Industry Updates
2026 Principles for Responsible Investment (PRI) Reporting
In November, PRI released details on its upcoming 2026 Reporting Framework, which will streamline reporting to a maximum of 40 indicators. Most are aligned to the prior framework while also expanding coverage of human rights and nature-related topics. The majority of indicators will be scored, and PRI will continue to assign Signatories a 1–5-star assessment, with one score at the entity level and other scores segmented by asset class. PRI has confirmed that the asset class threshold remains at 10%, and, notably, has reintroduced reporting on internally-managed assets for asset owner Signatories.
PRI has also launched “Pathways,” optional educational tools designed to help Signatories understand best practices across three responsible investment objectives. While Pathways do not currently factor into the 2026 Reporting Framework, PRI has indicated it will provide more substantive and comparative assessment reports beginning in Q4 2026.
Reporting in 2026 will be mandatory for all Signatories outside of their grace period and will follow the traditional May–July timeline.
Silver’s 2026 Guidance
Signatories should ensure they are adequately prepared for this new reporting regime by examining prior disclosures and looping in relevant teams to the process. This is doubly true for Signatories who have not participated in full reporting since 2023, the last fully mandatory reporting year. Silver will continue to provide resources and guidance to Signatories leading into the reporting period.
Pension Fund Activity
Throughout 2025, large asset owners in Europe and the U.S. continued to evidence the impact of sustainability, stewardship, and climate commitments in investment allocation decisions. The UK People’s Pension withdrew roughly £28 billion from State Street over concerns about its ESG and stewardship approach, reallocating assets to managers aligned with the scheme’s 1.5°C commitment. Dutch pension funds PFZW and PME have reduced or terminated mandates with BlackRock following reviews of voting records and alignment with long-term sustainability frameworks. Similar pressure is emerging in the U.S., where New York City’s Comptroller has recommended terminating a $42 billion BlackRock mandate and is reviewing other managers who failed to submit decarbonization plans aligned with the city pension funds’ 2040 Net Zero goal. These headlines underscore a growing willingness among asset owners to reallocate capital when manager practices diverge from stated climate and stewardship expectations.
Silver’s 2026 Guidance
Managers should continue to evaluate investor expectations and commitments, particularly during fundraising, to ensure sustainability programs and initiatives are adequately ambitious and targeted. US managers should be cognizant of the balance between preferences from pro- and anti-ESG LPs.
Net Zero Alliances Face Political Headwinds Amid Changes to Climate Frameworks
Recent developments within major net-zero alliances underscore the continued recalibration of voluntary climate initiatives amid shifting political and regulatory pressures. The Net-Zero Banking Alliance (NZBA) announced that it will cease operations following a series of high-profile member departures, with members voting to transition away from a formal, member-based alliance.
The Net Zero Asset Managers initiative (NZAM) announced that it will resume operations after pausing earlier this year, but with materially revised commitment requirements. Most notably, NZAM has removed references to investing in line with a ‘Net-zero by 2050’ goal, citing the need to reflect differing jurisdictional realities and broaden participation. While prior commitments included decarbonization targets, portfolio emissions tracking, and stewardship and engagement obligations, NZAM emphasized that signatories will continue to set individual targets, implement their own stewardship strategies, and report annually on progress.
On the other hand, industry frameworks continue to move toward more standardized and prescriptive climate expectations. The Institutional Limited Partners Association (ILPA) released a supplementary climate module, developed alongside PRI and Initiative Climat International (iCI), to help LPs more consistently assess how private equity managers integrate climate considerations. In parallel, the Scienced Based Targets initiative (SBTi) finalized its Financial Institutions Net-Zero (FINZ) Standard, establishing clearer requirements for banks and investors to set net–zero–aligned targets, address fossil fuel and deforestation exposure, and provide enhanced public reporting. Early commitments from 135 institutions signal rising expectations for consistency and accountability in climate target-setting across the financial sector.
Silver’s 2026 Guidance
Given continued LP demand for climate action and decarbonization progress, managers should be aware of the updates to the SBTi and ILPA frameworks when considering target setting and climate disclosure activities. However, the NZAM and NZBA changes are a reminder that US Republican-led states continue to look skeptically at any climate action, particularly those that introduce industry-level collaboration into the fold. Managers should continue to be mindful of these conflicting viewpoints as they develop their climate-related activities.
United States Policy and Regulation
California Laws
Recent legal developments continue to create uncertainty around California’s climate disclosure regime. In November, the Ninth District Circuit Court of Appeals preliminarily enjoined enforcement of SB 261 while an appeal proceeds. Oral arguments have now taken place, with the panel of three appellate judges focusing heavily on whether SB 261’s disclosure requirements constitute compelled speech. The panel did not signal a clear preference toward either party, and no decision or timeline was provided at the conclusion of the hearing.
Despite the ongoing appeal, advisors continue to recommend that companies continue refining scoping analyses, aligning existing climate risk disclosures with SB 261 requirements where applicable, advancing preparatory work to a point where it can be easily resumed, and determining an approach to SB 253 compliance, where first reports are due August 10, 2026.
Multiple states have proposed, but not passed, “copy-cat” legislation, including New York (SB 3456 and SB 3697A), New Jersey (SB 4117), Illinois (HB 3673), Washington (SB 6092) and Colorado (HB 25-1119).
Silver’s 2026 Guidance
Managers and portfolio companies who are in scope of California’s climate bills should continue to monitor developments from the Ninth District and CARB, and ensure compliance with either SB 261 and/or SB 253 in line with updated guidance.
Proxy Voting
Recent actions by U.S. regulators and policymakers signal a shifting proxy voting landscape as scrutiny of ESG-related shareholder proposals and proxy advisors intensifies. The SEC announced that it will not express views on most Rule 14a-8 no-action requests during the 2025–2026 proxy season, citing resource constraints, and will treat company notifications of proposal exclusions as informational only. This approach coincides with a broader SEC re-evaluation of Rule 14a-8 and updated guidance clarifying when proposals may be excluded on economic relevance or ordinary business grounds. Concurrently, the White House issued an executive order directing the SEC and Department of Labor to review rules governing proxy advisors, shareholder proposals, and ERISA fiduciary obligations, with a particular focus on ESG- and DEI-related voting, transparency, and potential conflicts.
In Texas, the legislature passed SB 2337, which requires proxy advisors to disclose when ESG, DEI, or other non-financial factors influence their recommendations and to identify materially different advice provided to different clients. The law was immediately challenged by Glass Lewis and ISS on First Amendment grounds, and a federal judge granted a temporary injunction blocking enforcement against those firms; a trial is scheduled for February 2026.
These regulatory shifts are unfolding against a backdrop of declining support for environmental and social shareholder proposals: during the 2025 proxy season, fewer E&S proposals were submitted and significantly fewer made it onto proxy ballots, with average support falling to 16% and only five proposals receiving majority approval. Proxy advisors are also recalibrating, with ISS shifting to a more case-by-case approach on several ESG topics for 2026.
Silver’s 2026 Guidance
While these trends point to fewer proposals and lower voting support in the near term, they are unlikely to meaningfully reduce broader stakeholder expectations, as U.S. multinationals continue to face investor, regulatory, and market pressure to address sustainability risks and disclosures. However, corporates and asset managers should continue to monitor developments closely to ensure compliance with updated rules and guidance.
Diversity, Equity and Inclusion Changes
The U.S. Department of Justice issued new guidance reminding recipients of federal funding that DEI initiatives must comply with longstanding anti-discrimination laws, highlighting legal risks associated with programs that differentiate based on protected characteristics, including race-based scholarships or internships, recruitment strategies tied primarily to racial or ethnic composition, and procurement policies that prioritize certain demographic groups over more qualified alternatives. Against this backdrop, AT&T announced it will end its DEI programs and avoid DEI-based hiring, training and supplier requirements amid FCC scrutiny, as the company seeks acquisition approval.
Silver’s 2026 Guidance
DEI and related programs continue to face attacks from the federal government and state-level actors. Managers, and their portfolio companies, should carefully examine programs to ensure their commitments and policies do not fall afoul of the current administration’s policies.
EU & UK Policy and Regulation
EU Omnibus
EU lawmakers in Parliament and Council have reached a provisional agreement on the Omnibus proposal, representing a significant recalibration of the scope of the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD). Under the agreement, CSRD would apply to companies with more than 1,000 employees and €450 million in revenue, while CSDDD would capture companies with more than 5,000 employees and €1.5 billion in revenue, remove the requirement to prepare a Paris-aligned transition plan, and adopt a more explicitly risk-based approach to supply chain due diligence. Review clauses in both directives leave open the possibility of future scope expansion. Parliament has formally approved the deal, with a Council vote still pending.
Silver’s 2026 Guidance
Managers and portfolio companies should continue to review scoping requirements under updated legislation from the EU to ensure they are properly prepared for CSRD requirements.
SFDR 2.0 Proposal
The European Commission has proposed a comprehensive overhaul of the Sustainable Finance Disclosure Regulation (SFDR) through “SFDR 2.0,” aimed at simplifying compliance and improving comparability for investors. The proposal would eliminate the existing Article 8 and Article 9 framework, replacing it with three new product categories; Transition, ESG Basics, and Sustainable. Each has defined objectives, exclusions, and a requirement that at least 70% of portfolios align with the stated label. Concepts such as “do no significant harm” and “good governance” would be removed, and entity-level PAI reporting would be eliminated (though entity-level sustainability risk disclosures would remain). The proposal also restricts sustainability-related claims for unlabeled products and offers no automatic grandfathering, meaning open-ended funds would need to transition once the regulation enters into force, 18 months after publication in the Official Journal.
Silver’s 2026 Guidance
While the timeline to a final proposal will be long and winding, managers should continue to keep tabs on SFDR 2.0 developments, particularly as plans are laid for future fund vintages.
Enforcement Actions
Recent sustainability-related enforcement actions highlight growing regulatory scrutiny of ESG claims, internal governance, and SFDR compliance across jurisdictions. In Europe, Luxembourg’s financial regulator took enforcement action against Aviva Investors in late 2024 following an ESG-focused inspection of Article 8 funds, signaling a tougher supervisory stance on SFDR that continued in 2025 with Denmark’s Financial Supervisory Authority reprimanded three asset managers for deficiencies in their SFDR processes, including failures related to the Do No Significant Harm principle and principal adverse impact indicators. Across the Atlantic, the Ontario Securities Commission has alleged that Purpose Investments misled investors about the extent of its ESG integration practices.
Silver’s 2026 Guidance
As with prior SEC-related ESG enforcement activity, 2025 saw multiple examples of managers failing to match sustainability disclosures with actual practice. Across all jurisdictions, managers should continue to ensure their sustainability commitments are adequately demonstrable in the face of potential regulator scrutiny.
UK Transition Plan Consultation
The UK government has followed up on its commitment to require UK-regulated financial institutions and FTSE 100 companies to develop and implement credible climate transition plans aligned with the Paris Agreement’s 1.5°C by 2050 goal. To advance this objective, the Department for Energy Security and Net Zero launched a consultation in June seeking input on how best to mandate transition planning. The consultation explored two primary policy options: either a) requiring firms to explain why they have not disclosed a transition plan; or b) mandating the development and disclosure of such plans, and sought feedback on content requirements, alignment with existing frameworks, and implementation challenges. This consultation was released alongside a parallel consultation on the UK Sustainability Reporting Standards.
Silver’s 2026 Guidance
Managers with FCA obligations should closely monitor updates to this consultation to ensure awareness of potential transition plan obligations.
Industry Trends and Statistics
- Positive investor sentiment (Morgan Stanley, 2025)
- 86% of asset owners and 79% of asset managers expect allocations to sustainable funds to increase over the next two years
- 90% of asset owners require external managers to maintain a sustainable investing policy or strategy
- 75% of asset owners expect physical climate risk to materially impact asset prices within five years
- Sustainable funds overperform traditional funds (Morgan Stanley, 2025)
- Sustainable funds posted median returns of 12.5% versus 9.2% for traditional funds in the first half of 2025
- This marks the strongest period of relative sustainable fund outperformance since 2019
- Corporate sustainability outlook (Deloitte, 2025)
- 45% of executives cite climate and sustainability as the most pressing challenge over the next year
- 83% of companies increased sustainability investments by more than 5% year-over-year
- Revenue generation cited as the top business benefit
- Sustainability and value creation in private markets (BCG, 2025)
- Private equity GPs estimate that sustainability initiatives improve portfolio company EBITDA by 4–7% over the hold period
- Reported EBITDA impact is higher in Europe than in North America