Harish joined the Business Development team at Integrum ESG after having previously overseen BD for the investment network Venture Giants, and also worked within the Customer Experience Program Team at Amazon. He has a BSc in Philosophy, Logic and Scientific Method from the London School of Economics and Political Science.
From Framework Design to Enforcement and Credibility
ESG regulation has entered a new phase defined by implementation, enforcement and credibility testing.
Across major markets, regulators are placing less emphasis on introducing new sustainability frameworks and more on how existing rules are applied in practice. The priority has shifted toward ensuring that disclosures, product design and investment activity are consistent, substantiated and defensible under supervisory scrutiny.
This reflects a broader regulatory rationale. ESG frameworks are no longer treated as transitional or experimental. They are now established components of financial regulation that must withstand audit, supervision and challenge.
Over the past year, this shift has reshaped how ESG rules are interpreted and applied, with clear implications for asset managers operating across the EU, UK and US.
For the European Union, 2025 marked a decisive shift from incremental adjustment toward structural reform of the sustainable finance framework.
The most consequential development was the European Commission’s decision to formally revise the Sustainable Finance Disclosure Regulation. Long criticised for its complexity and for evolving into a de facto product categorisation regime, SFDR entered its 2.0 phase as reform proposals progressed from consultation into draft legislation.
The direction of travel was clear. Regulators signalled fewer ambiguities around product categorisation, reduced reliance on extensive narrative disclosures and a renewed focus on clarity and usability for investors.
At the same time, supervisory attention continued to move beyond disclosure documents toward product presentation and naming. The expiry of transitional relief under ESMA’s fund-names guidelines required asset managers to align sustainability-related fund names more strictly with portfolio holdings and investment strategy. This reinforced regulators’ emphasis on preventing greenwashing at the point of sale.
Beyond asset manager-specific rules, 2025 also saw the EU reassess the broader sustainability regulatory stack. Negotiations under the Omnibus initiative signalled political willingness to simplify CSRD and CSDDD obligations, reflecting concerns around regulatory burden and competitiveness.
While these reforms are primarily aimed at corporates, they are directly relevant to asset managers. Changes to reporting scope, timelines and requirements shape the availability, consistency and reliability of issuer-level sustainability data used in investment and disclosure processes.
In the United Kingdom, 2025 was less about introducing new ESG regulation and more about embedding existing frameworks into supervisory expectations.
TCFD-aligned reporting remained central to the UK regime throughout the year. Asset managers subject to mandatory climate-related financial disclosures continued to report against the TCFD pillars of governance, strategy, risk management and metrics and targets.
Regulatory scrutiny increasingly focused on the quality, coherence and internal consistency of disclosures rather than their mere existence. Despite the UK’s longer-term ambition to transition toward ISSB standards, TCFD remained the practical reference point for climate reporting during the year.
Alongside this, the UK Sustainability Disclosure Requirements regime moved further into implementation. For the largest asset managers, 2025 marked a shift from policy interpretation to live entity-level reporting, bringing heightened expectations around internal controls, senior sign-off and alignment between sustainability claims and investment activity.
Later in the year, regulatory attention expanded to ESG ratings. The FCA consulted on bringing ratings providers within the regulatory perimeter. While these proposals are directed at ratings firms rather than asset managers, they highlighted growing scrutiny of how ESG data and scores are selected, interpreted and used in disclosures and investment decisions.
At the federal level, momentum slowed significantly. The SEC’s decision to stop defending its climate disclosure rules in court stalled the prospect of a nationwide mandatory climate reporting framework for issuers. For asset managers, this prolonged uncertainty around the future availability of standardised climate data from US companies.
At the same time, political opposition to ESG intensified, particularly in Republican-led states. Legislation such as Texas SB 2337 restricted the consideration of ESG factors by certain public investment bodies, reinforcing a narrative that framed ESG as ideological rather than financially material.
This created a complex operating environment for asset managers, especially those managing public mandates across multiple states with differing political and regulatory expectations.
Despite this pushback, climate disclosure pressure did not disappear. California’s climate-risk and emissions disclosure laws SB 253 and SB 261 remained a focal point for large US and multinational issuers, despite ongoing legal challenges and uncertainty around enforcement timelines.
In parallel, New York advanced proposals aimed at requiring large high-emitting companies to disclose climate-related risks and emissions. This reinforced the trend toward sub-national climate regulation in the absence of federal consensus.
For asset managers, these developments underscored the reality of a fragmented US disclosure landscape where state-level initiatives increasingly influence the data available to investors.
Regulatory focus has shifted decisively toward implementation, supervisory challenge and credibility testing.
Rather than introducing new ESG frameworks, regulators are concentrating on how existing rules are applied in practice, particularly where sustainability claims intersect with product design, disclosures and investment behaviour.
Across regions, scrutiny of ESG data and ratings is intensifying. Regulators are seeking greater transparency around how third-party inputs influence investment decisions, portfolio construction and public disclosures.
The common thread is rising expectations. Asset managers are now expected to justify sustainability claims, explain data limitations and demonstrate that ESG objectives are reflected in real-world investment activity.
Asset managers operating across the EU, UK and US should:
Ensure alignment between sustainability disclosures, investment processes and product design as supervisory enforcement intensifies
Prepare for regulatory developments such as SFDR 2.0 and UK SDR by planning transitions that preserve portfolio integrity and disclosure continuity
Account for regulatory fragmentation, particularly in the US, by strengthening governance frameworks that can operate across differing disclosure and compliance regimes
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