As businesses and their advisers usher in 2026, Ropes & Gray’s annual “26 Predictions for 26” frames a year in which climate and broader sustainability compliance will deepen in complexity even as regulatory patchworks persist across jurisdictions. The firm forecasts expanding disclosure mandates, renewed legal challenges in the United States, heightened attention to governance and extended producer responsibility, and rapid, disruptive uptake of artificial intelligence across sustainability functions. [1]

Climate-related disclosures will continue to proliferate globally, driven by initiatives that draw on the Task Force on Climate-related Financial Disclosures (TCFD) architecture while evolving in different technical directions. According to Ropes & Gray, new requirements in jurisdictions such as Australia and Spain are already affecting US multinationals and further adoptions of IFRS S2-style standards are expected elsewhere. At the same time, the firm expects the US Securities and Exchange Commission to move to formally unwind its stalled 2020s-era climate disclosure rulemaking amid ongoing litigation. Industry workstreams that aim to harmonise practice will reduce some friction, but full interoperability will remain elusive because of differing reporting boundaries, materiality tests and assurance expectations. [1][4][5]

In Europe, the streamlining of the European Sustainability Reporting Standards under the CSRD Omnibus simplification process is expected to produce a more top-down, proportionate approach for Wave 2 filers. EFRAG’s work on a draft simplified ESRS E1 Climate Change standard is central to that effort and will shape how many multinationals approach double materiality assessments and taxonomy-related disclosures next year. Ropes & Gray predicts draft simplified ESRS 1 will be adopted largely as delivered to the European Commission, prompting a renewed compliance push among affected companies. [1][3][6]

A prominent new private-sector coalition will add momentum and controversy to the accounting debate. Launched in October 2025, Carbon Measures brings together major global businesses seeking to “establish a more accurate carbon accounting framework and drive market-based solutions to reduce emissions at the lowest cost,” and proposes a ledger-based approach intended to improve accuracy and eliminate double counting. Ropes & Gray expects Carbon Measures’ work to feature strongly in 2026 discussions about corporate carbon accounting, even as regulators and standard-setters pursue their own interoperability goals. [2][1]

At the state level, California remains a focal point. Ropes & Gray assesses that the regulations implementing SB 253 (GHG emissions reporting) and SB 261 (climate risk disclosure) are likely to survive legal challenge, though protracted litigation could carry into 2027. The firm notes that a preliminary injunction blocking SB 261 enforcement will probably remain in place for months, and that most companies are preparing for SB 253 compliance even while further CARB workshops, template finalisation and guidance are expected early in 2026. [1]

2026 will also be marked by intensified “lawfare” in the United States and a continuing stream of anti-ESG legislative activity. Ropes & Gray anticipates more legal challenges to executive-branch sustainability initiatives and a new round of congressional bills and hearings that , even if unsuccessful in the Senate , will shape agency strategy. In this environment, the firm argues that durable agency rulemaking will be crucial to preserving regulatory advances that administrations view as priorities. [1]

Corporate governance and investor stewardship will reclaim centre stage. Ropes & Gray predicts significant rulemaking from the US SEC on shareholder proposals, proxy advisory practice and periodic reporting that could reorient governance regulation and investor engagement. At the same time, companies will prioritise operational compliance areas such as extended producer responsibility programmes and the build‑out of sustainability controls, data systems and assurance pathways to meet the expanding web of mandates. [1]

Artificial intelligence will be both a force-multiplier and a new compliance headache. Ropes & Gray highlights AI’s potential to accelerate supply-chain mapping and risk assessment, while warning that increased AI use can undermine corporate GHG reduction plans and introduce social risks around bias, privacy and workforce disruption. The firm expects sustainability teams to contend with where responsibility for AI-driven impacts should sit within organisations as investors begin to press on these issues. [1]

On human rights and supply‑chain regulation, the outlook is mixed. Ropes & Gray expects preparation for mandatory due diligence laws to remain muted in 2026 given further delays and shifting priorities in Europe, even as Asia advances its own legislative agendas in Indonesia, South Korea and Thailand. Enforcement activity under US trade and forced labour statutes, including Section 307 of the Tariff Act and the Uyghur Forced Labor Prevention Act, is projected to increase and to focus on foreign producers perceived as undercutting domestic firms. The onset of the EU Forced Labour Regulation will drive preparatory work among exporters ahead of its compliance guidelines. [1]

Finally, Ropes & Gray warns that greenwashing litigation and reputational contests will continue to rise, aided by plaintiffs’ use of AI and by social-media activism from across the political spectrum. At the same time, the era of broad “ESG” as a single organising frame is waning; companies and investors are moving toward targeted, factor‑specific stewardship and more data-driven reporting aligned with mandatory regimes. The firm concludes by reiterating its practice capabilities in ESG, CSR and business and human rights compliance and by encouraging clients to prioritise controls, assurance and engagement as 2026 unfolds. [1]

📌 Reference Map:

##Reference Map:

  • [1] (Ropes & Gray) - Paragraph 1, Paragraph 2, Paragraph 3, Paragraph 5, Paragraph 6, Paragraph 7, Paragraph 8, Paragraph 9, Paragraph 10
  • [4] (IFRS Foundation) - Paragraph 2
  • [5] (Task Force on Climate-related Financial Disclosures) - Paragraph 2
  • [3] (EFRAG) - Paragraph 3
  • [6] (EFRAG) - Paragraph 3
  • [2] (Carbon Measures) - Paragraph 4

Source: Noah Wire Services