Outlook 2026: from human rights accountability in Japan to fragmented disclosure regimes in Europe, public-interest ownership models and expanding board responsibilities in Canada, corporate governance expectations are diverging but intensifying worldwide.
In part two of our focus on corporate governance, 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.
Junko Watanabe, partner at Nishimura & Asahi, Tokyo, and Takanori Mizuno, associate:
In recent years, corporate governance structures concerning business and human rights have come under increasing scrutiny in Japan, with various crisis management and compliance cases grabbing social attention in 2025 which include the one questioning directors’ accountability. This trend is expected to continue beyond 2026, and Japanese companies will be required to review and strengthen their governance frameworks from the perspective of respecting human rights.
At this critical juncture, the demand for respecting human rights in business operations has also become urgent in Japan. Japanese companies are increasingly recognizing the need to engage in dialogue with stakeholders, including rights-holders whose rights or interests are/may be affected, to identify and assess human rights risks and to address those starting with the most severe and likely to occur.
However, many companies still lack sufficient measures to identify, assess, and address human rights risks throughout their value chains. Given that companies are increasingly being held accountable for human rights risks arising in their value chains, the trend in engagement with stakeholders is expected to accelerate further beyond 2026.
Christian Ritz, partner at Hogan Lovells, Munich; and Felix Werner, senior associate:
Boards face fragmented disclosure regimes, increasing supply chain due diligence requirements and politicised ESG signals. At the same time, litigation and enforcement risks – greenwashing claims, investor actions, regulatory investigations – will continue to push boards toward evidence based disclosures and robust internal controls.
A mature governance is key to balance the opposite trends – clear committee mandates, defined accountability for due diligence, and controls that ensure high quality, assured sustainability data (on par with financial reporting). In 2026, effective boards will demonstrate competency, credible oversight of salient risks and cross jurisdiction coherence. As a core governance function, operationalised ESG drives resilience, access to capital and long term value.
The practical response is formal ESG committees with close oversight of human rights and supply chain risks, and data driven reporting with legal gatekeeping while closely monitoring implications of anti ESG developments.
To cope with the challenges, boards will increasingly rely on AI-enhanced governance platforms – leveraging real-time dashboards, risk analytics and ethical compliance tools – to elevate active oversight, expedite decision-making and identify early warning signs of misconduct. Anticipated global divergence in regulations will compel boards to balance evolving national requirements with investor expectations, reinforcing ESG oversight as central to corporate legitimacy and long-term strategic resilience.
Radha Curpen, partner and group head of ESG and sustainability at McMillan, Vancouver:
Corporate governance in 2026 is shaped by expanded board responsibilities and diversity disclosure requirements. Directors must consider a broader range of stakeholders, including employees, consumers, and the environment, when making decisions. Updated guidelines require boards to oversee climate-related risks and ensure effective management strategies. Diversity reporting for boards and senior management is mandatory, reflecting a commitment to equity and inclusion. Shareholder activism is rising, pushing for greater ESG action and transparency. Boards must strengthen oversight, integrate ESG into strategic planning, and ensure compliance with evolving governance standards to meet stakeholder and regulatory expectations.
Geert de Nijs, partner at Fieldfisher, Amsterdam:
The Collective Heat Act (CHA) was adopted by the Dutch Senate on 9 December 2025. Entry into force is pending a Royal Decree, which is a formality. The CHA replaces the current Heat Act and aims to accelerate the heat transition from natural gas to sustainable heat sources while safeguarding public interests like security of supply, affordability and consumer protection. It amends the current gas-price based tariff regulation in three steps towards a cost based tariff regulation, overseen by the national energy regulator (ACM).
Governments, mostly municipalities and provinces, receive a central steering role by establishing designated heat areas within their territory and designate a heat company responsible for production/sourcing, transport and delivery within that area.
A major (and not uncontroversial) change is that governance and ownership of heat companies is shifted towards public control: designated heat companies must have a public majority (minimum of 51% ownership). Current privately owned heat systems are required to work towards 51% public ownership in a period between 1 to 30 years (depending on their current situation). The mandatory public majority ownership does not apply to heat systems with 1,500 users or less.
Petra Schaffner, partner and head of ESG Germany at CMS, Cologne:
In the past year, boards have experienced a marked backlash against the ESG momentum – most notably via SEC rollbacks of federal disclosure mandates, prompting a strategic retrenchment into state‑ and EU‑level compliance frameworks. Compounding this is an omnibus push in Brussels: the EU’s Omnibus Package has delayed CSRD/CSDDD timelines, raised scope thresholds, and eased supply‑chain liability – even as core due‑diligence duties remain intact. These dynamics shift board oversight away from ideology and toward navigating multi‑jurisdictional risk and competitive strategy.
Looking ahead, directors must adopt a dual mindset: safeguarding resilience while unlocking value. Focus should fall on AI controls, geopolitical supply‑chain agility, and scenario planning for legislative unpredictability. With sustainability and diversity standards better managed under global frameworks, boards can now probe deeper – using governance as a lens for value creation, not merely compliance.