FCA drops mandatory climate reporting as the EU greenwashing ban starts (3 October 2026)
The two weeks to 3 October were about the rules for what companies say about sustainability. The FCA softened its climate reporting rules for listed companies, the EU's ban on vague green claims came into force, and the slimmed down European reporting standards reached the Official Journal. ISO's net zero standard, meanwhile, failed its first vote.
FCA puts all UK SRS disclosures on comply or explain
On 30 September the FCA published Policy Statement PS26/19, its final rules moving UK listed companies from TCFD aligned climate disclosure to the UK Sustainability Reporting Standards, the UK endorsed version of the ISSB standards. The consultation, CP26/5, had proposed making the climate standard, UK SRS S2, mandatory. The final rules do not. Every category of disclosure, climate included, is on a comply or explain basis.
The FCA says respondents told it that mandatory S2 could place disproportionate burdens on smaller companies whose business models are not materially affected by climate, and that a split between mandatory and comply or explain parts was complicated to follow. It has also brought secondary listed overseas companies and depositary receipt issuers into the same regime, rather than letting them signpost their home country disclosures.
The timetable is unchanged: the rules apply to accounting periods beginning on 1 January 2027, with first reports in 2028. There is a one year relief for Scope 3 emissions and a two year relief for the non climate standard, S1. The FCA is consulting on a new technical note, TN 803.1, on how to apply comply or explain, with comments due by 28 October 2026.
ShareAction's Luke Hildyard welcomed the move to international standards but warned that comply or explain "risks leaving stakeholders, including investors safeguarding more than £3trn of UK pension savings, without complete, reliable and comparable data if some complacent boards choose not to comply." For boards, the practical point is that the explanation is now the disclosure. A decision not to report against a standard needs a documented reason that will stand up when an investor reads it.
Sources: FCA, PS26/19 (PDF); FCA, Primary Market Bulletin 66, 30 September 2026; ESG Today, 30 September 2026.
EU ban on vague green claims applies from 27 September
The Directive on Empowering Consumers for the Green Transition, Directive (EU) 2024/825, set 27 September 2026 as the date from which member states must apply its rules. It works by amending the Unfair Commercial Practices Directive and the Consumer Rights Directive, adding green transition and circular economy rules to existing consumer law.
The main changes: generic environmental claims such as "environmentally friendly" are banned unless backed by proof; claims that a product has a neutral, reduced or positive emissions impact because of offsetting are banned; sustainability labels must be based on a certification scheme or set up by a public authority; and claims about future environmental performance need a detailed, realistic plan with time bound targets, checked by an independent expert. The directive also bans unfounded durability claims and presenting goods as repairable when they are not.
The separate Green Claims Directive, which would have set rules for substantiating claims, remains paused. That leaves the ECGT bans as the working rulebook. Any UK business marketing to consumers in the EU should audit its packaging, websites and net zero pledges against it now, starting with offset based "carbon neutral" claims, which are the clearest casualty.
Sources: EUR-Lex, Directive (EU) 2024/825; ESG Today, 28 September 2026.
Revised ESRS published in the Official Journal
The simplified European Sustainability Reporting Standards were published in the Official Journal on 21 September as Commission Delegated Regulation (EU) 2026/1563. It enters into force on 10 November 2026 and applies to financial years beginning on or after 1 January 2027. A companion regulation, 2026/1560, sets the voluntary standard that smaller companies can point to when larger customers ask them for sustainability data, under the CSRD's value chain cap.
The useful detail for anyone mid way through a 2026 report is the transitional article. For financial years starting in 2026, companies in scope may use either the original ESRS or the revised set, or the original ESRS with a list of specific reliefs, including on the double materiality assessment and value chain reporting. They must state which version they applied. EFRAG's revision, which the Commission largely adopted, cut mandatory datapoints by 61%, according to ESG Today.
Sources: EUR-Lex, Delegated Regulation (EU) 2026/1563; EUR-Lex, Delegated Regulation (EU) 2026/1560; ESG Today, 22 September 2026.
ISO's net zero standard fails its first vote
The draft ISO 14060 standard for net zero aligned organisations did not get enough support to advance. "ISO/DIS 14060 did not receive the level of approval required to advance in its current form," an ISO spokesperson told Trellis on 23 September. A draft needs approval from two thirds of the participating committee members voting, and no more than a quarter of all votes cast can be negative.
The draft drew close to 5,000 comments by the 9 September deadline, and national standards bodies from 88 countries took part in the ballot. ISO does not publish how members voted, but two people close to the process told Trellis that fossil fuel producing countries were among those voting no, and that some others wanted more time on the rules for using carbon credits. The committee will review the comments and recirculate a revised draft, with no timetable given.
Companies that were planning to badge their transition plans as ISO 14060 aligned will have to wait. In the meantime, the EU's new rules above already require an independently checked plan behind any forward looking climate claim made to consumers.
Sources: Trellis, 23 September 2026; ESG Today, 29 September 2026.
Also this fortnight
Glass Lewis announced a business combination with the sustainability data company Clarity AI on 24 September, with a new sustainability, data and AI centre in Madrid. Glass Lewis says it serves more than 1,300 investment managers and pension funds; Clarity AI's clients are mostly European. Coming after the SEC's court action against ISS, covered in our 12 September roundup, it is another sign that proxy advisers are moving their weight towards European clients.
Source: ESG Today, 24 September 2026.