Sustainability and ESG in 2026: 8 regulatory trends that are reshaping the operating environment for businesses

Over the past year, political processes, particularly in the EU, have led to adjustments and simplifications in parts of the sustainability regulations. This applies, among other things, to changes related to reporting and due diligence requirements. At the same time, it is important to see the big picture: The overarching challenges related to climate, nature and human rights will not disappear, and the regulations that are currently in force – and which are under further development – still place extensive demands on businesses across industries.

For many companies, this means that sustainability must increasingly be addressed as an integral part of the company's legal and commercial risk picture. Requirements for documentation, traceability and verifiability will become more central, and sustainability will have a direct impact on everything from financing and contracts to marketing and market access.

Here are the trends we think businesses should pay particular attention to in 2026:

1. Sustainable finance: Simplifications, tightening and innovations

The financial sector plays a crucial role in the transition to a sustainable economy, and in the EU, the extensive regulatory development we have seen in this area in recent years continues. 2026 will be the year in which last year's "simplification wave" will have its first effects, including reduced reporting requirements under the Taxonomy Regulation. From next year, the scope of entities subject to reporting under the Corporate Sustainability Reporting Directive (CSRD) and the taxonomy will also be narrowed.

But simplification is not the same as deregulation. Simplified rules entail new sets of rules that companies must understand and comply with. As both companies and authorities gain more experience with reporting and classification requirements, expectations from supervisory authorities, investors and others may increase.

In addition to the changes to the aforementioned CSRD and taxonomy reporting requirements, we will see a comprehensive revision of the SFDR and new requirements for banks' management of ESG risk.

• SFDR 2.0: For asset managers and other financial market participants, a key development in 2026 will be the revision of the Sustainable Finance Disclosure Regulation (SFDR). The European Commission published its proposal for an "SFDR 2.0" in December 2025, which, if adopted, will mean that participants will have to deal with a new classification regime for funds and other products. With the changes, the requirements for labelling financial products as sustainability-oriented will become more precise and potentially more extensive. In January 2026, the EU's European Securities and Markets Authority (ESMA) published a new document with expectations for market participants' sustainability claims, which shows that preventing greenwashing remains a key focus area for the supervisory authorities, also beyond the scope of the SFDR.
• Banking regulation: 2026 will be the first year in which banks and other financial institutions will need to develop and monitor the implementation of specific plans to manage financial risks related to ESG factors in the short, medium and long term. More specifically, the European Banking Authority (EBA) has established guidelines pursuant to the Capital Requirements Directive (CRD VI) for the identification, measurement, management and monitoring of sustainability risks in financial institutions. The Norwegian Financial Supervisory Authority (Finanstilsynet) has confirmed that it will base its supervisory practice on the guidelines and expects firms to comply with them from the time they entered into force on 11 January 2026. For small and non-complex enterprises, the guidelines will apply from next year. And when banks and other financial institutions are subject to new reporting requirements, this will also affect their customers – even if the customers are not directly subject to the regulations.

2. Carbon markets in 2026: New frameworks for decarbonisation and carbon removal

The year 2026 looks set to mark a crossroads for carbon markets. Several parallel regulatory processes in the EU will shape the regulatory framework for the industry's decarbonisation in the years ahead:

• Update of the EU Emissions Trading System: The European Commission has announced a comprehensive climate package with proposals for updating the EU Emissions Trading System (EU ETS), expected by July 2026. The revision will address, among other things, the role of carbon removal in the carbon market, expansion to more sectors and greenhouse gases, rules for non-permanent carbon capture and use, as well as the risk of carbon leakage in sectors not covered by the Carbon Border Adjustment Mechanism (CBAM).
• Carbon Removal Certification Framework: The EU Carbon Removal Certification Framework (CRCF) is expected to become operational during 2026. On 3 February 2026, the European Commission adopted a delegated regulation with specific methodologies for DACCS and BECCS technologies, as well as biochar. Carbon removal projects that utilise these technologies are expected to be able to start applying for EU certification in the coming months. To stimulate the demand for so-called CRCF credits, the European Commission has announced the creation of an "EU Buyers' Club". The purpose is to send a clear demand signal for these credits, which are crucial for achieving the EU's climate goals. It remains to be seen how the CRCF will operate in parallel/integrated with existing certification schemes in the voluntary carbon market.
• Changes to the EU's climate law: The European Parliament also this week passed amendments to the EU's climate law that set a binding target of a 90 percent reduction in greenhouse gas emissions by 2040, compared to 1990 levels. A key element is increased flexibility in how the goal can be achieved. From 2036, up to 5 percent of net emission reductions can come from high-quality international carbon credits from partner countries. Of particular importance to the industry is that the revised Act allows for domestic permanent carbon removal to be used to compensate for hard-to-reduce emissions in the EU ETS.

There is particular tension related to whether or how the EU will include carbon removal in the EU ETS, and momentum from the latest developments in the CRCF framework and the changes to the climate law could potentially affect the upcoming revision. Taken together, these regulatory changes are likely to lay the foundation for a new phase in European climate policy, in which carbon removal and emissions trading will increasingly work together to achieve long-term climate goals.

3. Climate lawsuits: Climate risk is increasingly being tested in the courts

The courts have become a key arena for determining the responsibilities of both companies and boards of directors in climate and environmental issues. As of June 2025, over 3,099 climate lawsuits have been filed in more than 60 jurisdictions – a clear sign that the legal system is being actively used to fight climate change.

The development can be divided into three main categories:

1. actions against states,
2. lawsuits against companies that themselves counteract the climate goals, and
3. lawsuits against financial institutions for complicity through investments in or financing of climate-damaging activities.

When it comes to lawsuits against companies, the basis for the claims is, among other things, compensation for pollution, "greenwashing", breach of board duties and violation of corporate due diligence legislation.

There is no reason to believe that the trend of increased use of the legal system in the climate case will slow down. Among the issues worth keeping an eye on in 2026, Milieudefensie et al. v. Royal Dutch Shell is central. Milieudefensie has demanded that Shell must reduce greenhouse gas emissions by 45% by 2030 and to net zero by 2050. The case is now being considered by the Supreme Court in the Netherlands, and a final decision could have significant ripple effects far beyond the borders of the Netherlands. In Norway, the environmental organizations were successful from the Court of Appeal in Climate Litigation II towards the end of 2025. The case concerns the validity of the development licences for the Breidablikk, Yggdrasil and Tyrving fields, and has now been appealed to the Supreme Court where it will be heard in a Grand Chamber.

4. Greenwashing and sustainability claims: Marketing faces stricter control

The use of environmental and sustainability claims in marketing is increasing rapidly, but so is the concern about greenwashing, i.e. unsubstantiated claims that a product or service is "climate neutral", "environmentally friendly" or "100% sustainable".

To strengthen consumer protection, the EU adopted the Green Transition Directive in March 2024, which will enter into force in September 2026. The directive aims to make it easier for consumers to make more sustainable choices, including by combating greenwashing and ensuring better information about the lifespan of products and whether they can be repaired.

The Directive prohibits vague and unsubstantiated claims such as "green", "natural", "biodegradable", "climate neutral" or "eco" unless they can be substantiated by evidence demonstrating significant environmental benefits. It also prohibits sustainability labels without third-party certification or government approval, as well as claims of neutral, positive or reducing environmental impact based on the purchase of offsetting carbon offsets.

Furthermore, the "blacklist" is expanded with new practices that are considered misleading, such as irrelevant claims such as "plastic-free" about paper. Before purchasing, traders must also clearly disclose the product's environmental properties, including durability, repairability and recyclability, and environmentally friendly delivery options.

The rules apply to all enterprises that market goods and services to consumers in the EU and EEA. Violation of the rules may result in fines, confiscation of income or exclusion from public procurement. The Member States must implement the Directive by March 2026, and in Norway, the Ministry of Children and Families is responsible for its implementation.

5. Customs and sustainability: New climate and nature requirements change the framework conditions for international trade

Regulation of imports and exports of products and raw materials with climate and nature impacts is now a key climate policy instrument. The EU has implemented several measures to steer consumption and production in a more sustainable direction, including through CBAM, the EU Deforestation Regulation (EUDR) and a comprehensive customs reform.

• CBAM (Carbon Border Adjustment Mechanism) prices greenhouse gas emissions associated with the import of carbon-containing goods and came into force in the EU on 1 January 2026. Norway aims to introduce similar rules from 2027, and about 350 Norwegian companies are expected to be affected.
• EUDR (EU Deforestation Regulation) aims to limit the EU's impact on global deforestation by regulating commodities such as cattle, cocoa, coffee, oil palm, rubber, soy and wood. In December 2025, a postponement of the implementation and simplifications were agreed to reduce the data load in the EUDR system by adapting the requirements for due diligence and documentation to the size of the enterprise. The regulation is proposed to be incorporated into the EEA Agreement to the extent that Norway is obliged under the agreement.
• Due to challenges related to massive e-commerce imports into the EU, the exemption from customs duties on parcels under €150 will be removed and a uniform tax of €3 per item will be introduced from 1 July 2026. As part of the new customs reform to be introduced in the EU, responsibility for import compliance will be shifted from consumers and carriers to online platforms and sellers, who will then become official importers and will ensure that all taxes and duties have been paid, and that the goods imported are safe and comply with EU environmental, safety and ethical standards.

For the business sector, these changes entail stricter requirements for registration, reporting and tax calculation, as well as an increased need for control and documentation in the supply chains. It will be more important than before to clarify the division of responsibilities between importers, suppliers and intermediaries in order to avoid regulatory violations, delays and increased costs at the borders.

6. Supply Chain Due Diligence: From Policy to Enforceable Duties

With the introduction of the Transparency Act in 2022, a number of Norwegian businesses – as well as some foreign companies with operations in Norway – were given a statutory duty to carry out due diligence assessments of their own operations and supply chain, with a focus on human rights and decent working conditions. The obligations in the Transparency Act mean that companies can no longer settle for general sustainability policies or voluntary guidelines. Specific assessments must be carried out of the risk of human rights violations and decent working conditions, including far down the supply chains. The assessments must be documented, followed up, and made available for public scrutiny through annual reports.

At the same time, the requirements for ESG are still increasing, both through contractual obligations and society's expectations. Suppliers and subcontractors are increasingly assessed on the basis of how they handle environmental, social and corporate governance, and companies are now setting specific requirements for documentation, follow-up and reporting throughout the value chain. Many companies integrate ESG commitments directly into contracts to ensure accountability and transparency, and to reduce the risk of violations of human rights or environmental standards. This development means that ESG work is no longer just an internal management tool, but a strategic requirement that affects business models, supplier choices and competitiveness in the market.

Through the Transparency Act, Norway has been a pioneer in this area, and many companies have made a good start in their work on due diligence. For companies that have worked purposefully on this, it can provide a clear competitive advantage – both in today's market and when similar regulations from the EU, such as the EU's Corporate Sustainability Due Diligence Directive (CSDDD), are eventually to be implemented in Norway.

7. Product requirements and circular economy: New environmental requirements govern how products can be developed and sold

In recent years, the EU has introduced increasingly stringent requirements for how products should be designed, manufactured and handled throughout their life cycle. For companies that develop or sell products in the European market, sustainability has gone from being a strategic choice to becoming a clear legal requirement.

At the heart of this development is the Ecodesign Regulation (ESPR), which came into force in the EU in 2024. The regulation will be implemented in Norwegian law through the Act on Sustainable Products and Value Chains, which the Norwegian Environment Agency expects to happen during 2026. With the regulation comes a number of new sustainability requirements. Products need to be more durable and easier to repair. They must be designed for reuse and material recycling, and there are requirements for energy use and energy efficiency.

In parallel, the EU is working on a broader regulatory framework for the circular economy, often referred to as the Circular Economy Act, to be adopted by the end of 2026. The goal is to strengthen the market for secondary raw materials and increase the supply of and demand for high-quality recycled materials. Specifically, the regulations will focus on, among other things, increased collection and recycling of EE-waste and critical raw materials, harmonisation of criteria for when waste ceases to be waste ("end of waste"), and expansion of producer responsibility schemes.

For companies, this means that sustainability and circularity requirements will now become a permanent part of the product strategy. Companies need to rethink how products are developed, used and recycled, and how information about this is passed on in the value chain. Those who manage to make sustainability an integral part of their product work will be better equipped when the new rules come into force.

8. Shipping and climate requirements: A more fragmented world

In recent years, the EU in particular has led the development of sustainability regulations for the shipping industry, including through the incorporation of shipping into the EU Emission Trading System (EU ETS) and the FuelEU Maritime regulations, which set an upper limit for greenhouse gas intensity for ships operating, calling, staying in or leaving ports within the EU (and in the long term also the EEA).

Internationally, the IMO Net-Zero Framework, a global framework with requirements for reduced greenhouse gas intensity, was approved in April 2025 and was scheduled to be adopted in October 2025. If the IMO Net-Zero Framework had been adopted, the industry would have a global regulatory framework to comply with. The vote was postponed by one year, until October 2026. As of now, it is unknown if and when the framework will be adopted, and if so, whether it will look the same as today's draft.

This has created greater uncertainty about the future of sustainability regulation in the shipping industry, as it may mean that instead of a unified, global regulation of the shipping industry, we will see that the development continues towards more fragmented solutions. For example, more and more individual countries and regions are adopting their own ETS schemes and other decarbonisation regulations that also cover shipping.

This regulatory fragmentation entails a clear risk of overlapping systems, which will result in less transparent legal regulation. This will probably mean higher operating costs, as well as many parallel reporting obligations. Market players will therefore have to prepare for increased costs and increased complexity when it comes to compliance with various sustainability regulations in shipping.

What does this mean for businesses in practice?

In other words, sustainability is not on its way out of companies' risk picture – it is becoming even more closely integrated into law, finance and business strategy. For many, 2026 is less about new headlines and more about how existing regulations are actually to be complied with in practice. This requires clear anchoring in the board and management, systematic work on documentation and management, and a comprehensive assessment of sustainability risk in line with other business-critical risks. The difference between being ahead and behind schedule can have both legal and commercial consequences.