Global Survey Of ESG Regulations For Asset Managers

INTRODUCTION

Asset managers (i.e., investment advisers) offering funds in more than one country are accustomed to adapting to different regulatory requirements. However, the challenges presented by the global regulation of ESG investing strategies are presenting a particularly arduous burden, especially as countries' approaches to ESG regulation become more varied.

Not only do investor demands differ among countries, but the regulators and other controlling bodies have imposed, or proposed to impose, different requirements that will impact approaches to investing fund assets, disclosures, and marketing, even with respect to the same strategies. While the approaches and goals can vary across jurisdictions, one message is universal in all languages: Regulators want asset managers to say what they do and do what they say. Some regimes seek to accomplish this with specific ESG labeling or other requirements, while others are currently relying on existing rules prohibiting fraud and material misrepresentations.

To help asset managers keep up with the current regulatory landscape and get a comparative sense of the requirements and common issues in various regions, our lawyers—located in the Americas (the United States), Asia (Hong Kong, Japan, and Singapore), Australia, and Europe (the European Union, including Ireland and Luxembourg^,1 and the United Kingdom)—have provided an overview of regional regulations by responding to the same eight questions regarding the existing ESG-related rules and ESG developments impacting the investment management industry. We summarize, among other things, each country or region's position on ESG related labeling and categories, investment requirements, disclosure and reporting requirements and restrictions for offshore products, as well as other ESG-related initiatives that could impact asset managers doing business in that country or region.

Taken together, this publication provides a high-level view of the overall global ESG regulatory landscape, allowing managers to think strategically about how their firms can navigate this changing environment and effectively approach their business activities in the various regions in which they offer services.

While we expect that governments will continue to address ESG concerns by amending existing or imposing new rules at a rapid pace, the following summary responses are designed to provide asset managers—particularly those with an international business—with a helpful guide, based on practical experience, to current requirements and trends impacting their services and products, as well as offer practical insight into how they can seek to straddle the various regulatory regimes.

WHAT IS NEW?

The global landscape of ESG regulation continues to evolve quickly. Below are some of the key changes that occurred since the last publication of this survey on 19 February 2026:

United States: On 29 May 2026, the SEC proposed a complete rescission of its climate risk-related reporting rules. These rules, originally adopted in March 2024, would have required public issuers in the United States to make certain climate risk disclosures, including disclosure of emissions information, but these rules have been under judicial challenge and subject to a voluntary stay. At the state level, California's climate risk reporting obligations remain under judicial review, and the climate risk disclosure rules are subject to a judicial stay. However, the GHG emissions reporting requirements remain in effect and the initial reporting is currently due mid-August 2026.

Hong Kong: On 22 January 2026, the HKMA released the Phase 2A update of the Hong Kong Taxonomy, significantly expanding its scope. This update increases the number of eligible economic activities from 12 to 25, widens sector coverage from four to six (adding manufacturing and information and communications technology sectors), and introduces a structured transition category and climate adaptation elements.

Separately, the Cross-Agency Steering Group (described below) has published strategic priorities for 2026–2028, which focus on consolidating Hong Kong's sustainable finance ecosystem and further developing emerging areas.

Japan: On 17 April 2026, the Ministry of the Environment updated its Green Bonds Guidelines to provide clarity and additional examples of projects that will be considered “green” in connection with green bonds and loans.

Singapore: On 5 March 2026, MAS introduced the Transition Planning Guidelines on Environmental Risk Management for asset managers, which provide guidance regarding the assessment and management of climate-related risks.

Australia: There have been no new updates since the last edition of this survey was published.

European Union: On 20 November 2025, the European Commission published a proposal to amend the SFDR. If it proceeds, “SFDR 2.0” would introduce a classification framework and labels for sustainability related financial products and would also make changes intended to reduce the ESG reporting burden. The proposals are under consideration by the European legislative bodies.

Meanwhile, for corporate entities, the European Commission's Omnibus I package (published on 26 February 2026) has been finalized. The changes include significant simplifications to the disclosure and reporting requirements introduced by the CSRD and CSDDD. As part of the package, a “stop-the-clock” regulation providing for a two-year postponement of certain CSRD reporting obligations entered into force on 17 April 2026.

Asset managers should also be aware of the regulatory framework for ESG ratings providers being introduced in the European Union, which will apply from 2 July 2026. ESMA has issued a Final Report on the draft RTS setting out detailed rules for ESG rating providers, and ESG rating providers active in the European Union are required to apply for a license or for recognition starting 2 August 2026 and before 2 November 2026.

United Kingdom: The United Kingdom is moving forward with the introduction of a regulatory regime for ESG ratings providers. The legislative framework has been finalized, and the FCA is consulting on the rules that will apply to providers of ESG ratings. The final rules are expected in Q4 2026, and the regime is expected to take effect in 2028.

For corporate entities, we are awaiting the outcome of the consultations on the UK sustainability reporting framework published in June 2025. On 30 January 2026, the FCA published a consultation paper regarding the sustainability disclosures applicable to listed entities. The consultation closed on 20 March 2026. The final rules are expected in autumn 2026 and are expected to come into force 1 January 2027. The proposed UK SRS are to be based on the ISSB standards published in June 2023.

Separately, the UK government has decided not to develop a UK green taxonomy.

UNITED STATES

WHAT RULES, IF ANY, ARE CURRENTLY IN PLACE (I.E., HAVE BEEN ADOPTED) FOR FUNDS AND ASSET MANAGERS?

At the federal level, no formal ESG-specific rule is currently in place for funds and advisers (i.e., fund managers). In March 2024, the SEC finalized its climate risk-related reporting rules applicable to public operating companies and other issuers of securities in the United States. These rules were promptly challenged in court; however, the litigation is currently paused in light of the SEC's determination in March 2025 to cease defending the regulations. On 29 May 2026, the SEC proposed a complete rescission of its climate risk-related reporting rules. This proposal will be open for public comment for a period of 60 days following its publication in the Federal Register.

In addition to SEC reporting requirements, the state of California has passed legislation that would require companies “doing business” in California to make certain disclosures of their emissions and climate related risks. These laws, like the SEC's climate risk disclosure rules, are subject to challenge in federal court. In November 2025, the Ninth US Circuit Court of Appeals, which is hearing the challenge, issued an injunction prohibiting the state of California from enforcing one of the laws (SB 261) that was scheduled to go into effect at the beginning of January 2026. This law would have required companies to make certain climate risk disclosures. The other law (SB 253)—requiring disclosure of Scope 1, 2, and 3 emissions data—is still subject to the legal challenge, but it was not subject to the injunction. The first reporting under this law will be required by 10 August 2026.

Other states have adopted—or are considering adopting—various laws or regulations that seek to regulate how and whether ESG factors may be considered by those conducting business in such states. In general, these laws and regulations require advisers to consider only “pecuniary” factors, and advisers that consider ESG factors in investing may be subject to sanction. Many other states have adopted legislation that would prohibit the state government from doing business with or investing with firms that avoid investment in certain industries for ESG purposes. Additionally, on 8 April 2025, President Trump issued an executive order directing the attorney general to identify laws “purporting to address 'climate change' or involving 'environmental, social, or governance' initiatives, 'environmental justice,' carbon or 'greenhouse gas' emissions, and funds to collect carbon penalties or carbon taxes” and take action to prevent the enforcement of such laws. It does not appear that any action has been officially taken in response to this executive order at the time of this update.

While there are no laws or regulations specifically governing ESG disclosures for funds or advisers as of the date of this survey, the currently existing federal laws and rules prohibiting materially misleading statements and previously issued guidance from the SEC staff do provide limits and standards for funds and advisers with respect to their use of ESG factors. In addition, SEC enforcement actions taken in recent years indicate that the SEC will take a very strict read of ESG-related disclosures and expects that asset managers have in place procedures ensuring that any ESG-related processes they describe in fund disclosures or marketing materials are consistently followed.

Existing Rules and Guidelines

As indicated previously, funds and advisers are currently subject to laws and rules that prohibit them from making materially misleading statements or untrue statements of material fact, including statements about ESG. Accordingly, funds and advisers are presently required to provide accurate disclosures regarding their use of ESG-related factors in their investment strategies. In May 2021, the staff of the SEC issued a risk alert urging funds and advisers to, among other things, establish policies and procedures related to ESG investing, ensure that portfolio management practices were consistent with disclosures about ESG approaches, and implement adequate controls around the implementation and monitoring of negative screens (e.g., prohibitions on investing in tobacco).

Advisers are also subject to Rule 206(4)-1 (the Marketing Rule) under the Investment Advisers Act of 1940, as amended (the Advisers Act), which was designed to prevent false or misleading advertisements by advisers, including in connection with the private funds (e.g., hedge funds, private equity funds) they manage. Accordingly, even in the absence of a specific ESG rule, funds and advisers are still bound by existing requirements pertaining to material misstatements and omissions, and accurate reporting. 

Footnote

1. Please note that individual countries within the European Union may impose additional ESG-related requirements or restrictions. While we touch on some particular considerations for Ireland and Luxembourg, asset managers should consider whether the particular EU countries that they perform services in have introduced rules or guidelines that exceed those that apply to all EU members.

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.