Sustainable/Impact Investing] Regulations Cheatsheet - State of Play (December 2025)

Hi All,

It's that time of the year. Here is the cheatsheet on ESG/Sustainable/Impact investing for everyone in sustainable/impact investing across private and public markets operating globally.

The current regulatory landscape can be summarized as the "Fragmented Maturation" Phase. As of late 2025, the global landscape has bifurcated. Europe is entering a "2.0" refinement phase (fixing SFDR, rolling out CSRD), the UK is in the thick of "Day 1" implementation for its SDR, while the US is largely defined by litigation-driven pauses. Meanwhile, Asia is steadily converging on global baselines (ISSB) with local characteristics.

For sustainable investors, interoperability is the new alpha. You are no longer just "complying"; you are navigating conflicting timelines and definitions.

Note) Slides were put together with the help of AI.

Bottomline: What serious sustainable / impact investors should be “on top of” going into 2026

Here’s a short operational checklist:

1. Map your reporting to ISSB S1/S2 now: Even if you’re using TCFD or local templates, organise data so it can be re-cut as ISSB; this will make you interoperable across EU/UK/Asia.
2. Prepare for SFDR 2.0 while still complying with current SFDR: Maintain Article 8/9-style disclosures and PAIs, but start scenario-planning product ranges under the proposed three-category regime.
3. Tighten fund names, labels and marketing: Default assumption in EU, UK and US: if “ESG / sustainable / impact / transition / green” is in the name or pitch, 80%+ of assets and the entire process must evidence it, backed by internal policies and QA; expect scrutiny and potential enforcement.
4. Private markets: build SFDR/SDR-grade data into DDQs and portfolio monitoring: Integrate CSRD/CSDDD requirements into value-creation plans, especially in European-exposed portfolios and supply chains.
5. Asia strategy: align to local taxonomies and climate codes
   • For ASEAN infra/real-asset deals, classify activities under ASEAN Taxonomy.
   • For HK/SG manager licences, make sure climate-risk frameworks and disclosures meet SFC/MAS expectations
6. US nuance: enforcement risk even as some climate rules are rolled back: Climate-specific prudential rules and the SEC climate rule are under pressure or paused, but California disclosure and greenwashing cases mean ESG/impact products still carry meaningful legal and reputational risk

Note) The proposed revision to the Sustainable Finance Disclosure Regulation (SFDR 2.0) replaces the current Article 8 and Article 9 disclosure system with a new, mandatory three-category product labeling regime for funds making sustainability claims. The three proposed categories, which will have explicit qualifying criteria, are:

Sustainable Category (new Article 9): This category is for products that have a primary objective of investing in companies, assets, or projects that are already sustainable or contributing to specific, measurable sustainability goals (e.g., climate, environmental, or social goals). Products in this category must invest at least 70% of their portfolio in alignment with their sustainability strategy and adhere to specific exclusions (including fossil fuels). The use of the word "impact" in a fund name would be reserved for products in this or the Transition category that pursue measurable impact.

Transition Category (new Article 7): This category is designed for products that invest in companies and/or projects that may not be sustainable yet but are on a credible path to transition towards more sustainable practices, or that contribute to an improvement in sustainability areas. Like the Sustainable category, these products must commit at least 70% of their investments to transition-related assets and comply with a list of mandatory exclusions (e.g., those found in the Paris-Aligned Benchmarks). This category aims to legitimize and clarify approaches to transition finance.

ESG Basics Category (new Article 8): This is for other products that integrate various environmental, social, and governance (ESG) factors into their investment process but do not meet the higher ambition criteria of the Sustainable or Transition categories. These products must ensure 70% of investments align with the fund's overall strategy for integrating ESG factors and follow a basic set of social exclusions (e.g., tobacco, controversial weapons, human rights violations). 

Products in any of these three categories must meet a mandatory minimum investment threshold of 70% aligned with their specific objectives, a set of compulsory exclusions, and simplified, streamlined disclosure requirements. Products that do not qualify for any of these categories cannot use sustainability-related claims in their names or marketing materials. 

1. United States: The "Litigation & Labels" Landscape

While corporate disclosure rules are stalled, product-related rules for funds are very much live.

Live & Critical (Asset Managers)

• SEC Names Rule (Amendments to Rule 35d-1):
  • Status: LIVE. The compliance deadline for larger funds (Net Assets >$1B) is December 10, 2025.
  • What it means: If a fund’s name suggests a focus on ESG/Sustainability (e.g., "Green Bond Fund"), 80% of assets must ostensibly meet that description. The rule also tightens how derivatives are calculated towards this 80% basket.
  • Source: SEC Final Rule 35d-1 Amendments (2023).

Stalled / In-Flux (Corporates & Portfolio Companies)

• SEC Climate Disclosure Rule:
  • Status: STAYED. Enforcement is paused pending the outcome of litigation in the Eighth Circuit. A hearing is expected in late 2025/early 2026, but as of today, no reporting is required.
• California Climate Laws (SB 253 & SB 261):
  • SB 253 (Climate Corporate Data Accountability Act): LIVE but delayed. Requires disclosure of Scope 1, 2, and 3 emissions. Initial reporting is targeted for August 2026 (delayed from original early 2026 estimates).
  • SB 261 (Climate-Related Financial Risk Act): STAYED. As of Dec 1, 2025, a federal appeals court has paused enforcement pending a First Amendment appeal.
  • Source: California Air Resources Board (CARB) Enforcement Advisory, Dec 2025.

2. United Kingdom: The "SDR Implementation" Year

The UK has moved from consultation to hard compliance. December 2025 is a massive milestone.

Live (Asset Managers & Owners)

• Sustainability Disclosure Requirements (SDR):
  • Naming & Marketing Rules: LIVE (as of Dec 2, 2024). Firms cannot use terms like "sustainable," "impact," or "green" in product names unless they meet strict qualifying criteria or use a label.
  • Investment Labels: LIVE (since July 2024). The four labels (Sustainability Focus, Sustainability Improvers, Sustainability Impact, Sustainability Mixed Goals) are available for use.
  • Entity-Level Disclosures: LIVE (Deadline: Dec 2, 2025). Asset managers with >£50bn AUM must have published their first entity-level TCFD-aligned sustainability report by December 2025. (Firms >£5bn have until Dec 2026).
  • Anti-Greenwashing Rule: LIVE (since May 2024). Applies to all FCA-authorized firms, requiring that all sustainability claims be fair, clear, and not misleading.
  • Source: FCA Policy Statement PS23/16.

3. European Union: The "Refinement & Rollout" Phase

The EU is fixing early flaws in its regime while expanding corporate reporting.

Live (Asset Managers & Corporates)

• CSRD (Corporate Sustainability Reporting Directive):
  • Status: LIVE. Large "public interest" companies (already under NFRD) have reported for FY2024. Other large EU companies are preparing to report in 2026 (for FY2025 data).
  • Note: The timeline for non-EU parent companies (e.g., US firms with EU revenue) to report at the consolidated level has been delayed to October 2027.
• SFDR (Sustainable Finance Disclosure Regulation):
  • Status: LIVE (Current Version). Level 2 RTS requirements for Article 8/9 funds are in full force.
• EU Deforestation Regulation (EUDR):
  • Status: DELAYED. Originally set for Dec 30, 2025, the entry into application has been pushed by one year to December 2026 to allow for IT system readiness.
  • Source: European Commission Proposal (Oct 2025) / Council Approval.

Upcoming / Watchlist

• SFDR 2.0 (Proposal): In November 2025, the European Commission proposed a massive overhaul, potentially scrapping "Article 8/9" in favor of product categories like "Transition" and "Sustainable." This is not yet law but signals that current compliance frameworks will need to evolve by 2027/28.

4. Asia: The "Harmonized Pragmatism"

Asia is moving toward mandatory disclosure, heavily referencing the ISSB global baseline.

Japan

• FSA Stewardship Code 3.0:
  • Status: LIVE (Released June 2025).
  • Key Detail: Focuses on "substantive" engagement over form. It explicitly requires institutional investors to disclose beneficial ownership if requested by investee companies to promote transparency.
  • Source: Japan Financial Services Agency (FSA).

China

• Sustainability Reporting Guidelines:
  • Status: LIVE (Effective May 1, 2024).
  • Detail: Issued by Shanghai, Shenzhen, and Beijing exchanges. Mandatory sustainability reporting for constituents of key indices (e.g., SSE 180, Shenzhen 100) and dual-listed companies. Voluntary for others.
  • Source: CSRC / Stock Exchange Guidelines.

Hong Kong & Singapore

• ISSB Alignment: Both jurisdictions are aggressively aligning local reporting standards with IFRS S1 & S2. Singapore has mandated climate reporting for listed issuers (phased) and large non-listed companies (starting 2027).

Summary by Stakeholder

Private vs. Public Markets Distinction

• Public Markets: The burden is on standardization. Regulations (CSRD, ISSB) are forcing public companies to produce comparable data. Investors effectively just need to "consume" this data.
• Private Markets: The burden is on estimation and collection. Private companies are largely out of scope for direct reporting (except for huge ones under CSRD/California).
  • The Trap: Private Equity managers (GPs) are still subject to SFDR/SDR at the fund level. They must harass their private portfolio companies for data that those companies are not legally required to produce. This "data gap" remains the biggest operational headache in Dec 2025.