustainable Finance publishes a report on monitoring capital flows to sustainable investments

The Platform on Sustainable Finance published the second edition of Monitoring of Capital Flows to Sustainable Investments [available here]. It estimates that large European companies directed EUR 512 billion towards green and transition investment in 2025, equivalent to 21% of overall EU corporate investment. This includes EUR 330 billion in Taxonomy-aligned expenditure and EUR 182 billion in additional capital expenditure by companies with credible transition plans, not reported as Taxonomy-aligned.

The report tracks expanding green bond and lending markets, but finds that the substantial assets held by SFDR Article 8 and Article 9 funds remain only partly connected to Taxonomy-aligned activities. Average reported alignment stood at 2.3% and 8.8% respectively, partly reflecting the limited number of companies providing alignment data.

The Platform advocates more integrated capital markets and greater access to equity and risk-sharing finance, alongside practical improvements to the Taxonomy, including clearer rules for estimates, digital reporting and broader activity coverage. It cautions that the investment figures exclude non-reporting mid-caps and SMEs and do not show how much other expenditure may reinforce fossil-fuel dependence.

20 October 2026 [EU] – EU Commission reports continued growth in sustainable investments across the EU

The European Commission published updated data [available here] and a factsheet [available here] showing that reported investment in Taxonomy-aligned activities has exceeded EUR 1.2 trillion since 2021. Around EUR 324 billion was recorded in 2025, with electricity providers accounting for the largest share. Taxonomy-aligned activities represented approximately 29% of reporting companies’ capital expenditure. The European Commission also notes that the use of the European Green Bond Standard is expanding, with issuance reaching around EUR 60 billion by 7 October 2026 (nearly two-thirds issued in 2026). Bonds using the standard accounted for 15% of EEA green bond issuance in the year to date. The corporate figures cover the EU, Norway, Switzerland and the UK and remain provisional for 2025, limiting direct comparisons with previously published data.

22 October 2026 [International] – ISSB consults on proposed nature-related disclosures

The International Sustainability Standards Board (ISSB) launched a consultation on proposed nature-related disclosures, open until 19 February 2027 [available here]. The proposals build on IFRS S1, which already requires disclosure of material information about nature-related risks and opportunities that could be expected to affect a company’s prospects, and complement IFRS S2’s climate-related requirements [see further in our publication available here].

Drawing extensively on the Taskforce on Nature-related Financial Disclosures (TNFD) framework, the proposed disclosures emphasise how dependencies and impacts on nature give rise to financial risks and opportunities, the location of assets and activities across the value chain, and interactions with Indigenous Peoples, Local Communities and affected stakeholders. The proposed disclosures cover companies’ strategic responses, the resilience of their business models assessed through nature-related scenario analysis, and the amount and percentage of assets or activities exposed to nature-related risks or aligned with nature-related opportunities. Under the proposals, the scenario analysis used to assess resilience would be proportionate to companies’ exposure to nature-related risks and their available skills, capabilities and resources, with qualitative approaches permitted where appropriate.. The proposals also seek connected reporting on nature and climate rather than separate, siloed disclosures.

The ISSB proposes issuing the requirements as a standalone Practice Statement, compliance with which would not be necessary to claim compliance with ISSB Standards. This approach aims to improve nature-related reporting without disrupting implementation of IFRS S1 and IFRS S2. Stakeholders are invited to comment both on the substance and on whether the content should instead be issued in another form, including as a Standard.

22 October 2026 [EU] – EFRAG highlights tools and guidance for voluntary sustainability reporting

The European Financial Reporting Advisory Group (EFRAG) published the summary report of its outreach event on the transition from the VSME Recommendation to the new Voluntary Standard [available here], held on 9 October 2026. EFRAG highlighted updated guidance available through its Knowledge Hub, with translations into all EU languages planned by December 2026. An updated Digital Template is expected in November, incorporating the new standard and additional features for narrative disclosures, comparative information and merging reports. Participants discussed using the standard as a common starting point for sustainability information requests from banks and business partners, while recognising that sector-specific and risk-management needs may require additional data. National reporting platforms and secure data-sharing tools were presented as ways to reduce duplicate requests and allow companies to report information once and reuse it across counterparties.

26 October 2026 [EU] – Platform on Sustainable Finance raises concerns over proposed reporting standards for non-EU companies

The Platform on Sustainable Finance published a statement on EFRAG’s proposed ESRS 40-a for certain non-EU companies [available here]. While supporting alignment with the standards applicable to EU companies, it warns that differences in disclosure requirements could undermine comparability and create an uneven playing field.

The Platform highlights two concerns:

• Gaps in Taxonomy information could leave investors and financial institutions without data needed for their own disclosures. It therefore encourages non-EU companies reporting under ESRS 40-a to provide Taxonomy information voluntarily in relation to their EU subsidiaries.
• The proposed “mixed approach” would allow non-EU companies to report on certain non-climate topics using a narrower EU-related perimeter rather than covering their worldwide impacts. The Platform argues that separating EU-related impacts could increase reporting complexity and costs while obscuring material environmental and human rights impacts outside the EU.

October 2026 [EU] – EFAMA, AFME and Eurosif set out priorities for SFDR trilogues

As trilogue negotiations on the SFDR review get underway, the European Fund and Asset Management Association (EFAMA), the Association for Financial Markets in Europe (AFME) and the European Sustainable Investment Forum (Eurosif) published their priorities for the review of the SFDR, highlighting different approaches to product categories, disclosure requirements and investor protection:

• EFAMA [see here] prioritises simplification, workable product categories and coordinated implementation with the revised MiFID II and IDD sustainability-preference rules. It favours alternative, rather than cumulative, conditions for exceptions to the transition category’s fossil-fuel exclusions. It opposes mandatory principal adverse impact (PAI) and Taxonomy-alignment disclosures for “ESG basics” products and seeks to preserve sustainability communications by alternative investment funds using the opt-out for funds marketed exclusively to professional investors.
• AFME [see here] supports excluding portfolio management and advisory services from SFDR and removing entity-level PAI and remuneration-policy disclosures. It calls for coordination with distribution and PRIIPS rules so that products outside SFDR can communicate their sustainability features and meet clients’ sustainability preferences, alongside neutral disclaimers for non-categorised products. Like EFAMA, it favours flexible transition criteria and proportionate PAI disclosures.
• Eurosif [see here] advocates stronger anti-greenwashing safeguards, including cumulative conditions for exceptions to the transition category’s fossil-fuel exclusions covering Taxonomy-aligned capital expenditure, emissions-reduction strategies and restrictions on fossil-fuel expansion and coal-based power generation. It seeks mandatory disclosure of at least three PAI indicators by each product in the transition, sustainable and ESG basics categories, including category-specific mandatory indicators and additional indicators selected according to the product’s sustainability objectives and strategy. It also calls for Taxonomy disclosures for products with environmental objectives, and a proportionate “do no significant harm” safeguard for sustainable products. Unlike EFAMA, it would prohibit opted-out funds from using sustainability-related terms in their names and marketing communications.

October 2026 [International] – TNFD updates disclosure recommendations and completes its metrics framework 

The TNFD updated its 2023 recommendations [available here], adding guidance on environmental crime and finalising metrics on invasive alien species and the state of nature. The framework retains 14 recommended disclosures covering:

• board oversight, management responsibilities and stakeholder engagement on nature-related issues;
• effects on business models, strategy and financial planning, including resilience and priority locations;
• assessment and management of nature-related issues across operations and value chains; and
• metrics, targets and progress in addressing nature-related dependencies, impacts, risks and opportunities.

The updated guidance addresses how organisations assess and manage known or potential exposure to environmental crime, including through traceability and due diligence targets. It notes that such disclosures should not constitute allegations or determinations of criminal conduct or identify specific persons or entities as having committed an offence and must comply with applicable legal and confidentiality requirements.

The final metrics complete TNFD’s measurement framework, covering invasive species prevention, ecosystem extent and condition, and species extinction risk, with the aim of supporting comparability and independent assurance.

France

1 October 2026 [France] – AMF publishes its conclusions on the revision of the SFDR Regulation

The French Financial Markets Authority (AMF) published its conclusions on two practical issues related to the revision of the SFDR Regulation [available here]. It results in 14 recommendations, and the AMF intends to continue its work, including on ESG selectivity and exclusion policies.

On transition plan credibility, the term “credible” is deemed insufficiently operational as it stands and should rest on explicit minimum criteria tied to a recognised framework: alignment with the Paris Agreement; transparent GHG reduction targets; consistency between past and projected decarbonisation trajectories; real allocated actions and resources; and disclosure of exposure to high-climate-impact and fossil-fuel sectors, drawing on revised ESRS indicators though mere CSRD compliance doesn’t guarantee a plan’s quality.

Unresolved points include: whether Paris alignment should be strictly mandatory; whether criteria should extend beyond climate; who should verify credibility externally; and how to treat Scope 3 emissions given data-quality gaps.

On principal adverse impacts (PAI), key recommendations include:

• rethinking the mandatory base rather than keeping the current list;
• aggregating indicators at portfolio level with qualitative analysis for private equity;
• aligning PAI with ESRS and exclusion policies to avoid redundancy;
• dropping the optional tier; and
• making sector-specific PAI mandatory above an exposure threshold, for a core set of 13 requirements.

Unresolved points include how PAI reporting should work for pooled funds versus direct holdings; how to prevent materiality assessments from being used to dodge unfavourable disclosures; and how to align PAI with CSRD reporting given not every company covered by PAI rules is covered by CSRD.

5 October 2026 [France] – Banque de France publishes a study on the evolution of supervisory expectations regarding banks’ climate and nature risks

The Banque de France published a study [available here] on how climate change and nature degradation expose banks to new financial risks, noting that French authorities have used 3 levers since 2020 to improve French banks’ practices: developing forward-looking tools on scenarios and stress tests; strengthening supervision; and since 2026 requiring banks to draw up a prudential transition plan.

On the scale of the risk, the study highlights that NGFS long-term scenarios point to significant global GDP losses by 2050, while shorter-term 2025 scenarios show a potential 7.4% single-year GDP hit in France from a combination of heatwaves, droughts and wildfires across Europe. The ECB’s 2024 “Fit-for-55” stress test similarly estimated additional losses of EUR 50 billion for the French banking sector and EUR 518 billion for the European financial system as a whole by 2030 under an adverse scenario.

On supervision, the study reports improvements following the ECB’s 2022 thematic review and subsequent follow-up. Indeed, while no major French bank had advanced climate and environmental risk practices in 2022, more than a third did by the end of 2024, though progress remains uneven particularly on credit risk, and the ECB has already imposed financial sanctions on two European institutions for failing to meet binding risk-assessment requirements on time. The French transposition of CRD6, in force since April 2026, marks a major step in embedding climate and environmental risk into the prudential framework by requiring banks to produce a prudential transition plan, while giving supervisors stronger powers to demand changes to governance, risk management and the plan’s targets and actions.

8 October 2026 [France] – ISR Label committee consults on and presents its new private equity framework

The ISR Label committee opened a public consultation on its first framework dedicated to private equity in order to adapt the existing securities and real estate frameworks to private equity and unlisted companies. The public consultation runs from 8 October to 19 November and is open to any interested stakeholder, after which the committee will revise the proposed framework and submit it to the Minister of the Economy for approval.

The draft framework [available here] leans on the particular leverage private equity managers have over the companies they finance, through their capital stake, governance involvement and holding period, placing strong weight on pre-investment due diligence and ongoing dialogue mechanisms built around measurable targets, improvement plans and tracked results over time, while adapting to the data granularity typically available from financed SMEs and mid-caps. It shares the same six-pillar structure and ESG exclusion criteria as the securities and real estate frameworks. Funds will need to carry out a thorough ESG analysis before investing, with particular attention to climate and then carry that analysis through into how the investment is run, backed by an ambitious shareholder engagement policy and transparent reporting to investors on how ESG performance evolves over time.

At a webinar on 14 October, the ISR Label committee presented further details of the proposed requirements [presentation available here, French only]. Portfolio companies in high-climate-impact sectors would be subject to annual carbon footprint updates, and at least 35% of these holdings would need credible Paris-aligned transition plans, either already in place or scheduled for implementation within 18 months of investment. The proposal also combines a common fund-level ESG performance indicator with a company-specific indicator, supported by three-year improvement targets, action plans and escalation procedures where targets are missed, subject to limited exceptions.

14 October 2026 [France] – AMF highlights ESMA’s priorities for upcoming sustainability statements

The AMF drew listed companies’ attention [available here] to ESMA’s 2026 sustainability reporting enforcement priorities [please refer to the EU section above], focusing on balanced double materiality assessments and consistency between material issues, policies, actions and targets. It also highlights transparency on the ESRS version applied in 2026, preparation for the revised standards from financial year 2027 at the latest, and timely disclosure of expected shortfalls against 2030 targets.

21 October 2026 [France] – French Treasury outlines revised ESRS and voluntary reporting framework

The French Treasury published an overview of the revised ESRS, and the voluntary reporting standard for companies outside the CSRD’s scope [available here, French only]. It highlights simpler reporting requirements and application of the revised ESRS to financial years beginning on or after 1 January 2027, with optional early application in 2026 subject to transitional rules. It also clarifies that the value-chain cap protects partners with no more than 1,000 employees from CSRD-related information requests for information beyond that covered by the voluntary reporting standard.