Sustainable Finance Regulatory Update | Q3 2025

The third quarter of 2025 marked a pivotal period for global sustainable finance regulation. Across regions, policymakers refined disclosure frameworks, clarified expectations, and tightened accountability around sustainability claims. While the EU and UK advanced alignment with ISSB and ESRS standards, the US and Canada faced regulatory gridlock offset by strong state and competition-level enforcement. Meanwhile, APAC jurisdictions continued a pragmatic rollout of ISSB-aligned rules at varying speeds.

For asset managers and financial institutions, the message is clear: the regulatory floor is converging around transparent, verifiable sustainability data, and supervisors are demanding credible evidence behind every disclosure and claim.

Landscape Snapshot (Jul–Sep 2025)

EU

SFDR Q&A clarifications, ESRS amendments out for comment, and countdown to ESG Ratings RTS.

UK

Green Taxonomy scrapped; consultations live on UK SRS (S1/S2), sustainability assurance, and mandatory transition plans.

US & Canada

SEC climate rule frozen, but California’s SB-253/SB-261 still pushing forward; Canada’s anti-greenwashing guidance now binding.

APAC

Hong Kong ISSB standards effective; Singapore delays its climate-related disclosures; India is tightening its ESG debt framework and reviewer rules.

Europe

SFDR clarifications

ESAs issued updated SFDR Q&As with guidance on sustainable investment % disclosure, real estate metrics, and template best practice.

ESRS amendments

EFRAG’s proposals streamline data points and clarify proportionality. The simplification proposal cuts down 66% in total disclosure, focusing on material, objective data points. Portfolio-level reporting depends on the investee company ESRS datapacks. Changes may shift coverage of Scope 3, biodiversity, and workforce indicators.

ESG Ratings Regulation RTS due late October

ESMA finalises rules on methodology transparency, conflict management, and scope of in-house ratings.

United Kingdom

UK SRS (S1/S2) consultation

Draft standards mirror ISSB with UK tweaks. FCA expected to mandate for listed issuers; asset managers likely in scope soon after. Reporting stacks should shift from TCFD to ISSB baseline.

Mandatory Transition Plans

Consultation proposes obligations for banks, insurers, and asset managers, building on TPT templates. Supervisors will test the credibility of financed emissions targets and capex allocation.

Sustainability Assurance Regime

Government exploring oversight for third-party assurance providers.Funds marketed with sustainability claims will face higher assurance expectations.

United States & Canada

SEC climate rule stalled

In March, the SEC voted to stop defending its climate disclosure rules in court. Since then, the U.S. Court of Appeals has told SEC that it will not issue a ruling on the legality of its climate disclosure rules, leaving it to the agency to defend or revoke them. With federal rules stalled, expect California’s SB-253/261 and ISSB standards to serve as the operative baselines for U.S. climate reporting.

California (SB-253 & SB-261)

CARB FAQs/workshops set first GHG reporting deadlines for 2026.Asset managers with a California footprint need Scope 1-2-3 emissions pipelines and climate risk disclosures aligned with ISSB/TCFD. The California Air Resources Board (CARB) has also published a preliminary list of 4,160 companies that must comply with SB 253 and SB 261, the state’s new climate reporting laws.

Canada Anti-greenwashing Guidance

Competition Bureau guidance (Jun) requires claims to be specific, evidence-backed, and verifiable. Marketing materials and stewardship statements must be substantiated, particularly fund naming and ESG-labelled products. CSA has paused its own climate rule-making.

Asia-Pacific

Hong Kong

ISSB-aligned standards effective 1 Aug; HKEX climate rules phased from Jan 2025.HK-listed asset managers must align disclosure packs with IFRS S2, especially with financed emissions and scenario analysis.

Singapore – Climate Reporting Delayed

Singapore has pushed back most ISSB-aligned sustainability reporting deadlines to give smaller companies more time. All listed firms must still disclose Scope 1 & 2 emissions from FY 2025, but Scope 3 reporting will only apply to the largest issuers from FY 2026, and later (FY 2028–30) for mid- and small-caps. External assurance is also deferred to FY 2029 for listed firms and FY 2032 for large non-listed companies.

India

SEBI refined ESG debt labels and tightened rules for third-party reviewers.Investors in Indian ESG-labelled debt must verify the robustness of external reviews; fund managers should adapt ESG bond frameworks. 1 Aug 2025 consultation on tighter independent reviewer norms.

Key Dates

17 Sep 2025 

UK consultations close (SRS, assurance, transition plans).

29 Sep 2025

EFRAG ESRS consultation closed.

Late Oct 2025

ESMA Final Report & RTS on ESG Ratings.

30 Dec 2025

EUDR applies for large firms (portfolio supply-chain exposure relevant).

Our take

Q3 made clear that disclosure baselines are consolidating around ISSB/ESRS and that supervisors are tightening the credibility behind claims. That means portfolios need audit-ready, cross-standard data. That’s exactly where Impact Cubed’s factorised datasets and regulatory templates reduce re-work and compliance risk while keeping product timelines intact.