ESG update Oct 2025

This blog is part of a quarterly series on the wide topic of Environmental, Social and Governance and covers items that have caught my attention.

Official announcements

• The International Sustainability Standards Board (ISSB) released new e-learning modules accessible through its Knowledge Hub to support companies in getting started with understanding the Standards - Introduction to IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures. The four self-paced modules include a mixture of written and visual content and interactive knowledge checks, designed to build foundational knowledge of ISSB Standards. The modules are:
  
  • Introduction to the IFRS Sustainability Disclosure Standards;
  • Introduction to IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information;
  • Introduction to IFRS S2 Climate-related Disclosures; and
  • Integrated sustainability disclosures and organisational considerations.

At the end of each module, users have the option to sit a short, multiple-choice assessment to receive a certificate of completion.

• In June 2025, the Government published three consultations:
  
  • Exposure draft of sustainability reporting standards UK SRS S1 and UK SRS S2
  • Transition plan requirements consultation
  • Developing an oversight regime for assurance of sustainability-related financial disclosures

The ACT responded to all three consultations. If you would like to see a copy, please send an email to technical@treasurers.org

• The International Organisation for Standardisation (ISO) announced the launch of “ISO 17298: Biodiversity for organizations,” a new standard aimed at helping organizations to assess and address their biodiversity impacts, dependencies, risks and opportunities.
• The People’s Bank of China (PBOC), the National Financial Regulatory Administration and the China Securities Regulatory Commission announced the publication of the Green Finance Endorsed Project Catalogue, creating a new categorisation system to determine which economic activities are eligible to be funded by green financial products.  It consolidates disparate standards in China covering green bonds and loans, although not including equities. China joins Australia,  the EU, Singapore, Hong Kong, Canada, and India.
• The UK government decided not to proceed with plans to develop and implement a UK Green Taxonomy. This was made following feedback from its consultation indicating that less than half of respondents had positive views on the value of a taxonomy, and many felt that other areas of the framework were of higher priority.
• The Science Based Targets initiative (SBTi), one of the key organisations focused on aligning corporate environmental sustainability action with the global goals of limiting climate change, announced the release of the initial draft of the Corporate Net-Zero Standard V2, the proposed update to its key standard to assess, certify and track companies’ decarbonisation commitments to achieve net zero emissions and to support science-based climate target setting.

Key updates proposed include explicit Scope 2 target setting to promote the adoption of zero-carbon energy, a requirement by large companies to set Scope 3 value chain emissions goals, while introducing more flexibility within Scope 3 targets setting, an increased focus on tracking and reporting on decarbonisation progress, and options for the introduction of interim carbon removal targets.

Resources, Reports and Announcements

• A report from the Green Finance Institute (GFI) found that the case for assessing nature-related risk was now clear. The TNFD, in partnership with the University of Oxford’s Environmental Change Institute (as part of the Resilient Planet Finance Lab) and Global Canopy, recently published an evidence review on the financial effects of nature-related risks. This open-source database consolidates over 600 pieces of evidence from 360 sources showing that nature-related risks are financially material for business[1]. It includes empirical business-level examples such as flood damages to Toyota and Nissan factories, the relocation of Starbucks bottling facilities due to water scarcity, and litigation costs to JBS linked to deforestation. The database builds on previous research on macro-economic impact by the GFI, the Universities of Oxford and Reading, and United Nations Environment Programme World Conservation Monitoring Centre (UNEP-WCMC), which forecast that nature degradation could reduce UK GDP by up to 12% over the next decade[2].

As of June 2025, the report noted the existence of more than 200 TNFD aligned reports in the public domain, with almost 100 of those documented on the TNFD website[3]. These include major global corporate and financial institutions such as Bunge, Holcim, ING, NBIM, Orsted, Schroders, Teck Resources and UBS.

• RBC issued a report on natural capital which suggests that a combination of policy integration, AI, and accounting could get nature on the balance sheet and growth agenda. It noted that the U.K. is one of the most nature depleted countries in the world with only half of its native wildlife intact.
• Barclays Bank published an approach to assessing nature-related financial risks of large financial portfolios and outlined pragmatic steps to drive progress. It found that selected mining companies could face a 25% earnings hit. Its key findings include:
  
  • Data and methodological challenges should not deter action: the availability of industry-wide data is fragmented. Current analysis requires intensive resource, and gaps in datasets limit the scope and accuracy of results. Standardised nature-related impact and dependency metrics, alongside consistent frameworks are needed. Notwithstanding these challenges, there is enough information available to make progress.
  • Nature-related financial risks are potentially material: while the challenges above lead to uncertainty in our findings, both samples saw potential cumulative earnings impact over five years, across the modelled scenarios. The quantum of nature risk depends on their sector, production types and site locations.
  • Nature and climate alignment are vital: nature and climate are interconnected and their interaction and associated risks must therefore be assessed together. This will require the development of integrated climate-nature scenarios.
  • Engagement and collaboration are critical to progress: the development and standardisation of the data, frameworks and guidance to drive progress will require cross-industry collaboration from industry bodies and standard setters, to policy makers, financial institutions and companies.
• Environmental degradation is a structural economic risk rather than a peripheral concern according to a report from Grantham Research Institute and University of Oxford which found that the degradation of natural capital represents a systemic threat that is already undermining growth, disrupting fiscal sustainability and impairing sovereign creditworthiness across many Low Income Countries.
• The ICMA issued Sustainable Bonds for Nature: A Practitioner’s Guide. The purpose of the guide is to:
  
  • provide issuers with guidance on the key components involved in issuing a credible nature-themed bond;
  • aid investors by promoting availability of information to evaluate the environmental impact of their nature-themed bond investments;
  • assist underwriters by offering steps that will facilitate the design of transactions that preserve the integrity of the market; and
  • equip external reviewers such as second party opinion (SPO) providers and verifiers with a better understanding of what to expect from a nature-related sustainable bond framework.
• Science Based Targets initiative (SBTi) launched a new training and certification platform. The new platform comes as demand for sustainability-related skills is increasing globally as companies and countries globally take action on implementing their climate and sustainability-related commitments, and to meet growing sustainability reporting and regulatory compliance requirements. According to SBTi, the new platform is designed to make science-based target setting more accessible by helping professionals to build skills, navigate the target setting process, and contribute to the global transition to net zero.
• According to a report by PwC a majority of companies subject to CSRD or ISSB disclosure requirements say that pressure from a variety of stakeholders including investors and customers to provide sustainability reporting and data has continued to increase over the past year, despite regulators in some areas pulling back on mandatory disclosure requirements, with most also increasing investments in sustainability reporting capabilities.
• Business sustainability ratings and solutions provider EcoVadis announced the launch of Carbon Data Network, a new data exchange aimed at enabling companies to access reliable primary carbon data from their suppliers. It will allow companies to more easily and efficiently track their Scope 3 indirect emissions and make better decisions to reduce their carbon footprint.

The new network contains emissions data from more than 150,000 organisations and is powered by their Carbon Action Manager Scope 3 supply chain engagement solution and provides companies with access to a series of tools and resources to build their carbon capabilities and accelerate decarbonisation.

Naresh Aggarwal

15 October 2025