ESG update April 2026
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 GHG Protocol released a progress update on potential revisions to both Scope 2 and Scope 3 reporting. Key areas of focus include:
o improving accuracy of Scope 2 emissions by keeping GHG reporting methods consistent and aligned with how electricity is produced and delivered, as the energy landscape evolves
o for Scope 2 emissions, a new hourly matching and deliverability requirement for market-based reporting, aimed at aligning emissions claims more closely with the time and place electricity is consumed, in order to reduce double counting, and to ensure that reported clean energy purchases more accurately reflect the physical realities of the power grid
o for Scope 3 emissions, a new requirement for companies to report at least 95% of required Scope 3 emissions in order to remain in compliance with the standard, and the creation of a new Scope 3 category, “Category 16,” which would cover other value chain activities such as facilitated emissions or those related to licensing activities.
Key aspects of the proposed update include new requirements for emissions from energy contracts and instruments, such as renewable energy credits, in GHG inventories, as well as “Scope 2 Quality Criteria” that all contractual instruments must meet in order to be a reliable data source for the Scope 2 market-based method, and recommendations for transparently disclosing information about energy purchases
• The UK government released the finalised Sustainability Reporting Standards (UK SRS), based on the sustainability and climate-related standards developed by the IFRS Foundation, aimed at enabling companies to provide consistent and standardized reporting on sustainability and climate-related financial information, risks and opportunities, aligned with international frameworks.
While the government endorsed the standards for voluntary use, it left the door open for future mandatory application of the climate and sustainability disclosure frameworks, noting that markets regulator the FCA is already consulting on implementing requirements for listed companies to include UK SRS-based disclosures in their reporting, and that the government “will consider whether to require private companies to report information in accordance with UK SRS” as part of a broader upcoming consultation on updating corporate reporting requirements.
The new publications include the finalised versions of “UK SRS S1” and “UK SRS S2,” which correspond to the IFRS Foundation’s International Sustainability Standards Board’s (ISSB) IFRS S1 (sustainability-related) and IFRS S2 (climate-related) standards.
One of the key changes included in the finalised UK SRS was the removal of time references for reliefs on requirements to report Scope 3 value chain emissions data. While IFRS S2 includes a one-year transitional relief during which companies are not required to report Scope 3 emissions the finalised UK standard no longer specifies how long the relief may be applied.
Similarly, while the IFRS standards include a 1-year “climate-first” relief to give companies extra time to provide disclosure on some sustainability-related risks, in order to enable them to first focus on climate-related reporting, which had been extended to 2 years in the UK’s June 2025 draft standards, the finalised UK SRS removes the time references to this relief as well.
Regarding the mandatory application of the new standards, the government said that it “plans to consult shortly on a programme of work to modernise the UK’s corporate reporting requirements,” and that under that consultation, it “will consider whether to require private companies to report information in accordance with UK SRS as part of that exercise.”
Resources, Reports and Announcements
• The Global Reporting Initiative (GRI) released a series of new exposure drafts aimed at expanding and strengthening corporate reporting on pollution impacts and management, covering disclosure on topics including air and soil pollution, as well as critical incidents such as oil spills.
• The International Organisation for Standardisation (ISO) announced the launch of “ISO 14092:2026 – Climate change adaptation,” a new international standard aimed at helping organisations including local governments and communities to design, implement and monitor climate adaptation plans.
The new standard comes as many organisations have adopted climate adaptation strategies, yet implementation remains fragmented and under-resourced, with access to adaptation finance increasingly requiring clear, evidence-based planning processes supported by transparent governance. ISO said that the new standard provides practical guidance for planning climate change adaptation at the local scale, with a structured framework to help organisations define governance and responsibilities, effectively engage stakeholders, assess and prioritise climate risks, design and implement adaptation strategies, and to progress and improve plans over time
• Software company Watershed that provides an enterprise sustainability platform to enable companies to measure, report, and reduce their greenhouse gas emissions, and over time has expanded its capabilities to include areas such as waste, water, land-use change, and social and governance metrics. It claims that its platform now offers the capability to manage and measure all ESG data, including custom data and metrics, in addition to a new report builder capable of addressing any framework or regulatory system or customer requests for information, as well as report drafting tools to help spot gaps and improve reports with AI.
• The Net Zero Asset Owner Alliance released its updated Target-Setting Protocol, outlining requirements for signatories to set and report on portfolio alignment with net zero by 2050. This fifth version places a greater emphasis on transition elements and alignment with net zero pathways, rather than just on reducing portfolio emissions, including the introduction of a new transition target for asset owners.
Among the key changes in the new version of the NZAOA’s target-setting framework is the introduction of a new transition target category, aimed at enabling investors to support high-emitting companies with credible net-zero plans. The new transition targets outline the share of portfolio emissions linked to “transitioning assets,” which typically consist of holdings in companies in high-emitting sectors with credible transition plans.
• Greenhouse Gas (GHG) reporting framework provider GHG Protocol announced the release of consultations on proposed changes to its guidance and accounting methods underlying reporting of emissions from companies’ purchased electricity and electricity sector actions, forming part of the initiative’s efforts to update its suite of corporate standards and guidance. The new consultations cover the GHG Protocol’s Scope 2 Guidance, updating the initial guidance from 2015, and an update on consequential accounting methods for estimating avoided emissions from electricity-sector actions.
Naresh Aggarwal
13 January 2026
