Regulatory progress on climate disclosure is accelerating in some jurisdictions and stalling in others. Jurisdictions accounting for almost 60% of global GDP are advancing toward mandated adoption of IFRS S2, while the EU has narrowed its reporting scope and California’s SB 261 remains paused.
New analysis from Willis, a WTW business, finds the divergence is creating uneven pressure for organisations managing climate-related financial disclosures.
On 24 February 2026, the EU Council adopted Omnibus amendments to simplify the CSRD. The scope narrowed to companies with more than 1,000 employees and over €450 million net turnover. Member States have one year to transpose the directive, with revisions to the European Sustainability Reporting Standards (ESRS) still to follow.
In the UK, the government published finalised UK Sustainability Reporting Standards on 25 February 2026. The FCA has consulted on replacing its TCFD-aligned listing rules with UK SRS-aligned requirements for in-scope listed companies.
A policy statement is expected in autumn 2026, with rules from January 2027. The framework will mandate the financial quantification of climate risks.
In the US, California’s SB 253 is progressing through the California Air Resources Board’s rulemaking process. First Scope 1 and Scope 2 emissions reporting is expected in 2026. SB 261 remains subject to ongoing litigation.
UK insurers face particular pressure. The Prudential Regulation Authority’s SS5/25 supervisory statement took effect in June 2026 with raised expectations for climate risk identification and management.
A survey found 57% of respondents were still reviewing the rules when the deadline arrived. More than half had not yet completed a gap analysis, and only 14% felt very confident assessing climate risk materiality.
Muhammed Anwar, senior director of strategic climate disclosure at Willis’s Climate Practice, said businesses that deprioritise climate reporting now risk losing ground with lenders, investors, and customers.
“If a business is unable to demonstrate a detailed understanding of their climate risks and plans to manage them effectively, capital may become more expensive,” he said.
Anwar added that the costs of pausing extend beyond reputation. “The drawbacks from pausing on climate action can take many forms, from higher insurance costs and reduced investment appeal to strained supply chains,” he said.
The urgency is supported by independent research. The Climate Change Committee published a report in May 2026 finding that climate impacts are already affecting the UK economy and financial system.
Cormac Bradley, senior actuarial director at Broadstone, said the message has shifted. “It is about how firms are managing climate risk today,” he said.
The financial stakes are considerable. Aon’s 2026 Climate and Catastrophe Insight found natural disasters caused US$260 billion in economic losses in 2025, with more than half uninsured.
Swiss Re warned that insured losses could reach US$148 billion in 2026 under normal long-term patterns. A peak scenario puts that figure at US$320 billion.
The PRA also launched its Dynamic General Insurance Stress Test in May 2026. The exercise had been delayed while general insurers prepared for Solvency UK regulatory returns. Its launch adds a live supervisory pressure point to the Willis disclosure analysis.
Insurers and brokers across multiple jurisdictions will need to track different implementation timelines as mandatory requirements take shape through 2026 and 2027.
