Political polarisation around ESG will persist through 2026, particularly in the US. At the same time, sustainability-related regulatory enforcement activity is ongoing in other jurisdictions and litigation risks are intensifying. Multinationals will need jurisdiction‑specific, strategically anchored approaches. For many, 2026 may feel like another year ‘between a rock and a hard place’.

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2026 will bring a degree of much needed clarity, but full regulatory certainty is likely to remain out of reach. Multinational businesses will still be required to navigate an evolving and complex patchwork of requirements–a challenging task that demands significant compliance resources.

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Across the globe we expect claimants to continue to be inventive in the targets they select, the fora they pursue and the legal theories they advance, especially in light of perceived regulatory enforcement rollback in some jurisdictions.  This will make for new and potentially surprising litigation risk.

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We expect increasingly intense scrutiny on businesses involved or investing in conflict-affected areas. Shifting international alliances and geopolitical reconfigurations will elevate the opportunity and risk calculus to boards and require operational agility and resilience.

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We anticipate greater focus from boards and investors on AI governance, including expectations that companies proactively integrate workforce governance standards into their AI strategies, planning cycles and deployment frameworks.

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M&A ESG due diligence will continue to mature, resulting in a deeper, more prospective assessment of a target's sustainability profile, as well as the downstream use and impacts of its products and services.

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The SBTi Ongoing Emissions Responsibility (OER) framework, expected to be adopted in 2026, together with positive policy signals from governments and the anticipated finalisation of Article 6, have the potential to reinvigorate natural capital carbon markets.

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Growth in long‑term offtake agreements and deeper private‑sector engagement would signal that natural capital outcome bonds are becoming a more mature, investable asset class.

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Private capital investors are showing growing interest in climate, nature and development-based solutions, supported by a concerted effort across markets to make such investments more accessible and attractive.

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Clarity on the legislation should emerge by mid‑2026, but the real test will be the more detailed 'Level 2' rules, which will dictate the viability of the new product categories and the operational disclosure and data governance implications for fund managers.

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ESG-related risks will continue to rise in both scale and complexity. Although insurance remains a key component of corporate risk management, it is unlikely to provide comprehensive cover for all potential exposures, resulting in an increasing 'insurance gap'. Companies will need to adopt a broader suite of risk mitigation strategies.

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Supervisory expectations are tightening. Look out for a possible movement toward formal board level competency requirements, and greater regulatory scrutiny of the quality and decision–usefulness of climate–risk information.

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