ISSB
The International Sustainability Standards Board Issues Targeted Amendments to Greenhouse Gas (GHG) Emissions Disclosure Requirements
The International Sustainability Standards Board (ISSB) published targeted amendments to greenhouse gas (GHG) emissions disclosure requirements in IFRS S2 Climate-related Disclosures on December 11, 2025. The amendments were introduced in response to feedback received at a public consultation carried out by the ISSB earlier in 2025 and address specific application challenges identified by companies in preparing their disclosures. The amendments clarify that companies are permitted to limit measurement and disclosure of Scope 3 Category 15 GHG emissions to financed emissions as defined in IFRS S2, may use alternative classification systems to disaggregate information about financed emissions, and may deviate from IFRS S2 where required or permitted by local disclosure requirements for certain disclosure items. The amendments will be in effect for reporting periods beginning on or after January 1, 2027.
TNFD
The Taskforce on Nature-related Financial Disclosures Publishes Recommendations for Upgrading Nature Data for Market Participants
The Taskforce on Nature-related Financial Disclosures (TNFD) released a set of eight recommendations on November 6, 2025, for upgrading the nature data value chain for market participants. The recommendations include a blueprint to launch, operate, finance, and govern a Nature Data Public Facility (NDPF). The eight recommendations cover both state-of-nature data used by companies in their assessment of nature-related issues as well as reported data produced by companies on their impacts and dependencies on nature. The TNFD elaborates nature data principles to enhance the quality of state-of-nature data, an accompanying set of metadata standards, a proposed harmonization of licensing and usage agreements, a mechanism for companies to provide “qualifying state-of-nature data” they have collected on a proprietary basis, a nature data measurement protocol, and a universal data collection and sharing protocol.
GRI
The Global Reporting Initiative Opens Public Consultation on Labor Standards
The Global Reporting Initiative (GRI) opened on December 10, 2025 a public consultation on a range of GRI labor-related standards. The consultation is the final component of the GRI’s ongoing review of all labor-related disclosures and concerns a range of GRI standards, including Workers in Business Relationships (GRI 414), Forced Labor (GRI 409), Child Labor (GRI 408), and Freedom of Association and Collective Bargaining (GRI 407). The exposure drafts aim to increase coverage on labor rights and working conditions, including labor-related due diligence processes, incident reporting, grievance mechanisms, and engagement with worker representatives. The consultation will close on March 9, 2026.
Malaysia
The Securities Commission Malaysia Seeks Feedback on the Review of Malaysia’s Corporate Governance Framework
The Securities Commission (SC) Malaysia published a Discussion Paper on December 12, 2025, seeking public feedback on Malaysia’s corporate governance framework. The Discussion Paper identifies key areas for a potential review of Malaysia’s corporate governance framework, including reinforcing the roles of boards and management in driving long-term value creation and strengthening overall board effectiveness. According to the SC Malaysia, this may involve shifts in behavior and mindset and “enhancing agility in managing emerging risks and adopting new technology.” The feedback received in response to the Discussion Paper will guide the upcoming revision of the Malaysian Code of Corporate Governance (MCCG). The public feedback period will close on February 6, 2026.
The Advisory Committee on Sustainability Reporting Announces Its Approach to Addressing Non-Compliance with Sustainability Reporting Requirements under Malaysia’s National Sustainability Reporting Framework
The Advisory Committee on Sustainability Reporting (ACSR) outlined its approach to non-compliance with Malaysia’s National Sustainability Reporting Framework (NSRF) on December 8, 2025. According to the announcement, the ACSR (which consists of the Securities Commission [SC], Bank Negara Malaysia, Bursa Malaysia, the Companies Commission of Malaysia, and the Audit Oversight Board) will take a “phased and practical approach to reviewing disclosures,” acknowledging that a transition period to allow reporting entities to adapt is necessary and recognizing the challenges companies face in delivering quality disclosures. Accordingly, the ACSR will prioritize assisting companies in developing the capacity and skills to ensure meaningful progress in the quality of disclosures. However, the ASCR clarifies that consistent failure to take corrective action to address deficiencies may result in enforcement action against offending companies.
Malaysia’s Joint Committee on Climate Change Releases Guidance on Sustainable and Transition Finance
The Joint Committee on Climate Change (JC3) published Sustainable and Transition Finance Guidance on December 17, 2025. The Guidance sets out key principles that banks can follow when assessing borrowers, at both the asset and entity levels, and when providing financing to the real economy. In addition, the Guidance provides tools to enable banks to conduct consistent and credible assessments of clients’ transition progress. It also acknowledges the wide range of taxonomy frameworks to which banks may wish to refer or use and outlines how banks can proceed when an asset or project does not meet all criteria to qualify as an eligible transition activity/investment under said taxonomy frameworks.
China
The Ministry of Finance Publishes China’s Sustainability Disclosure Standards for Business Enterprises
The Ministry of Finance (MoF) of the People’s Republic of China published the Chinese Sustainability Disclosure Standards for Business Enterprises No. 1 – Climate (the Climate Standard) on December 25, 2025. The Climate Standard was developed on the basis of the IFRS S2 Climate-related Disclosures issued by the ISSB, albeit tailored to local market specificities. The Climate Standard will undergo a voluntary trial period before its final scope and date of application are determined.
Korea
The Financial Services Commission Promotes Measures to Strengthen the Effectiveness of the Korean Stewardship Code
The Financial Services Commission (FSC) of Korea, in conjunction with several other government ministries and advisory bodies (the Stewardship Code Council, the Korea Institute of Corporate Governance and Sustainability, the Ministry of Health and Welfare, the Ministry of Education, the Ministry of Personnel Management, and Korea Post) announced measures to improve the effectiveness of the Principles on Institutional Investors’ Stewardship Responsibilities or “the Stewardship Code” on December 29, 2025. The FSC acknowledges the voluntary uptake of the Stewardship Code but identifies areas where improvements could be made in reporting, the accessibility of stewardship reports, the implementation of a review process, and the alignment of the Code with global standards. Accordingly, the FSC is proposing that an “implementation review process” be introduced, with the Stewardship Code Council being responsible for conducting final review and approval of stewardship reports. According to the FSC, implementation reviews will initially focus on the stewardship reports of asset management companies and public pension funds as of December 2026.
In addition, a dedicated Stewardship Code website will be set up to act as a central repository where all stewardship reports will be made available, among other resources. Finally, the Stewardship Code will be revised to reflect evolving global standards, particularly with respect to the incorporation of ESG factors. According to the FSC, revisions to the Stewardship Code will be initiated in the first half of 2026.
Australia
The Australian Securities and Investments Commission Releases First Sustainability Reporting Educational Modules to Assist Smaller Companies
The Australian Securities and Investments Commission (ASIC) released its first set of education materials to help smaller companies and report preparers in understanding and applying new sustainability reporting requirements on December 15, 2025. The ASIC acknowledges that the scope and complexity of Australia’s recently introduced sustainability reporting requirements may pose a challenge for many reporting entities and could impact small and medium-sized companies that support reporting entities. The ASIC has partnered with the Australian Accounting Standards Board (AASB) to develop eight learning modules on the sustainability reporting framework. The modules are intended to help stakeholders, particularly smaller companies, to understand foundational concepts such as climate-related risks and opportunities and how they can be relevant to their activities.
EU
The European Parliament and the Council of the EU Reach a Provisional Political Agreement on the Sustainability Omnibus Package to Simplify EU Sustainability Reporting and Due Diligence Requirements
The European Parliament and the Council of the EU reached a provisional political agreement on December 9, 2025, on the revision of the EU’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) (collectively referred to as the Sustainability Omnibus Package). The political agreement concludes a protracted legislative process that began in February 2025 with proposals by the European Commission to simplify the EU’s sustainability reporting and due diligence requirements.
Under the terms of the political agreement, the CSRD’s scope of application has been limited to companies with over 1,000 employees and an annual turnover of €450 million. Financial holding companies have been removed from scope and a ‘transition exemption’ from further reporting was introduced for companies that will fall out of scope in 2025 and 2026. Mandatory Taxonomy-related reporting was retained but will remain subject to a materiality threshold under amendments to the Taxonomy Delegated Acts (DAs) introduced earlier in 2025.
The scope of the CSDDD has been revised to apply to companies with over 5,000 employees and €1.5 billion in net turnover. In terms of due diligence obligations, the co-legislators have removed limits on the breadth of a company’s assessment and identification of adverse impacts but grant companies flexibility to prioritize which of their actual or potential adverse impacts they address. The requirement to adopt a transition plan has been removed, as has a harmonized EU liability regime.
The European Parliament voted to validate the political agreement on December 16, 2025. Once the Council does likewise, the only remaining formal step will be publication in the Official Journal of the EU (OJEU). Thereafter, transposition by the Member States can begin.
The European Securities and Markets Authority Reviews the Impact of ESMA Guidelines on the Use of Environmental, Social, and Governance- or Sustainability-Related Terms in Fund Names
The European Securities and Markets Authority (ESMA) published research on December 17, 2025, assessing the impact of its fund-naming guidelines on the use of Environmental, Social, and Governance (ESG)- and sustainability-related terms in fund names. The research examined the product offerings of 25 of the largest EU asset managers, with collective assets under management valued at €7.5 trillion. ESMA found that the guidelines had improved the consistency between ESG terms in fund names and the actual investment strategies of the underlying fund. According to the research, 64% of funds mentioned in shareholder notifications changed their name following the adoption of the guidelines. In most cases, funds removed ESG-related terminology. Funds with higher fossil fuel exposures were more likely to remove ESG terms from their names.
Relatedly, ESMA published a thematic note on January 14, 2026, on clear, fair, and not misleading sustainability-related claims for market participants, in order to address greenwashing risks. The thematic note focused on ESG strategies and includes guidance on how market participants should apply certain fundamental principles when sharing information about their ESG strategies with clients.
The European Supervisory Authorities Publish Joint Guidelines on ESG Stress Testing
The European Supervisory Authorities (ESAs) (the collective name for ESMA, the European Banking Authority (EBA), the European Insurance and Occupational Pensions Authority (EIOPA)) issued joint guidelines on January 8, 2026 on ESG stress testing. The joint guidelines aim to ensure that financial institutions adhere to similar standards when applying assessment methodologies to test the impact of various ESG risks. According to the joint guidelines, National Competent Authorities (NCAs) should ensure that appropriate timeframes are established for financial institutions to conduct stress-testing, taking into account the need for complete and reliable information. NCAs should also allocate sufficient human resources to be able to assess the robustness of the stress testing carried out by institutions under their supervision. The Joint Guidelines will apply from January 1, 2027.
The Joint Bank Reporting Committee Releases Its 2026 Work Programme and Recommendations to Enhance Semantic Integration on ESG Definitions
The Joint Bank Reporting Committee (JBRC) (which consists of representatives from the EBA and European Central Bank [ECB]) published ESG-focused recommendations alongside its Work Programme for 2026, on January 19, 2026. According to the Work Programme, the JBRC will focus on ‘semantic integration’ in 2026, with a view to developing common definitions and standards across statistical, supervisory, and resolution reporting. Consistent with this priority, the JBRC has also made a series of recommendations to improve the consistency in concepts and definitions underpinning ESG disclosures.
The European Parliament and the Council of the EU Approve Provisional Political Agreement on Revisions to the EU Deforestation Regulation
The European Parliament and the Council of the EU reached a provisional political agreement on amendments to the EU Deforestation Regulation (EUDR) on December 4, 2025. Under the agreement, only operators that first place a product on the market will be required to issue a due diligence statement. Simplified declarations for micro and small primary operators have also been introduced. The application of the Regulation has been postponed until December 30, 2026, for all operators and until June 30, 2027, for micro and small operators. In addition, the European Commission has been tasked to conduct a ‘simplification review’ by April 30, 2026, to identify if further revisions to the EUDR could reduce the administrative burden on companies in scope.
Following approval by the co-legislators, the revised EUDR was published in the Official Journal of the EU (OJEU) on December 23, 2025.
The European Commission Publishes Two Draft Delegated Acts on Supervisory Fees for ESG Ratings Providers and ESMA Fines and Periodic Penalty Payments under the EU ESG Ratings Regulation
The European Commission published two draft Delegated Acts (DAs) under the EU ESG ratings regulation for public comment on January 16, 2026. The first of these draft DAs elaborates upon the procedure that ESMA must follow in order to impose fines and periodic penalty payments on ESG ratings providers found to be in breach of their obligations. The draft DA specifies that ESG ratings providers have various rights during an ESMA investigation.
The second draft DA concerns the methodology for calculating supervisory fees payable to ESMA by ESG ratings providers. The draft DA reiterates the ‘cost-recovery principle’ whereby the supervisory costs incurred by ESMA in relation to ESG ratings must be covered by ESG ratings providers under ESMA supervision. According to the proposed methodology for calculating supervisory fees, ESMA’s supervisory costs will be divided between ESG ratings providers in a manner proportionate to their revenue. Both draft DAs are open for public feedback until February 13, 2026.
United States
The Trump Administration Issues Executive Order Regarding Proxy Advisers, Proxy Voting, and Shareholder Proposals
The Trump Administration issued an Executive Order regarding proxy advisers that directs the Securities and Exchange Commission (SEC), as well as the Federal Trade Commission (FTC) and Department of Labor (DOL), to “increase oversight of and take actions to restore public confidence in the proxy advisor industry, including by promoting accountability, transparency, and competition” on December 11, 2025. A summary is also available in a Fact Sheet the White House released.
A statement from ISS in connection with the Executive Order is available here.
By:
Hugo Gallagher, Senior Associate, Regulatory Affairs & Public Policy, ISS STOXX
Karina Karakulova, Director of Regulatory Affairs & Public Policy, ISS STOXX
