Confident View Ahead: The Sustainability Rules Are Changing. The Stakeholders, and the Case for Resilience, Are Not.

June 2026

Sustainability has always been, at its best, a discipline of stewardship. It is the work of looking after the resources, the relationships and the trust a business depends on, so that the company can keep creating value over the long term, for itself and for the people and places it touches. That purpose has not changed. What has changed, over the first half of 2026, is the regulatory weather around it. After a decade in which the rules moved steadily in one direction, toward more disclosure and wider scope, the global rulebook has begun to pull apart, and the gap now opening between jurisdictions is creating genuine confusion for the leaders we advise.

It is an understandable moment to feel pulled two ways. In some places the headlines speak of simplification and rollback; in others, the obligations are quietly getting sharper, broader and more expensive. The natural temptation is to read the easing as permission to slow down. But the point most easily lost in the noise is also the most important one: the rules are changing, but the stakeholders, and the need to build resilient businesses for the long term, are not. Investors, customers, employees, the communities a business operates in, and the natural systems every supply chain ultimately rests on, still expect what they expected a year ago. If anything, the pressures that make resilience a commercial necessity, from carbon priced at the border to water stress and increasingly contested supply chains, are intensifying rather than easing. Regulation was only ever one expression of those forces, and often the least demanding. A company that mistakes a lighter reporting rule for a lighter obligation, to its stakeholders or to its own long-term resilience, has misread the moment.

Consider what has happened in a matter of months. In Europe, the Sustainability Omnibus raised the reporting threshold so high that an estimated 80 per cent of the companies previously included under the Corporate Sustainability Reporting Directive now fall outside it.¹ Yet over the same period the EU brought its Carbon Border Adjustment Mechanism into its definitive phase,² held firm on deforestation rules that demand traceability to the plot of land,³ set strict new packaging rules built around extended producer responsibility,^{4, 5} and published a Water Resilience Strategy that treats water as a strategic resource rather than a compliance footnote.¹⁰ In the United States, the SEC has proposed to rescind its federal climate-disclosure rule and the EPA has loosened methane standards,⁸ yet packaging producer-responsibility laws are now charging fees across a growing list of states,⁷ and California’s emissions-reporting mandate is moving into force.⁸ And beneath all of it, the voluntary standards that investors and customers actually rely on, from science-based targets to nature disclosure, have spent 2026 becoming more demanding, not less.^{11, 12, 13}

Read as separate headlines, these developments look contradictory. Read together, they describe a single structural shift. The binding obligations are migrating away from the annual report and toward places that are far harder to avoid: the border, the package, the supply chain, the state capital, and the expectations of investors and customers themselves. A generic sustainability program, bolted onto the side of the business and sized to the lightest rule in the room, is no longer a safeguard. What the moment calls for is a strategy.

This Confident View Ahead sets out the developments our daily policy monitoring has tracked through mid-June 2026,¹⁴ across carbon, water, nature, land and packaging, and the standards that bind them together, and offers Confident Strategy Group’s convictions about what they mean for the businesses we advise.

A leaner Europe is a tougher Europe

The headline from Brussels is simplification, and it is real. Under the Omnibus Directive, adopted by the Council in February 2026 and in force as Directive (EU) 2026/470 since March, the CSRD now applies only to companies with more than 1,000 employees and over €450 million in net turnover, removing an estimated 80 per cent of the firms originally in scope, with some estimates higher. The companion ESRS standards are being cut substantially, by around 60 per cent of their data points on the most widely cited estimates, and companies that fall out of scope are not required to report for financial years beginning on or after 1 January 2027.¹

It is tempting to read this as Europe stepping back from ESG. It is more accurate to say Europe has changed how it asks, not what it ultimately expects. Double materiality remains mandatory. The regime still reaches non-EU parent companies through their European operations. And because thousands of mid-sized suppliers now sit outside mandatory reporting, the data-gathering burden does not vanish; it migrates up the chain to the large buyers who must still account for their value chains. Simplification narrowed who reports. It did not soften what the largest companies are accountable for.

More to the point, while Europe asked fewer companies for less paperwork, it sharpened the instruments that actually impact. The Carbon Border Adjustment Mechanism entered its definitive phase on 1 January 2026: embedded carbon in covered imports now carries a real financial liability, with the certificate purchase-and-surrender mechanics set to land in 2027 for this year’s imports.² The EU Deforestation Regulation asks for something deceptively hard: proof that a commodity was not grown on recently deforested land, traceable to the plot, with large operators in scope since December 2025 and smaller ones following this year, on a timeline that has already been adjusted more than once and could shift again.³

The most underestimated of these is the Packaging and Packaging Waste Regulation, which applies from 12 August 2026 and is far more than a chemicals rule. It pairs strict PFAS limits on food-contact packaging, with no grandfathering, and a bisphenol A restriction,^{4, 6} with a full circular-economy regime: extended producer responsibility fees that will be modulated by how recyclable a package is, minimum recycled-content thresholds for plastic packaging from 2030, and a requirement that all packaging be recyclable by design.⁵ The regulation and its PFAS deadline are now fixed in EU law; the detailed mechanics of the producer-responsibility fees and recycled-content rules are still being set through implementing legislation expected over the next two years. Either way, for any company selling into the EU, the cost of a package will increasingly track its environmental performance, and the producer, not the municipality, now carries the bill.

Read together, this is not a softer Europe. It is a more concentrated one: fewer reporters, but sharper, binding, extraterritorial instruments positioned at exactly the points a global business cannot route around.

Washington steps back, the states step forward

The American story looks like the mirror image, and in part it is. The SEC has proposed to rescind its climate-risk disclosure rule, although that proposal remains out for public comment and is not yet final, with any final decision expected later in 2026 or in 2027. The EPA’s reconsidered methane standards, effective in June, extend compliance deadlines and relax monitoring, with the agency claiming roughly $2.5 billion in industry savings through 2038.⁸ Taken on their own, these read like a retreat from climate regulation.

They are not, and treating them as such would be a costly misreading. The obligation has not disappeared; it has moved. California’s SB 253 is moving into force: the Air Resources Board approved its implementing rules in February 2026 and has reaffirmed the first reporting deadline, with the first Scope 1 and 2 reports, covering 2025 data, due in August 2026 and Scope 3 following from 2027, and the EU regimes continue to capture US multinationals through their European footprint.⁸ But the clearest sign of where the real activity has gone is packaging. In the absence of any federal program, seven states have now enacted extended producer responsibility laws for packaging, and the system has moved from statute to invoice. Oregon began charging producer fees in July 2025, Colorado from January 2026, and California, whose SB 54 is the most far-reaching of the group, finalized its regulations in 2026 with fees beginning in January 2027.⁷ Maine, Minnesota, Maryland and Washington are close behind, and several more states are drafting. As in the EU, these programs increasingly modulate fees by recyclability, so the more wasteful the package, the higher the charge.

Two things follow for any company placing packaging on the US market. First, there is no longer a single national rule to design to. There is a widening patchwork of state programs, each with its own fees, definitions and deadlines, and the cost of getting it wrong is now measured in dollars per tonne rather than reputation. Second, the direction of travel on both sides of the Atlantic is identical. The producer is being made financially responsible for the full life of a package, from the recycled content that goes into it to what happens when it is thrown away.

Beyond carbon: water, nature and the resources behind the balance sheet

For most of the past decade, “sustainability regulation” has been shorthand for carbon. That is changing. The same logic that put a price and a paper trail on greenhouse gas emissions is now reaching the other resources a business depends on, and the policy activity of 2026 makes the direction unmistakable.

Water is the clearest example. The European Commission’s Water Resilience Strategy, published in 2025, moves water from a local utility matter to a strategic resource question, with new emphasis on scarcity, drought and nature-based solutions, and water resilience folded into the national restoration plans due in 2026.¹⁰ The backdrop is sobering: global water demand is projected to exceed available supply by around forty per cent by the end of this decade.¹⁰ For food, beverage and agriculture businesses in particular, water, not carbon, is often the binding constraint on growth, and investors and customers increasingly ask companies to account for how they use and protect it.

Nature and biodiversity are moving fastest of all. The framework for disclosing how a business depends on and affects nature, developed by the Taskforce on Nature-related Financial Disclosures, has scaled to hundreds of organizations representing tens of trillions of dollars in assets, and the International Sustainability Standards Board has decided to build nature-related requirements on top of it.¹¹ Europe’s reporting standards already cover water and marine resources, and biodiversity and ecosystems, directly.¹¹ Land use is where this turns concrete and, often, geopolitical: the same deforestation concern behind the EU’s traceability rules has now entered trade policy, with the United States proposing an additional twenty-five per cent tariff on Brazilian goods, citing weak enforcement against illegal deforestation as one of several grounds, and a decision expected in mid-July 2026.⁹ A sustainability question has become a tariff line.

The pattern is consistent. Carbon was simply the first resource to be measured, priced and policed. Water, land and nature are travelling the same road, and a company that built only a carbon capability will find the same questions arriving about the rest. The work, in each case, is the same: understand what the business depends on and what it affects, and be able to prove it.

The standards did not retreat

This is where the apparent contradiction at the heart of 2026 resolves itself. Even as some governments simplify mandatory disclosure or withdraw from it, the voluntary standards and certification schemes that investors, lenders and large customers actually rely on are moving in the opposite direction. They are consolidating and getting tougher.

The clearest sign is the spread of the global baseline. The International Sustainability Standards Board’s climate and general disclosure standards have now been adopted, on a voluntary or mandatory basis, in around 20 jurisdictions, with nearly 40 more moving toward them, together covering more than half of global GDP.¹² China issued its own standard built on the climate rules late in 2025, and Brazil began phasing them in this year.¹² The board is also preparing nature-related requirements.¹¹ As mandatory disclosure becomes patchier, this voluntary baseline is becoming the more stable common language, not the less.

The same is true of targets. On 11 June 2026, the Science Based Targets initiative, whose methodology underpins the climate goals of more than 11,000 companies, published a new version of its Corporate Net-Zero Standard.¹³ It is, if anything, more exacting: it shifts the emphasis from announcing targets to delivering them, with more realism about the hardest supply-chain emissions but firmer expectations on implementation and board oversight. The initiative rightly frames this as a matter of resilience. A credible, well-governed transition plan is how a company manages the risks of a changing economy, not merely how it satisfies a regulator. Nature disclosure is on the same trajectory, with its framework folding into both the global baseline and Europe’s reporting standards.¹¹

For leaders, the lesson is reassuring and demanding in equal measure. The investment a company has already made in measuring its emissions, setting science-based targets, or certifying its supply chains has not been wasted because one government has lightened its reporting rules. If anything, those standards are now the steadier reference point than the law. And it returns us to where we began. These schemes exist because investors, customers and society wanted a credible, comparable way to know who is genuinely doing the work. That demand has not faded. Nor has the reason behind it: in a world of mounting physical and transition risk, what these standards measure is, in plain terms, what a resilient business does to protect itself for the long term. None of this means a company should cling to every target or certification regardless of circumstance. There are sound reasons a business may need to recalibrate: a goal set under a business model that has since changed, the genuine costs and scale required to reach it, or an instrument that simply does not fit a given product, as when packaging rules designed for circularity could drive up food waste in fresh produce. Those are legitimate strategic choices, and the right response is to make them deliberately and explain the reasoning to the stakeholders who care, rather than to step back quietly the moment the regulatory pressure lifts. A considered, openly reasoned recalibration can preserve trust and even strengthen it; a reflexive retreat, taken simply because the rule eased, risks trading away a hard-won signal of credibility and a real source of resilience at exactly the moment stakeholders are paying closest attention.

What ties it together

Step back from the individual rules and standards, and a few forces run through all of them. They are what turn a stack of updates into a strategic agenda.

The first is that traceability has become the price of market access. Whether the question is carbon at the border, deforestation in the supply chain, water in a watershed, or the recycled content in a package, the underlying demand is the same: the ability to know, and to prove, where inputs come from and what they cost the world to produce. Built once and built well, that capability serves many rules and many standards at once.

The second is that responsibility now runs the full length of the product life. The common thread, from EPR fees to recycled-content mandates to deforestation and nature rules, is that the company placing a product on the market is being made accountable for far more than the moment of sale: for what goes into it, where it came from, how much water and land it drew on, and what becomes of it afterwards.

The third is that the loosest-jurisdiction strategy has quietly become the most expensive one. When the binding rules sit at the border, on the package and in the state capital, and when investors and customers hold a steadier line than any regulator, designing to the most permissive market is a false economy. The durable path is to build to the strictest standard that genuinely applies to your business, and to do it once, properly.

There is also a caution that runs through all of this, and it is one we put to clients and policymakers alike. These instruments are largely being designed in isolation from one another, and they are not equally suited to every business or product. An extended producer responsibility fee structure that works well for durable goods can push fresh-produce suppliers toward thinner, less protective packaging and more spoilage; a recycled-content mandate can run straight into a food-safety rule; and the cumulative cost of overlapping regimes tends to fall hardest on smaller suppliers and, in the end, on consumers through affordability. Being genuinely supportive of sustainability, as we are, does not mean accepting every rule uncritically. It means asking the questions that too often go unasked: does this measure cohere with the others, is it affordable, and does it make sense for this particular use case? The companies that ask them and the policymakers who welcome the question will end up with rules that actually work for the environment and for the businesses expected to deliver them.

The CSG Perspective

Drawing these signals together, Confident Strategy Group holds three perspectives about how senior leaders should approach the year ahead.

• A sustainability strategy is only worth what the business can implement, and that requires aligning it to the business plan. When the rules moved in one direction, a generic best-practice program was a reasonable bet. In a splitting landscape, generic is dangerous: it commits a company to standards it cannot operationalize, or it retreats from capabilities the business will shortly need, because strategy and plan were never connected. The right standard to build to is specific to the company: its markets, its supply chain, its customers’ procurement requirements, its capital providers, and its exposure across carbon, water, nature and packaging. Deciding which standard you are building to, and wiring that decision through the organization so it is implementable, practical and meets your stakeholders’ expectations, is the central work of sustainability strategy now. Part of that work is judgement: knowing where a rule fits the business and the product and where it does not, weighing affordability and unintended consequences, and being ready to make that case to customers, investors and regulators rather than absorb a requirement that adds cost or waste without a real benefit.
• The sustainability levers are instruments of resilience and stewardship, not reporting overhead to be minimized. Traceability, supply-chain visibility, water and nature data, recyclable and recycled-content packaging, and credible, science-based targets are the capabilities that keep a company selling into its chosen markets through a decade of change. They are also how a business honours its responsibility to the resources and communities it depends on. The two are not in tension. Done well, sustainability is simply good stewardship that happens to build resilience, and the companies that treat it that way will be the ones still standing comfortably when the next rule or the next drought arrives.
• Manage for the stakeholders, not the rulebook. Regulations will keep moving, in both directions, and trying to optimize to the lightest available rule is a strategy that resets every election cycle. The expectations beneath the rules, held by investors, customers, employees, and the communities a company depends on, are far more stable and far less forgiving of a business that visibly eased off the moment it was allowed to. Building to those expectations, and being able to show your work through credible standards and certifications, is what protects both market access and reputation when the rules change again, as they will.

Why Confident Strategy Group

Confident Strategy Group works at the intersection of business strategy, policy, regulation and reputation. We believe that sustainability, done well, is both good stewardship and a source of lasting resilience, for the business and for the world it operates in. In practice, that means a sustainability strategy is only worth what the business can implement, and is only resilient when it is built into the business plan rather than alongside it. We help leadership teams decide which standard to build to, align that decision across the organization, and turn the sustainability levers into long-term resilience and stewardship. Our work is practical, evidence-based, and specific to the company in front of us, and we track these developments daily across eight policy domains so that intelligence becomes strategy our clients can act on.

Bottom line for decision-makers

The rulebook will keep splitting, and it will keep moving in both directions. That is unsettling, but it is not the most important fact about this moment. The most important fact is that the reasons sustainability matters, resilience for the business and stewardship of the resources and relationships it depends on, have not changed, and neither have the people and natural systems that hold a company to them. The leaders who keep their eyes on that and build a strategy their business can actually carry will be the ones still trusted and still selling when the rules settle again. The work was always worth doing, and the change in the weather does not change that.

If you would like to pressure-test your sustainability strategy against an external world that is splitting in two, and translate it into a plan your business can actually execute, ready for your next board or executive committee, contact Confident Strategy Group.

References

1. Council of the European Union, Council signs off simplification of sustainability reporting and due diligence requirements to boost EU competitiveness (24 February 2026); Directive (EU) 2026/470 (“Omnibus I”), in force 18 March 2026. CSRD scope narrowed to companies with more than 1,000 employees and over €450m net turnover; out-of-scope companies not required to report for financial years beginning on or after 1 January 2027. The reduction in scope is an estimate, cited at around 80 per cent (and up to roughly 90 per cent in some analyses), with ESRS data points cut by an estimated 60 per cent. https://www.consilium.europa.eu/en/press/press-releases/2026/02/24/council-signs-off-simplification-of-sustainability-reporting-and-due-diligence-requirements-to-boost-eu-competitiveness/
2. European Commission, Taxation and Customs Union, Carbon Border Adjustment Mechanism. Definitive phase operational since 1 January 2026; embedded-carbon liability attaches to 2026 imports, with certificate purchase and surrender taking effect in 2027. https://taxation-customs.ec.europa.eu/carbon-border-adjustment-mechanism_en
3. European Union, EU Deforestation Regulation (EUDR). Large operators in scope from December 2025; obligations for micro and small enterprises following in 2026, subject to a phased timeline that has been adjusted more than once. Covered commodities include cattle, cocoa, coffee, palm, rubber, soy and wood.
4. Regulation (EU) 2025/40 (Packaging and Packaging Waste Regulation), Article 5(5). PFAS limits for food-contact packaging apply from 12 August 2026 (25 ppb per individual non-polymeric PFAS, 250 ppb for the sum, 50 ppm total fluorine), with no grandfathering.
5. Regulation (EU) 2025/40 (Packaging and Packaging Waste Regulation), applicable from 12 August 2026. Extended producer responsibility fees to be modulated by recyclability from 2030; mandatory minimum post-consumer recycled content for plastic packaging from January 2030 (ranging from 10 to 35 per cent by packaging type); all packaging to be recyclable by design by 2030. The regulation is adopted EU law; detailed eco-modulation and recycled-content methodologies are to be set through implementing and delegated acts expected over 2026 and 2027.
6. European Commission, restriction on bisphenol A (BPA) in food-contact materials, extending to most food-contact packaging from 2026.
7. U.S. state packaging extended producer responsibility laws: seven states enacted as of 2026, namely Maine (2021), Oregon (2021), California (SB 54, 2022), Colorado (2022), Minnesota (2024), Maryland (2025) and Washington (2025). Producer fees began in Oregon from July 2025, Colorado from January 2026, and California from January 2027; fee schedules are increasingly eco-modulated by recyclability, with the Circular Action Alliance acting as the producer responsibility organization in most states.
8. U.S. Securities and Exchange Commission, proposal to rescind the federal climate-risk disclosure rule: the Commission voted to propose rescission on 29 May 2026, published for a 60-day public comment period; a final vote is expected later in 2026 or in 2027, and the rule is not yet rescinded. U.S. EPA, reconsidered oil-and-gas methane standards (effective June 2026, with roughly $2.5bn in claimed industry savings through 2038). California SB 253 (Climate Corporate Data Accountability Act): California Air Resources Board implementing regulation approved February 2026, first Scope 1 and 2 reporting (2025 data) deadline of 10 August 2026 reaffirmed, Scope 3 from 2027, applying to companies with annual revenue above $1 billion doing business in California.
9. Office of the U.S. Trade Representative, determination of 1 June 2026 that certain Brazilian acts, policies and practices, including weak enforcement against illegal deforestation among several grounds, are actionable under Section 301, and proposing an additional 25% ad valorem tariff on Brazilian goods (with exemptions). Public comments due 1 July 2026, hearing 6 July 2026, statutory deadline for any responsive action 15 July 2026. The proposal is not yet final.
10. European Commission, European Water Resilience Strategy (COM(2025) 280, 2025). Emphasis on water scarcity, drought management and nature-based solutions, with water resilience integrated into national restoration plans due in 2026; global water demand projected to exceed available supply by approximately 40 per cent by 2030.
11. Taskforce on Nature-related Financial Disclosures, market adoption exceeding 730 organisations and US$22 trillion in assets under management (late 2025); International Sustainability Standards Board decision to develop nature-related disclosure requirements drawing on the TNFD framework, expected in 2026; EU ESRS E3 (water and marine resources) and E4 (biodiversity and ecosystems).
12. International Sustainability Standards Board, IFRS S1 and IFRS S2 Sustainability Disclosure Standards. As of early 2026, around 20 jurisdictions had adopted the standards on a voluntary or mandatory basis and nearly 40 were taking steps toward adoption, together representing more than half of global GDP; TCFD responsibilities were absorbed by the ISSB from 2024; China issued an IFRS S2-based standard in December 2025 and Brazil began phasing in ISSB-aligned disclosure from financial year 2026. Sources: S&P Global Sustainable1; IFRS Foundation jurisdictional profiles.
13. Science Based Targets initiative, Corporate Net-Zero Standard Version 2.0 (published 11 June 2026), shifting emphasis from target-setting to implementation and accountability. More than 11,000 companies have set science-based targets; the GHG Protocol provides the underlying emissions-accounting standard, used by approximately 97 per cent of S&P 500 companies reporting to CDP. Version 1.3.1 applies through 2026, with Version 2.0 required for new target submissions from 1 February 2028.
14. Confident Strategy Group, Global Sustainability & ESG Intelligence Briefing (daily policy monitoring through 12 June 2026; data on file), corroborating each theme across multiple primary and authoritative secondary sources.

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