Key highlights from July 2026 in the sustainability space.
1- EU Commission revises sustainability reporting standards
In the bloc's continued efforts to harmonize and simplify ESG-related disclosures, the European Commission has adopted revised European sustainability reporting standards (ESRS) for EU businesses as well as a voluntary standard for smaller companies.
The revised ESRS clarifies certain provisions and grants flexibilities in regards to how certain sustainability metrics are measured and the degree of granularity required in company reporting. In particular, the text aligns more closely with global GHG emission standards and global target to limit warming to 1.5 degrees, as well as eases disclosure requirements for issues such as microplastics, human rights incidents, materiality assessments, and omission of information.
The voluntary reporting standard aims to give smaller, non-mandated companies a simple sustainability reporting framework while curbing excessive "trickle-down" data requests from larger firms in their value chains.
The amended regulation shall apply to the financial years beginning on or after 1 January 2027.
2. GHG Protocol and IOS merge carbon emission accounting standards
The Greenhouse Gas Protocol and the International Organization for Standardization announced that they will merge their corporate carbon accounting standards into a harmonized global accounting standard. The initiative will align the GHG Protocol’s corporate emissions accounting framework, including Scope 1, 2 and 3 emissions, with ISO standards in order to improve consistency, comparability and interoperability across corporate carbon reporting systems. The move comes amid global efforts to simplify and harmonize sustainability reporting requirements, including the EU’s recent ESG reporting reforms.
3. Meta facing lawsuit for AI tools enabling disability discrimination
Following global layoffs affecting approximately 10% of its employees, Meta is facing a lawsuit alleging that its AI-assisted performance evaluation tools discriminated against employees with disabilities or medical conditions. The plaintiffs contend that Meta relied on algorithmic scoring and performance ranking systems that disadvantaged employees who had taken protected medical or family leave or whose productivity had been affected by a disability. The complaint was filed anonymously by 26 plaintiffs who had received disability accommodations or taken protected leave.
The case signals growing legal scrutiny of AI-driven employment decision-making and the potential application of disparate impact theory under U.S. employment law, a concept broadly analogous to indirect discrimination under the EU Employee Equality Directive, where a facially neutral policy disproportionately disadvantages a protected group. Although federal agencies have deprioritized enforcement of disparate impact claims, such cases remain admissible under certain state laws and through private litigation.
4. State governments and municipalities move to limit data center development
As tech companies move to expand AI infrastructure across the U.S., a trend bolstered by federal deregulation of environmental standards, New York became the first state to place a moratorium on data center development. The Executive Order No. 62 pauses review of permit applications for construction or expansion of data centers while the state's Department of Public Service assesses potential environmental impacts of new data centers.
Similar moratorium bills have been filed in fifteen states, but none have yet been passed into law. Meanwhile, county-wide moratoriums have taken effect in cities such as Little Rock, Oklahoma City, and West Chicago, highlighting an increasingly bipartisan concern over the environmental and public health impacts of data centers, particularly in areas with limited water and energy resources.
5. China unveils five-year Carbon Peaking Action Plan
China has issued a Five-Year Action Plan to achieve peaking carbon dioxide emissions by 2030 and reach carbon neutrality by 2060 – 10 years after Europe’s stated goal. The plan provides for the development of non-fossil energy, closer international cooperation, and improved regulations in order to optimize China's energy infrastructure, promote sustainable industrial development and facilitate low-carbon transition in key sectors. While China leads the world in global emissions, its commitment to decarbonization through investment, sectoral development and policy has already amounted to a steady decrease in its global emissions throughout 2025 and 2026.
6. UK strengthens reporting requirements under the Modern Slavery Act
The UK has proposed amendments to the Modern Slavery Act 2015 that would strengthen reporting obligations for organisations subject to the Act. The proposed reforms would amend Section 54, which requires commercial organisations with annual turnover of at least £36 million to publish an annual modern slavery statement. The amendments introduce mandatory disclosures regarding corporate structure, supply chains and due diligence processes, which must receive formal certification by the entity’s board or members. The Act also establishes a civil penalty regime for non-compliance. The legislation is awaiting Royal Assent before transitional provisions are introduced.
The proposed reform coincides with the implementation of the EU Forced Labour Regulation, which will prohibit products made with forced labour from being placed on or exported from the EU market starting in December 2027. Taken together, these developments signal increasingly stringent supply-chain due diligence and reporting expectations across Europe, requiring companies to strengthen traceability, supplier oversight and modern slavery compliance frameworks.
- Content prepared with the help of Amanda Alden.