US resistance to sustainability disclosure at state and federal level is widening the regulatory gap for US-domiciled firms operating internationally. In March 2025, the Securities and Exchange Commission (SEC) voted to end its defence of federal climate-disclosure rules. In December 2025, the White House issued an executive order targeting proxy advisers accused of promoting ESG agendas. At state level, Republican attorneys general continued to press anti-ESG claims against major asset managers, culminating in Vanguard’s February 2026 settlement of the Texas-led coal antitrust case. Together, those developments mark a more forceful US retreat from the sustainability disclosure policies being advanced across Europe, the UK and much of Asia-Pacific.
Europe Eases Up on Competitive Concerns
The European Union remains the most prescriptive jurisdiction linking corporate disclosure, investor-facing sustainability disclosure and product governance. The Corporate Sustainability Reporting Directive (CSRD) requires in-scope companies to report against European Sustainability Reporting Standards. The Sustainable Finance Disclosure Regulation (SFDR) requires financial market participants and advisers to explain both how sustainability risks may affect returns and how investment decisions may have adverse sustainability impacts. This combination makes ESG a reporting and controls framework with implications for governance, data quality and supervisory accountability.However, recently the EU has recognised the competitive disadvantages of overly burdensome regulations, in February 2026 the Council signed off simplification measures that narrowed the CSRD population and revised thresholds for third-country groups with EU activity. The Commission has also proposed changes to SFDR to improve usability and reduce implementation burden. Even so, the underlying policy stance remains intact. Sustainability information is still being treated as part of core market transparency.
The UK Builds A Separate Regime Around Labels And Claims
In the United Kingdom, the FCA’s ESG framework is taking shape across product labelling, anti-greenwashing and corporate disclosure. Its anti-greenwashing rule took effect on 31 May 2024 and applies across authorised firms, while its Sustainability Disclosure Requirements introduced retail investment labels alongside rules governing fund naming, marketing and consumer-facing disclosures. In January 2026, the regulator also consulted on replacing existing Task Force on Climate-related Financial Disclosures (TCFD)-based listed-company requirements with disclosure aligned to UK Sustainability Reporting Standards, with implementation proposed from 1 January 2027. The UK profile is less prescriptive than the EU at the level of product categorisation and entity reporting, but it is still building enforceable standards around disclosure integrity and sustainability claims. For international firms, the UK adds a second layer of cross-border complexity. UK labels are not equivalent to SFDR classifications. UK anti-greenwashing expectations do not map directly onto EU disclosure templates. A firm selling funds in both markets has to manage different vocabularies, different product documentation and different control frameworks for sustainability assertions.
APAC Converges Around ISSB
The International Financial Reporting Standards (IFRS) Foundation said in June 2025 that 36 jurisdictions had adopted, used or were finalising steps to introduce International Sustainability Standards Board (ISSB) standards into their legal or regulatory frameworks.
Australia is one of the clearest examples. Treasury states that mandatory climate reporting started on 1 January 2025, supported by local standards aligned to the global baseline. Hong Kong Exchange confirmed that its new climate disclosure requirements, based on IFRS S2, took effect from 1 January 2025 with phased reliefs. Japan’s Sustainability Standards Board finalised its inaugural standards in March 2025. Singapore has continued to develop ESG fund disclosure expectations and broader sustainability reporting reforms through MAS, ACRA and SGX RegCo. The details differ by jurisdiction, but the common pattern is clear: sustainability reporting is being absorbed into mainstream disclosure regulation through standards that are designed to be comparable across markets.For US firms, APAC presents a different challenge from Europe. The region is generally less taxonomy-heavy than the EU, but it still requires firms to align disclosure processes, issuer reporting and product governance to evolving ISSB-style frameworks. That places pressure on firms to maintain jurisdiction-aware reporting controls rather than rely on a single global sustainability narrative.
US Divergence And Market Advantage
The United States now stands apart from these developments. The SEC adopted climate disclosure rules in March 2024, but in March 2025 voted to end its defence of those rules in court. At the same time, the SEC has maintained fund disclosure and naming discipline through its amended Names Rule, while extending compliance dates into 2026. California’s climate legislation also remains part of the operating environment. The result is a fragmented landscape across federal securities regulation, state law and politically charged litigation.
While Europe, the UK and much of APAC are consolidating sustainability disclosure regimes, the US is still contesting their scope and legitimacy. The immediate effect is greater divergence. The larger question is whether that divergence gives US markets a competitive edge by easing domestic regulatory pressure, even as US firms operating internationally remain subject to more developed sustainability rules abroad.
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