Ten ESG and sustainability priorities that should be on your to do list for 2026

2026 will be a defining year for sustainability and ESG leaders.

For organisations operating in the UK and EU, particularly in manufacturing, expectations are shifting decisively from ambition and reporting to delivery, assurance, and accountability.

New regulations, tightening enforcement, and growing commercial pressure mean sustainability managers must balance regulatory readiness with real-world decarbonisation and operational change.

At Ricardo, we work with organisations across sectors to navigate this complexity and turn sustainability obligations into practical, value-creating action.

Below we outline 10 trends that should be firmly on your radar for 2026 – and where expert support can help to ensure compliance, build resilience and drive real impact.

1. Corporate sustainability reporting moves into delivery mode

The EU’s Corporate Sustainability Reporting Directive (CSRD) becomes reality for many organisations in 2026, with first reports published and assurance expectations rising quickly. The European Financial Reporting Advisory Group (EFRAG) has now launched the Final Draft European Sustainability Reporting Standards (ESRS) and the final trialogue on the CSRD omnibus proposal has concluded the legislative process, cementing the changes in reporting scope and thresholds. Although some companies will benefit from an extended reporting deadline, preparation is key.  Although these drafts significantly streamline reporting requirements (61% reduction in mandatory data points) sustainability teams need to build robust systems, defensible methodologies, and audit-ready data.

Key focus areas for 2026:

• Double materiality assessments that stand up to scrutiny
• ESRS-aligned KPIs with clear ownership and evidence
• Internal controls and governance equivalent to financial reporting

2. UK sustainability reporting and climate risk integration

The UK is progressing toward UK Sustainability Reporting Standards (SRS), aligned with International Sustainability Standards Board (ISSB) standards (IFRS S1 and S2). These place a strong emphasis on climate-related financial risks and opportunities. The UK government and regulators intend to finalise and publish the UK Sustainability Reporting Standards in early 2026 (final versions after consultation). Large UK companies meeting size thresholds (e.g., turnover, balance sheet, employees) will commence UK SRS compliance for the first accounting period starting on or after 1 January 2026 — meaning most will report under UK SRS in their 2026/27 annual reports.

In 2026, ESG managers will need to demonstrate:

• Credible climate scenario analysis
• Clear links between climate risks, strategy, and financial planning
• Strong governance and board oversight

3. Climate transition plans move from “nice to have” to critical

Credible climate transition plans are now a central expectation for regulators, investors, customers, and lenders – even where they are not yet strictly mandated.

Across the UK and EU, transition plans are increasingly used to assess whether an organisation’s net zero commitments are realistic, financed, and deliverable, rather than aspirational.

For ESG and sustainability managers, this means moving beyond high-level roadmaps to plans that clearly demonstrate how the business will transition over time.

Key elements that should be on the 2026 radar include:

• Clear emissions baselines and targets, aligned with science-based pathways where relevant
• Time-bound decarbonisation actions across operations and value chains
• Capital allocation and investment planning, linking transition actions to capex and opex
• Governance and accountability, including board oversight and executive ownership
• Financial impacts and resilience, showing how the transition affects costs, margins, asset values, and competitiveness

4. Strengthening supply chain due diligence 

Expectations on human rights and environmental due diligence expectations across value chains continue to increase driven by EU legislation, investor scrutiny and growing customer requirement. While the regulatory landscape is still evolving, there is s clear expectation that organisations will need to understand, manage and evidence their impacts and risk beyond tier 1 suppliers. 

For 2026, the priority is to have:

• A proportionate risk-based due diligence approach
• Clear supplier expectations and contractual levers embedded within procurement and supplier management processes
• Documented and operational decision-making, escalation, remediation, and grievance processes
• Robust data and traceability processes to support regulatory reporting
  
  

5. Carbon pricing and CBAM reshape trade and procurement

The EU’s Carbon Border Adjustment Mechanism (CBAM) moves into its definitive phase for 2026 imports, making embedded emissions data a commercial necessity. UK CBAM, which differs in being a tax rather than market based-mechanism, will come into effect January 1 2027. The iron and steel, cement, fertiliser, aluminium and hydrogen sector will be impacted.

For manufacturers and exporters, this means:

• Product-level emissions calculations
• Supplier data engagement
• Understanding cost exposure and mitigation options

6. Packaging, products, and circular economy rules accelerate

From August 2026, the EU Packaging and Packaging Waste Regulation (PPWR) will drive significant change in packaging design, material choices, and data transparency requirements. The EU Circular Economy Act, which focuses on resource efficiency, waste reduction and circular product design, is expected to be adopted in late 2026. These changes will require many companies to redesign products, packaging and supply chains to remain compliant and competitive.  Meanwhile, future-looking product sustainability requirements and digital product passports are coming into view, increasing expectations around traceability and product-level data.

For many organisations this means:

• Packaging formats and material choices to be redesigned to meet PPWR requirements on recyclability, recycled content, waste reduction and labelling
• Product designs and business models being reviewed and adapted to align with emerging circular economy and resource efficiency requirements, in anticipation of the EU Circular Economy Act
• Product-level data, transparency and traceability capabilities being put in place to support digital product passports and emerging product sustainability requirements 

7. Nature and biodiversity move to mainstream

Beyond climate, expectations around nature, water, and biodiversity impacts are growing rapidly.
In 2026, sustainability managers should consider:

• Nature-related risks and dependencies
• Water stewardship and ecosystem impacts
• Alignment with nature disclosure frameworks such as TNFD 

8. Green claims and litigation risk intensify

Regulators, customers, and courts are increasingly scrutinising sustainability claims. Vague or poorly substantiated statements now represent a material legal and reputational risk.
For UK and EU sustainability managers in 2026, the EU Empowering Consumers for the Green Transition Directive (ECGT), effective September 2026, bans generic/offset-based claims, requiring substantiation and third-party verification for claims like "carbon neutral," and impacts B2C communication in the EU. UK managers must align with this if selling to the EU, while also adhering to the existing UK CMA Green Claims Code.

9. From commitments to real net zero delivery

Perhaps most importantly, this is the year where organisations must show credible progress toward net zero – not just long-term targets.

This includes:

• Costed decarbonisation roadmaps
• Operational and process improvements
• Supply chain engagement focused on measurable reductions

10. Chemical regulation compliance - a strategic business risk

Chemical regulation compliance will continues to be a strategic issue for many organisations. Increasing pressure under REACH, the CLP Regulation, and the EU’s Chemicals Strategy for Sustainability means that substances, formulations, and even entire product lines can quickly become non-compliant, creating risks to market access, supply continuity, and product viability.

What was once managed as a specialist regulatory activity now requires closer coordination between sustainability, regulatory, R&D, procurement, and product teams. 

Key priorities for 2026 include:

• proactive enforcement risk mitigation,
• clear visibility of substances across products and supply chains,
• substitution and reformulation planning for substances of concern, including PFAS, and
• integration of chemical compliance into product design and sustainability strategies.

Chemical compliance is also increasingly linked to wider ESG considerations, including human health, environmental protection, circularity, and green claims, making it an essential component of credible sustainability performance.

Sustainability earns sustained board-level attention when it is framed in the language of strategy, risk, and returns. In 2026, the most effective ESG and sustainability leaders will position sustainability not as a cost centre, but as a driver of long-term value supporting: 

• revenue growth through greener products, access to new markets, and customer preference; 
• cost reduction through energy efficiency, waste reduction, and resource optimisation; 
• risk management by addressing climate, supply chain, and regulatory exposure; and
• capital access by meeting investor and lender expectations. 

When sustainability is embedded in core business strategy, aligned with mission, vision, and growth plans, it strengthens competitive advantage, resilience, and performance. 

For ESG and sustainability managers, 2026 is about cooperation, confidence and credibility:

• Cooperation to embed sustainability across every business department and throughout your supply chain.
• Confidence that systems and data will stand up to scrutiny.
• Credibility that sustainability strategies deliver real-world impact.

Ricardo combines independent, regulator-credible expertise with deep technical capability to help organisations meet this challenge – turning sustainability obligations into lasting value.

If your organisation would benefit from ongoing flexible support to meet your sustainability challenges check out our Sustainability Together offering which allows flexible access to a multitude of experts through a dedicated account manager – ready when you need it, across a broad range of sustainability and environmental topics. 

Find out more about Sustainability Together