By: Stuart Lemmon, Global Head of Practices at SE Advisory Services

For much of the past decade, corporate sustainability has operated in declaration mode: set an ambitious target, publish a roadmap, wait for policy to catch up. That approach has reached its limits. While COP continued to advance the multilateral agenda, for companies it reinforced a harder truth: credibility now rests on demonstrable progress, not stated intent. Investors, regulators and customers are no longer asking what companies plan to do; they are asking what has actually changed.

In conversations with corporate sustainability leaders, financial institutions, and policymakers, the mood feels unmistakably different. There is more realism about what decarbonisation requires, greater scrutiny of claims, and for those doing the work, a certain weariness at how slowly ambition is turning into action.

The next phase will be defined not by targets, but by traction. Based on our work across sectors and geographies, eight trends stand out for 2026:

#1 European reporting eases, Asia and the market don’t

Europe’s Corporate Sustainability Reporting Directive (CSRD) pause has been read in some quarters as a collective exhale – even a sign of global retreat on climate disclosure. It is neither.

The EU Omnibus simplification package will exempt a significant share of companies from CSRD and the Corporate Sustainability Due Diligence Directive (CSDDD) obligations. But while legal requirements are being scaled back, stakeholder expectations are not. Investors, lenders and business partners continue to demand decision-grade sustainability data, and firms that have already invested in reporting systems understand the value: stronger risk management, clearer governance and better-informed strategy. For those without that foundation, the temptation to pause may prove costly.

Meanwhile, regulatory ambition is shifting geography. From 2026, China, Hong Kong, Singapore and Japan will introduce mandatory ESG reporting aligned with the International Sustainability Standards Board (ISSB), locking sustainability disclosure into economies that account for a rising share of global GDP, trade and capital flows. Because these hubs sit at the centre of manufacturing, finance and technology supply chains, their rules will define what “bankable” sustainability data looks like for counterparties worldwide.

For carbon-intensive exporters, the pressure is compounding. The EU’s Carbon Border Adjustment Mechanism (CBAM) enters its definitive phase in 2026, with payments beginning in 2027; the UK follows the same year. The data and verification requirements are already forcing carbon-intensive exporters to adapt or risk losing market access.

The result is not a lighter regulatory burden but a redistribution of it, and a widening gap between what is legally required and what markets expect.

#2 Clean energy wins on cost, not just principle

The fundamentals of energy competitiveness have shifted. Recent analysis from Schneider Electric shows renewables now represent over 40% of global electricity generation, with wind and solar alone accounting for 25%. Corporate power purchase agreements (PPAs) reached record highs in 2024 – driven not by regulation but by economics. Renewables are now the most cost-effective source of new capacity in around 60% of global markets.

Demand-side flexibility is the next frontier. As grids absorb more variable renewable generation, when energy is consumed matters as much as how much. Companies that can shift or reduce usage at peak times are unlocking new revenue streams through demand response programmes — turning energy management from a cost line into a margin opportunity. Yet demand-side innovation and investment remain too often ignored, even as the cost, efficiency and flexibility benefits become harder to dismiss.

Energy efficiency remains one of the fastest, most cost-effective levers available — yet still underutilised. Electrifying industrial processes, upgrading building systems, and optimising operations can cut energy costs and emissions simultaneously. For many organisations, the cheapest kilowatt-hour is still the one they don’t use.

#3 Nature finance and land-based mitigation move to the centre

This is the year nature stops sitting adjacent to climate strategy and becomes fully integrated into it. The Taskforce on Nature-related Financial Disclosures (TNFD)’s alignment with the ISSB, the mainstreaming of nature risk screening tools and the rise of nature-aligned transition plans are pushing companies to treat biodiversity, water and land use as material financial risks.

At the same time, the Science Based Targets initiative (SBTi)’s FLAG guidance, covering forest, land and agriculture, is clarifying how emissions and removals must be managed in land-intensive sectors. For those with large Scope 3 footprints, insetting (addressing emissions within their own value chains) is moving from theory to practice; operational abatement and renewables alone will not be enough.

Investors are already there: biodiversity loss is now framed as a systemic risk with direct implications for creditworthiness, valuation and capital allocation. Our recent research with Spainsif found that financial institutions are increasingly moving beyond treating biodiversity as a compliance burden, recognising it instead as a strategic lever for risk management and value creation. Data and measurement challenges remain, but leading institutions are building capability now rather than waiting for perfect conditions.

A single global biodiversity credit market is unlikely any time soon. What will grow instead are company‑specific, location‑relevant investments in nature, tied tightly to supply chains and risk exposure. 

#4 Climate risk becomes a live financial issue, not a disclosure exercise

Many organisations can now identify their climate risks but far fewer are structurally able to absorb them. Physical hazards once seen as distant are showing up in core markets, from wildfires in northern Europe to heat driven productivity losses in industrial hubs and mounting water stress that disrupts operations and drive-up costs. These are no longer edge case scenarios in continuity plans, but recurring hits to cash flow, asset values and insurance availability.​

Transition risk is accelerating just as quickly. A new carbon price extension, product ban or regulatory tightening can reprice sectors faster than most governance cycles and budgeting processes can adjust, yet these dynamics are still missing from many valuations, M&A models and capital plans. In 2026, the benchmark will shift from how comprehensively companies describe climate risk to how credibly they embed scenario led analysis into decisions on strategy, capital allocation and portfolio design.

#5 Adaptation moved out of climate mitigation’s shadow

Adaptation has long been acknowledged, politely, as important – then underfunded because the benefits were seen as distant, defensive and hard to quantify. That lens is cracking. Climate impacts are now colliding directly with business fundamentals: heat stress is driving up energy use and eroding emissions gains, water shortages are halting production, and floods and storms are cutting through supply chains and damaging assets.

For sectors like agriculture and food, manufacturing, water utilities, energy providers and tourism, adaptation is no longer a CSR addon – it is central to protecting margins and licence to operate. The opportunity is that many adaptation measures pay back quickly: heat reduction strategies lower operating costs, nature-based flood management protects assets while boosting biodiversity, and early warning systems reduce downtime and losses.

Leading organisations are responding with structured adaptation plans that prioritise near term wins, avoid maladaptation and present resilience in terms that boards, lenders and investors can price. 

#6 Voluntary carbon markets mature and buyer behaviour shifts

The voluntary carbon market has gone through a hard, necessary reset. High-integrity credits remain in short supply, and the gap between what buyers need and what the market can credibly deliver is forcing a strategic rethink.

Instead of relying on annual spot purchases, more companies are locking in long-term offtake agreements, deepening due diligence and using digital Monitoring, Reporting and Verification (MRV) tools to test project integrity. Insurance products and secondary market mechanisms are starting to mature, signalling a more risk aware market architecture.

The goalposts are also moving. The SBTi’s Net‑Zero Standard 2.0 and a potential ISO net zero standard are tightening expectations around how credits fit into credible transition plans. Our latest market research shows this shift is already underway: 4 in 10 respondents say their organisations are actively engaging with high‑integrity credits through purchasing, investment or project development to manage climate risk, strengthen supply chains and build long‑term value. More than half (55%) plan to expand carbon credit use by 2030, signalling rising confidence, appetite and capacity to engage.

In this environment, early movers will secure the projects and technologies that fit their long‑term strategy. Those waiting for the dust to settle may find the window has already narrowed.

#7 AI starts to fill the capacity gap in sustainability teams

The real AI story in sustainability this year is not generative content creation. It is automation with intelligence. Agentic AI is beginning to handle the work that sustainability teams struggle to scale: validating emissions data, selecting the right emissions factors, reconciling millions of entries, flagging anomalies, modelling scenarios and maintaining audit trails. Rather than another dashboard, AI functions as an always-on assistant that links, checks and synthesises fragmented datasets.

But AI does not replace judgment. What it does is free up experts to focus on interpretation, strategy and stakeholder engagement – the work that actually moves the needle. The organisations seeing value are those combining AI-enabled efficiency with experienced guidance, not choosing between them.

This capability must be balanced with AI’s own energy footprint, which is why interest in “frugal AI” is rising. Expect more companies to right-size models, shift workloads to lower-carbon grids and apply AI selectively to high-impact processes. Governance, transparency and energy discipline will define credible adoption.

#8 Value chain collaboration becomes the real differentiator

Scope 3 emissions have made one thing unavoidable: no company can deliver a credible sustainability strategy on its own. The largest gains now depend on the quality of supplier relationships and the maturity of collaboration along value chains.

That means capability building for SMEs, harmonised measurement approaches, shared digital tools and cofinanced interventions for decarbonisation and nature positive outcomes. It also means moving beyond one-off data requests to multiyear partnerships built on trust, transparency and shared economic value. The businesses that pull ahead will be those that can connect these pieces, align their partners and treat the transition as a system challenge rather than a series of siloed projects.

Where does this leave us?

COP30 did not deliver a grand new design for the transition. Instead, it underscored that the defining question for 2026 is not who has the most ambitious targets, but who is most prepared to operate in a world where risk, policy and investor expectations are moving at different speeds.

In that environment, leadership will belong to the organisations that can demonstrate progress, adapt quickly and collaborate deeply across value chains. Those are the businesses that will shape what comes next.