ESG Law Outlook 2026: How accountability for climate commitments, risk resilience, whistleblowing and nature-related issues will redefine board oversight and decision-making in the US and UK.
Forward Law Review asked leading practitioners to examine how mandatory sustainability reporting, heightened enforcement expectations and competing regulatory regimes are forcing boards to reassess how ESG is governed at the top.
Here are their predictions for 2026.
Abbey Raish, partner at Kirkland & Ellis, Los Angeles, and Rebecca Perlman, partner in London:
Board-level accountability for climate commitments and sustainability disclosures
New and emerging regulatory requirements and global reporting standards are driving a shift from voluntary to mandatory sustainability disclosures, which may trigger board accountability for the accuracy and completeness of these new disclosures. Increasingly, many boards will need to implement clear internal policies and robust data governance to ensure public sustainability claims are backed by verifiable data. To mitigate the risk of enforcement and litigation, boards will be increasingly focused on overseeing progress against, not just setting, aspirational sustainability goals.
Board composition and expertise
Many public companies are increasingly aligning their global disclosures with ISSB/IFRS. Many of the provisions necessitate new processes – some are expressly required, whereas others are a necessary or expected step in meeting the standards. This includes more granular disclosures on board composition and expertise, as well as how boards assess (or develop) sustainability-related skills and competencies
Subsidiary governance
Certain emerging regulations require sustainability disclosure at entity level and preclude companies from using global reports to satisfy local requirements. This heightens risks around inconsistencies, regulatory enforcement and litigation. Subsidiary Sustainability Governance Frameworks will become a critical tool for mitigating these risks by setting parameters that enable local directors to fulfil their obligations while still bringing about greater consistency through defined processes, controls and reporting pathways.
Jon Solorzano, partner in sustainability and governance at Vinson & Elkins, Los Angeles and New York:
Over the long term, companies, investors, and their boards are increasingly viewing physical climate risks – such as extreme weather and disruptive phenomena (e.g., droughts, flooding, crop impacts) – as material business issues, even when near-term impact is difficult to quantify. While low-carbon investing has faced political and macroeconomic headwinds, particularly in the United States, more organizations are recognizing both the strategic necessity and the opportunity to invest in physical resilience.
Boards that fail to plan for rising climate-related risks may face growing pressure – not only from regulators, but also from capital markets that expect robust governance of material risks. Resilience extends beyond strengthening physical assets; it requires embedding comprehensive risk oversight into strategic decision-making at the highest levels of the organization. Effective governance means integrating climate-related risk management into board agendas, executive planning, and enterprise risk frameworks, ensuring that companies can anticipate, respond to, and recover from disruptions. And forward-looking investors are recognizing the business opportunity in allocating capital to adjust to these risks.
Ultimately, resilience is not simply a defensive strategy – it can unlock competitive advantage by enabling companies to adapt to change, safeguard their operations, and capture growth opportunities in a world facing increasingly frequent and severe weather impacts.
Ruth Knox, partner and chair of ESG & sustainable finance at Paul Hastings, London:
Assumptions about the inherent commercial value of ESG functions are now being directly tested. Boards are pausing investment and reassessing whether ESG strategies are delivering measurable value, rather than relying on assumed benefits such as marketing advantages.
In practice, governance decisions are being shaped by two factors: the growing contradictions between regulatory regimes affecting global businesses, and the ability of ESG functions to demonstrate clear internal and external value creation. Where that case is not yet proven, decision-making authority is increasingly concentrated with General Counsel and Chief Compliance Officers.
Until regulatory direction becomes more settled, board oversight will remain high, with a continued focus on risk management, capital allocation and strategic alignment.
Quinton Newcomb, partner at Fieldfisher, London:
In 2026, whistleblowing will play a pivotal role in financial crime prevention, with regulators expecting organisations to strengthen internal reporting systems and foster a culture of transparency, even offering incentivisation to those that report wrongdoing.
The Serious Fraud Office has committed to exploring incentivisation as a mechanism to gather intelligence. The 2025 autumn budget saw the introduction of a new scheme to encourage whistleblowers to report significant tax evasion to His Majesty’s Revenue and Customs which became effective immediately.
We consider it inevitable that such schemes will be introduced for all financial crime, bringing the UK in line with the United States, where, since its inception in 2007, the IRS had paid over $1.3 billion in awards under its whistleblower programme, with $123.5 million paid out in 2024 fiscal year alone.
Similarly, the US Department of Justice’s Corporate Whistleblower Awards Pilot Programme enables whistleblowers to be awarded up to 30% of the first $100 million USD, and up to 5% between $100 million and $500 million. Whilst, traditionally, such incentivisation has been controversial in the UK, this move towards rewarding informants marks a fundamental change in enforcement culture and a drive to tackle complex economic crime.
Joshua Domb, partner, Gen-R Law, London:
Whilst there is still plenty of work to do, my instinct is that most businesses have broadly understood the need for decarbonisation and are starting to get meaningful plans in place in that regard.
Where businesses remain a long way behind is nature and biodiversity. That being said, the rapid growth of TNFD reporting (620 organisations from over 50 countries and counting!) combined with the increasingly apparent financial materiality of biodiversity challenges will, I expect, push more companies to bring nature and biodiversity into board discussions and corporate governance frameworks throughout 2026.