2026 Opening: ESG Shifts from “Political Battlefield” to “Year of Mandatory Enforcement” — Companies Face Unprecedented Compliance Pressure

January 14, 2026 — As the new year begins, the global ESG (Environmental, Social, Governance) landscape is showing a clear polarization: on one side, the EU continues to advance a “simplified but still mandatory” regulatory framework; on the other, parts of the world led by the United States are experiencing noticeable policy rollbacks. Meanwhile, China’s A-share market has officially entered the “Year of Mandatory ESG Disclosure for 471 Listed Companies”.

In the European Union, after intense negotiations in the second half of 2025, the European Commission officially adopted the “Omnibus I Simplification Package” for the CSRD (Corporate Sustainability Reporting Directive) and ESRS (European Sustainability Reporting Standards) at the beginning of 2026. According to the latest revisions, the reporting threshold for large companies has been significantly raised (from 250 to 1,000 employees), the number of required data points has been reduced by approximately 68%, and companies already reporting in the 2025–2026 financial year are not required to add extra disclosures. This move is widely seen as the EU’s difficult balancing act between upholding its Green Deal commitments and restoring corporate competitiveness.

However, simplification does not mean relaxation. 2026 is regarded as the “Year of Mandatory Third-Party Assurance” for sustainability data. All companies subject to CSRD must now engage independent assurance providers to conduct audit-level verification of key indicators such as climate, biodiversity, and social responsibility. At the same time, the peak period of “greenwashing enforcement” has officially arrived — regulators and NGOs are showing zero tolerance toward any “net-zero” or “green” claims lacking credible data support. Several multinational corporations were already hit with class-action lawsuits and multimillion-euro fines in late 2025 for exaggerating their emissions reduction achievements.

In contrast, the United States has quickly delivered on campaign promises following the return of the Trump administration: withdrawal from several international climate bodies, repeal of parts of clean energy tax incentives, and the effective shelving of the SEC’s climate disclosure rules. Reports from multiple institutional investors indicate that while sustainable investment assets in the U.S. still grew to approximately $6.6 trillion in 2025, the growth rate slowed dramatically to only about one-third of the overall market. Many companies have begun adopting “green hushing” strategies, sharply reducing public references to “ESG” or “net-zero” language.

China’s market, however, is moving in the opposite direction. 2026 is being called the “A-share Mandatory ESG Disclosure Year” by market observers. According to new guidelines from the Shanghai, Shenzhen, and Beijing stock exchanges, a total of 471 companies — including those in the SSE 180, STAR 50, SZSE 100, ChiNext Index, and companies dual-listed domestically and overseas — are now required to publish 2025 sustainability reports by April 30, 2026. Among them, 28 companies had not even released voluntary ESG reports in 2024 and are considered the “most at-risk group” for compliance failure. At the same time, the corporate governance evaluation has officially been renamed ESG Evaluation, with new weightings of Environment (E) 21%, Social (S) 31%, and Governance (G) 48%. Issues such as employee engagement surveys and supply chain carbon emissions management have been included in core assessment metrics for the first time.

Expert Consensus: Major firms such as PwC, KPMG, and Deloitte widely agree that 2026 will be a global watershed year for ESG compliance. Companies that fail to rapidly build data governance capabilities, establish supply chain carbon accounting systems, and strengthen ESG oversight at the board level will face triple threats: regulatory fines, investor withdrawals, and reputational crises. On the other hand, early movers that get ahead are expected to gain long-term competitive advantages in green supply chain restructuring, improved ESG ratings, and lower costs of sustainable financing.

The market consensus is solidifying: Regardless of how political winds shift, issues such as physical climate risks, AI energy consumption controversies, biodiversity responsibilities, and supply chain human rights have already transitioned from “soft topics” to “hard financial risks”. In 2026, the question is no longer whether to do ESG — but who can do it more authentically, more efficiently, and with stronger financial materiality.