Global ESG Reporting Is Becoming Mandatory: What Businesses Need to Know in 2026

For years, sustainability reporting was largely voluntary — a reputational tool for forward-thinking companies. In 2026, that era is definitively over. Across the United States, Europe, and beyond, regulators are moving in lockstep to make climate-related disclosures mandatory, forcing businesses of all sizes to confront a new reality: transparency on environmental, social, and governance (ESG) performance is no longer optional. The question is no longer whether to report, but how to do it well.

A Regulatory Wave on Both Sides of the Atlantic

The pace of regulatory change in early 2026 has been striking. In the United States, the Securities and Exchange Commission (SEC) has launched a formal consultation on climate-related disclosures, responding to surging investor demand for consistent, comparable ESG data. The review signals a potential overhaul of how American publicly listed companies communicate climate risks — and could bring U.S. standards closer to global frameworks already established in Europe.

Meanwhile, California has moved even faster. The California Air Resources Board (CARB) has approved the initial regulations under SB 253 and SB 261, requiring large entities doing business in the state to report Scope 1 and Scope 2 greenhouse gas emissions by August 10, 2026. Given California’s economic scale — the world’s fifth-largest economy — these rules will affect thousands of companies, including many with European operations.

In Europe, the regulatory picture has also evolved, though with a notable recalibration. Directive (EU) 2026/470 has been adopted, adjusting the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) by raising applicability thresholds, extending timelines, and simplifying certain requirements. EU member states must now transpose these changes into national law. While critics argue the adjustments weaken ambition, supporters say they make compliance more achievable for mid-sized businesses without abandoning the core goal of full-chain sustainability accountability.

The ESG Data Quality Challenge — and the Tech Response

Mandatory reporting is only as valuable as the data behind it. This is where a growing ecosystem of technology and finance is stepping in. A telling example: Diginex’s acquisition of Plan A, an AI-driven carbon accounting platform serving over 1,500 clients including BMW and Visa. The deal is explicitly designed to help companies meet EU CSRD requirements — a sign that the compliance market is maturing rapidly.

At the same time, Europe’s financial watchdog ESMA has issued new guidance to prevent greenwashing in ESG funds, tightening the rules around how sustainable investment products are labelled and marketed. This matters enormously for the circular economy and sustainable finance sectors, where vague claims have long undermined investor confidence.

On the investment side, BBVA and ALTÉRRA have launched a USD 1.2 billion climate fund targeting decarbonisation across renewable energy, sustainable agriculture, and emerging markets — explicitly aligned with Paris Agreement goals. Deals like this illustrate how green business is increasingly backed by serious institutional capital, not just goodwill.

Implications for European Businesses and Policymakers

For European companies, the convergence of domestic and international ESG rules creates both pressure and opportunity. Key implications include:

• Supply chain scrutiny will intensify. Scope 3 emissions — those generated across a company’s value chain — remain the hardest to measure but are increasingly expected in disclosures. Companies that invest now in data infrastructure will have a competitive advantage.
• The circular economy is gaining regulatory muscle. Extended Producer Responsibility (EPR) laws are expanding in both the EU and U.S. states, creating new compliance obligations but also market openings for innovative green businesses like P.I.ECO, recently backed by Ambienta for industrial water recycling.
• Capital is following credibility. Investors and lenders are increasingly directing funds toward companies with robust, verified ESG data. The BBVA-ALTÉRRA fund is one example; the broader trend of sustainable finance linking reporting quality to capital access is accelerating.
• Policymakers face a harmonisation imperative. The closer the SEC’s eventual framework aligns with CSRD and ISSB global standards, the easier cross-border corporate responsibility reporting becomes — reducing duplication and improving comparability.

Key Takeaway

The global shift toward mandatory ESG disclosure is no longer a future scenario — it is the present reality. Whether driven by California’s emissions deadlines, Europe’s updated CSRD framework, or the SEC’s ongoing review, corporate responsibility reporting is becoming a baseline expectation for doing business. Companies that treat this as a compliance burden will struggle; those that see it as a strategic opportunity — to attract capital, build trust, and future-proof operations — will be better positioned for the decade ahead. For European businesses in particular, the moment to act is now.