Sustainability & Climate Pulse- November 2026

FOREWORD

In California, the California Air Resources Board (CARB) regulation is now in force, and first-year Scope 1 and 2 reports under Senate Bill 253 are due on 10 November, 2026. In Europe, the carbon market continues to develop, while revised European Sustainability Reporting Standards (ESRS) requirements apply to approximately 6,000 of the largest companies, with first reports due for the financial year 2027. The United Kingdom and European Union appear set to link their carbon markets, which could affect Carbon Border Adjustment Mechanism (CBAM) costs for companies trading between them.

The Taskforce on Nature-related Financial Disclosures (TNFD), the Science Based Targets Network (SBTN) and the Nature Positive Initiative (NPI) have aligned how companies assess, set targets for and report on nature.

In India, the Institute of Chartered Accountants of India (ICAI) has issued its Standard on Sustainability Assurance (SSA) 5000, which applies from 1 April 2027. Indian micro, small and medium enterprises (MSMEs) are feeling the cost of the EU’s CBAM, and NABKISAN has raised INR 1.8 billion through the country’s first social bond for water, sanitation and hygiene.

Investors are watching closely. FTSE Russell’s latest survey found that 84% of asset owners now use sustainability information in their investment decisions and identified weak corporate reporting as the main barrier to doing more.

Not all the news is encouraging. At the pre-COP31 meeting in Fiji, attention turned to the gap between the adaptation finance developing countries need and the funding available. Current national pledges also leave the world off a 1.5°C pathway.

In the Middle East, countries most exposed to climate change are often the least able to secure the finance required to respond.

For companies, the priority is similar everywhere: establish reliable data, understand exposure, and use disclosure to run the business, not only to comply.

IN THE NEWS

GLOBAL

UK and EU Agree to Link Emissions Trading Systems

The United Kingdom and European Union have agreed on terms to link their emissions trading systems (ETS), according to a Politico report citing four people familiar with the negotiations.

Neither government has publicly confirmed the deal, and a formal announcement is expected at the UK–EU summit in Brussels next month. The ETS agreement is one of three agreements being negotiated together under the post-Brexit reset, alongside youth mobility and a sanitary and phytosanitary (SPS) arrangement for agri-food trade, and sources indicate that none will proceed unless all three are settled.

For business, the main prize is relief from carbon border charges. Once the systems are linked, goods traded between the UK and EU would be expected to fall outside each other’s Carbon Border Adjustment Mechanism (CBAM), which matters because the EU’s CBAM entered its definitive phase in January 2026 and the UK’s version starts on 1 January, 2027. Linkage would also likely pull the UK carbon price, which has traded below the EU’s, closer to EU levels. Sector coverage, timing, and other details will remain unclear until the agreement text is published.

New Aligned Guidance from TNFD, SBTN, and Nature Positive Initiative Empowers Corporate Action on Nature

On 13 October, 2026, the Taskforce on Nature-related Financial Disclosures (TNFD), the Science Based Targets Network (SBTN), and the Nature Positive Initiative (NPI) published coordinated updates intended to make assessing nature, setting targets, and reporting fit together. The practical goal is reuse: data and analysis a company prepares under one framework should now carry over more easily to others, reducing duplicated effort for businesses and financial institutions working out how they depend on and affect nature.

The package has three parts. TNFD released LEAP (Locate, Evaluate, Assess, Prepare) v2.0, the first revision of its assessment approach since 2023. SBTN launched Science-Based Targets for Nature 2.0, which gives companies more flexible starting options and covers a wider range of targets. NPI introduced its State of Nature Indicators and Metrics, a common set of measurements that TNFD and SBTN have already incorporated into their frameworks. All three were published ahead of the 17th Conference of the Parties (COP17) to the Convention on Biological Diversity (CBD) in Yerevan, Armenia, and are meant to support governments implementing Target 15 of the Kunming-Montreal Global Biodiversity Framework, which asks governments to require large businesses and financial institutions to report on their biodiversity risks, dependencies, and impacts.

Pre-COP31 Concludes in Fiji Ahead of November Summit

Pre-COP31, the preparatory meeting for the 31st Conference of the Parties (COP31) to the United Nations Framework Convention on Climate Change (UNFCCC), convened in Nadi, Fiji, from 5 to 8 October, 2026, drawing more than 3,000 participants, roughly ten times the turnout at the previous Pre-COP. EU Climate Commissioner Wopke Hoekstra opened proceedings by urging all countries to submit Nationally Determined Contributions (NDCs) aligned with a 1.5°C pathway and called on Group of Twenty (G20) members to raise both emissions cuts and climate finance. Thirty Pacific countries endorsed the Taku Pakasoa Declaration, and delegations renewed their focus on the adaptation finance gap, with the United Nations estimating that developing countries need USD 310 billion to USD 365 billion annually to adapt to climate change, while only USD 26 billion in adaptation finance was available in 2023. COP31 itself opens 9 November, 2026 in Antalya, Türkiye, running through 20 November, 2026, under the presidency of Turkish Environment Minister Murat Kurum, with Australia’s Chris Bowen serving as President of Negotiations, and will also host the eighth meeting of the Parties to the Paris Agreement (CMA8) and the twenty-first meeting of the Parties to the Kyoto Protocol (CMP21).

EU Publishes Revised ESRS, Narrowing Scope Under Omnibus I

The European Commission has adopted and published a simplified set of European Sustainability Reporting Standards (ESRS) under the Omnibus I package, narrowing mandatory scope to approximately 6,000 of the largest companies operating in the European Union. The revision preserves the double materiality framework and the core structure of climate disclosure under ESRS E1, including the requirement to report anticipated financial effects, while reducing the overall volume of mandatory data points. The first reports under the revised standard are due for the financial year 2027, giving in-scope companies a transition window to re-map data collection to align with the simplified requirements. The change follows the two-month scrutiny period by the European Parliament and Council that closed without objection in early September, and companies that paused remediation of gap assessments pending that outcome can now restart, prioritizing data point mapping and re-baselining materiality assessments where the reduction in mandatory disclosures changes what must be collected.

USA

Majority of Asset Owners Embrace Sustainability in Investment Strategies, Reveals FTSE Russell Survey

FTSE Russell’s ninth annual asset owner survey, covering 402 asset owners in 24 countries, found that 84% now factor sustainability into their investment decisions, up from 73% in 2025 and just short of the 2022 peak. Another 15% are considering it. Integration is also getting deeper: 51% of respondents now apply sustainability considerations to more than half of their assets, nearly double last year’s 26%.

What asset owners care about has shifted. Governance, tax, and shareholder rights now top the list of sustainability priorities at 32%, up from 18% a year ago and just ahead of climate transition at 31%. Concern about physical climate risk and adaptation also rose to 26% from 19%. Respondents named the quality of corporate reporting and disclosure as the biggest obstacle to doing more, which puts pressure on companies to improve the sustainability data they give investors.

California Approves Initial Regulation for Corporate GHG Reporting Under SB 253

California’s Office of Administrative Law approved CARB’s Initial Regulation under SB 253 and SB 261 on 12 October, 2026 and the rule took effect the same day. The approval sets 10 November 2026 as the deadline for first-year Scope 1 and Scope 2 emissions reports under SB 253, giving covered companies (U.S. entities with more than USD 1 billion in annual revenue that do business in California) less than a month to file.

The regulation also defines applicability terms such as “revenue” and “doing business in California,” sets recordkeeping requirements, and establishes the annual fee program. For this first cycle, CARB will accept existing reports or data already filed with other programs, does not require third-party assurance, and is taking submissions through a voluntary Report Intake Platform or by email. Companies that had no Scope 1 or 2 data collection in place or planned by 5 December 2024 can submit a statement of non-reporting instead. SB 261 climate-risk reporting remains on hold under a Ninth Circuit injunction, and Scope 3 and assurance requirements will be addressed in subsequent rulemaking.

INDIA

ICAI rolls out SSA 5000 to align India’s sustainability assurance with global norms from April 2027

The Institute of Chartered Accountants of India (ICAI) has issued the Standard on Sustainability Assurance (SSA) 5000 (General Requirements and Framework for Sustainability Assurance Engagements), aligned with the International Auditing and Assurance Standards Board’s (IAASB) International Standard on Sustainability Assurance (ISSA) 5000, with specific modifications for the Indian context. The standard will apply to financial years beginning on or after 1 April 2027, establishing a consistent, principles-based framework for sustainability assurance across different reporting frameworks. It aims to improve consistency and rigor in the assurance of sustainability information as disclosure requirements evolve and investors and other stakeholders increasingly rely on ESG data. The development marks a step toward strengthening the credibility and comparability of sustainability disclosures in India, while clarifying expectations for assurance providers and reporting organizations.

NABKISAN Lists India’s First WASH-Focused Social Bond, Raises INR 180 Crore

NABKISAN Finance Limited, a subsidiary of the National Bank for Agriculture and Rural Development (NABARD), raised INR 1.8 billion (USD 21 million) through India’s first social bond dedicated exclusively to the water, sanitation, and hygiene (WASH) sector, listed on the National Stock Exchange on 1 October, 2026. The five-year bond, carrying an annual coupon rate of 8.10% and maturing in September 2031, was oversubscribed 1.8 times and received AAA ratings with a stable outlook from CRISIL and CARE Ratings. The proceeds will finance initiatives to expand access to safe water, sanitation, and hygiene solutions in rural and underserved communities, supporting improved health, livelihoods, and quality of life. Supported by Water.org as technical adviser and knowledge partner, the issuance highlights the role of innovative capital market instruments in mobilizing funding for essential social infrastructure and advancing inclusive rural development.

EU’s carbon rules have put Indian MSMEs under pressure

The European Union’s Carbon Border Adjustment Mechanism (CBAM) entered its definitive phase on 1 January 2026, requiring EU importers of covered goods, including iron and steel, aluminum, cement, fertilizers, electricity, and hydrogen, to account for embedded emissions. Indian manufacturers, particularly micro, small, and medium enterprises (MSMEs), face rising compliance costs, difficulties obtaining verified emissions data from suppliers, and limited access to certification expertise. Industry estimates cited in the report indicate that compliance and certification could cost USD 55,000 to USD 110,000, depending on manufacturing capacity. Smaller exporters are also reporting declining inquiries from European buyers, while sourcing materials from larger producers can entail a 15% to 20% price premium over secondary producers.

The financial impact extends beyond carbon costs to include emissions measurement, supplier data collection, verification, and documentation. Although EU importers are legally obligated to purchase and surrender CBAM certificates, Indian exporters may incur indirect costs due to price negotiations, reduced orders, or lost market access. The first annual declarations and corresponding certificate surrender for 2026 imports are due by 30 September 2027, with certificate sales scheduled to begin in February 2027. The development highlights the need for Indian exporters to strengthen greenhouse gas emissions accounting, improve supply chain traceability, and establish reliable emissions data systems to remain competitive in carbon-regulated markets.

MIDDLE EAST

Gulf ESG Debt Issuance Set to Surge by 2027, with Saudi Arabia and UAE at the Forefront

According to a recent report by Fitch Ratings, the Gulf Cooperation Council (GCC) is poised for a significant increase in ESG debt issuance starting in the fourth quarter of 2026, with Saudi Arabia and the UAE leading this growth. The GCC market is projected to continue as a dominant player in the emerging markets for ESG bonds, driven by robust sustainability and transition initiatives, diversification of funding sources, and heightened interest from international investors focused on sustainable financing.

In the first nine months of 2026, GCC bond and sukuk issuance reached USD 160 billion, reflecting a 3.3 percent increase year-on-year. This growth reinforces the region’s strategic position, accounting for approximately 39 percent of emerging-market US-dollar ESG issuance, excluding China. Fitch’s insights highlight the sukuk market’s role in facilitating access to Islamic liquidity, which is essential to meeting the growing demand for ESG-compliant investment opportunities. With outstanding ESG debt in the GCC surpassing USD 72.9 billion by the end of the third quarter of 2026, the future of sustainable finance in this region looks promising, particularly for issuers looking to attract sustainability-oriented investors.

Bridging the Gap: Addressing Vulnerability and Capacity in MENA Climate Finance

The Middle East and North Africa (MENA) region is grappling with stark disparities in climate vulnerability and the capacity to secure necessary funding, leading to a widening vulnerability gap. While countries like Saudi Arabia and the UAE leverage their fiscal resources and institutional strengths to pursue ambitious climate initiatives, nations such as Iraq and Jordan struggle to meet their climate commitments due to limited financial and administrative capabilities. This imbalance exposes a paradox in climate governance: the most vulnerable states often lack the means to access and effectively deploy climate finance.

The article highlights that international climate finance mechanisms, such as the Green Climate Fund, are not adequately addressing the needs of those most at risk. The reliance on domestic capacity to formulate credible strategies and navigate complex funding landscapes means that states with robust institutional frameworks are better positioned to attract investment. In contrast, countries facing significant climate pressures, coupled with political instability and limited resources, find themselves increasingly dependent on elusive external support. As the MENA region continues to confront pressing climate challenges, addressing this capacity gap is essential for ensuring equitable and effective climate action.

IN-DEPTH ANALYSIS

Less Noise, More Rules: The State of Sustainability Reporting in 2026

In the United States, political pressure has turned down the volume on ESG. Yet binding disclosure rules keep multiplying: California’s first mandatory emissions reports are due 10 November 2026, and the UK, EU, UAE and India have all finalized or expanded their own regimes this year. The question is no longer whether to report, but whether companies can do it consistently across regimes, with data that survives assurance.

The quiet side: reporting continues, promotion does not

Most large US companies still publish sustainability reports, but fewer promote them. A Teneo’s review of 2026 sustainability reports found that 87% of companies that reported last year have done so again this year, many later than before. Only 32% announced their report with a press release, down from a peak of 62% in 2022. Harvard Law School’s Forum on Corporate Governance describes 2026 reporting as “staying the course”: the disclosures persist even as the messaging softens. The vocabulary is changing too: “ESG” now appears in just 4% of report titles, down from 35% in 2022, and its use within reports has halved since 2025, with “impact” and “purpose” gaining ground.

Silence feels safe when companies face anti-ESG scrutiny on one side and greenwashing enforcement on the other. But it costs. Companies that go quiet risk losing credit for real progress with customers, employees, and ratings agencies, and weaken their story with investors who are still asking questions.

The rules side: mandatory disclosure keeps expanding

While voluntary messaging has quieted, mandatory requirements have moved forward on nearly every continent.

California is now the center of gravity for US climate disclosure. CARB’s initial regulation under SB 253 took effect on 12 October, 2026. Companies doing business in California with more than USD 1 billion in revenue must report Scope 1 and 2 emissions by 10 November, 2026, with Scope 3 reporting from 2027. At the federal level, the direction is the opposite: the Environmental Protection Agency (EPA) has been removing references to climate change from its rules. The US is not deregulating sustainability reporting so much as fragmenting it. US companies with global operations are responding accordingly: 14% now align their disclosures with the International Sustainability Standards Board (ISSB), almost double last year’s share, and 51% have completed or begun a double materiality assessment, up from 41% in 2025.

Elsewhere, the trend is toward convergence around ISSB-based standards and stronger enforcement. The UK has adopted ISSB-based standards for listed companies on a comply-or-explain basis. The EU’s revised ESRS narrows its scope to roughly 6,000 companies but keeps double materiality, with first reports due for the financial year 2027. The UAE now requires annual ESG statements with limited assurance and fines of up to AED 2 million, and India’s SSA 5000 assurance standard applies from 1 April, 2027.

The capability gap: most companies are not ready

The bigger risk is not the volume of rules but the gap between what they demand and what most companies can deliver. In reporting, that gap shows up in three places:

• Data quality. Emissions data is often compiled manually once a year from spreadsheets and supplier estimates. That works for a voluntary report but is fragile under regulatory scrutiny, and more of it is now on display: 63% of companies published a standalone sustainability data table in 2026, up from 57% in 2025.
• Controls. External assurance is now standard, with 75% of companies having at least some reported data assured, up from 54% in 2022. But assuring selected metrics is not the same as applying financial-grade controls across the full dataset, and limited assurance under California, the ESRS and other regimes will test the difference.
• Ownership. Reporting often sits with a small team, without clear accountability across finance, legal, operations and procurement. That is starting to change: general counsel now hold primary oversight at 23% of companies, ahead of CEOs at 19%, down from 28% in 2025.

What leaders should do now

Sustainability, finance, and risk leaders should treat reporting as a compliance and performance discipline, not a communications exercise. Four priorities stand out:

The companies that come out ahead will be neither the loudest nor the quietest. They will be the ones whose numbers hold up, wherever and however they are asked to report them.

REGULATORY WATCH