May 2026 saw significant developments across climate regulation, sustainability reporting, carbon markets, and corporate decarbonization. From SBTi strategy updates and SEC climate disclosure changes to new UK climate policies and international carbon market initiatives, this monthly sustainability news roundup highlights the key developments businesses should monitor.
International Sustainability Updates
SBTi updates absolute emissions target setting requirements
The SBTi has updated its target setting approach for near term targets, reducing the intensity of required carbon reductions faced by businesses with newly set targets.
The SBTi have updated their Absolute Contraction Approach for near term targets in line with the Corporate Net-Zero Standard V2.0. The requirement to make minimum annual reductions of 4.2% remains, however the new approach takes into account both the base year and net-zero target year, to provide consistency in the level of reductions required out to 2050.
This addresses the challenge posed by the previous approach, designed for companies setting targets in the early 2020s, under which the rate of reductions required became increasingly prohibitive the later the target was set.
SBTi outlines plans to become a transition partner in new strategy
The SBTi has signalled their intent to become a transition partner capable of supporting businesses with existing climate targets, delivered through the publication of a number of new standards.
The Science Based Targets initiative (SBTi) have released a new strategy, adapting their focus from ambition setting to becoming a transition partner. This is in order to support the growing number of companies with validated targets, to address transition risks and strengthen resilience through meaningful action, with the aim to remain the “gold standard for corporate climate action”.
Four major updates are to be implemented as part of the new strategy:
- Action-focused standards,
- focusing on implementation,
- addressing fragmentation,
- and expanding coverage.
Climate inaction a possible violation of international law under new UN climate resolution
The UN has adopted a climateresolution, endorsing the ICJ’s 2025 advisory opinion that not taking climate action may violate national governments legal obligations to current and future generations under international law.
The United Nations adopted climate resolution drawn up by the Republic of Vanuatu, where countries are obligated to protect the environment from GHG emissions, with 141 member states in favour. Under the resolution, all UN Member States are expected to ensure all steps are taken to avoid significant climate and environmental damage, which includes the reduction of emissions, and to ensure climate policies are sufficient to support the right to life, health and an adequate standard of living.
This vote demonstrates official endorsement and action towards the International Court of Justice’s 2025 advisory that not taking climate action may violate governments’ legal obligations under international law to both current and future generations.
SEC submits proposal to repeal 2024 Climate Disclosure Bill
The repeal of the Climate Disclosure Bill would eliminate the federal level climate disclosure requirements prior to any business ever having had to to comply with the legislation in practice.
On the 4th of May 2026 the SEC submitted it’s formal proposal to repeal the Biden-era 2024 Climate Disclosure Bill, which would have required large organisations to prepare a carbon footprint and report on climate risks. This, being at the federal level would have impacted businesses across the entirety of the US, however due to the lag time between implementation into law and actioning of the requirements, no businesses had to comply.
US businesses are now left with no federal level legislation mandating the disclosure of climate related information relating to their businesses activities, but should still remain aware of key state-level requirements such as those in California (SB 253, SB 261) and in New York (S9072A).
Open Coalition on Compliance Carbon Markets announced by the EU, China and Brazil
An international coalition on carbon markets has been announced by the EU, China and Brazil with the aim to increase global cooperation on carbon pricing.
The EU, China and Brazil have announced a joint initiative, the Open Coalition on Compliance Carbon Markets which is intended to enhance cooperation on global carbon pricing. With many carbon pricing schemes operating worldwide, this creates the opportunity to share and promote industry best practices and standards.
The EU and China both operate their own emissions trading systems, with Brazil establishing legislation to form its own in 2024. Germany and New Zealand are slated to join the coalition as members, with further entry open to additional qualifying member states. The coalition is expected to work to develop carbon accounting methodologies alongside various monitoring and verification systems for use in the sector, with further details expected later in 2026.
Australia proposes expanded small company exemptions for climate disclosures
The Australian government has proposed an increase in the qualifying threshold for its newly introduced climate reporting, amid a number of other initiatives aimed at reducing compliance and regulatory burdens faced by businesses.
Since 2025 Australia has required qualifying companies to publish audited financial and sustainability reports under new corporate reporting rules. The rules, adopted in 2024 through the Treasury Laws Amendment Bill, introduced climate-related reporting requirements largely aligned with the IFRS Global Sustainability and Climate Reporting Standards.
Recently a new proposal has been put forward by the Australian government to significantly increase the threshold for qualification under the reporting rules. This was an effort aimed at reducing the reporting burden on smaller business. This new threshold would exclude business with both less than AUD100m AUD in revenue and 50m AUD in assets, while maintaining the existing 100 employee minimum threshold.
The proposal is one among a number of other ongoing regulatory reforms and consultations announced by the Australian government, aimed at reducing compliance and regulation burdens faced by companies in the country. The legislative timeline for the possible implementation of this change is not yet known.
UK Sustainability Updates
UK Government moves to include shipping and aviation emissions in UK’s sixth carbon budget
The UK government is debating a statutory instrument, which would formally include the UK’s share of international aviation and shipping emissions (IAIS) in the UK’s sixth carbon budget.
The UK government is debating the inclusion of its share of international aviation and shipping emissions (IAIS), within the UK’s sixth carbon budget period (2033-2027) under a statutory instrument laid by the government.
This aligns with previous advice given by the Climate Change Committee (CCC) and would ensure the sectors are formally embedded in the UK’s net zero framework through to 2050, though their eventual inclusion has long been expected.
The government is already moving to support the decarbonisation of these sectors, with the UK’s sustainable aviation fuel mandate introduced in 2025 and key airport expansion plans undergoing close scrutiny. In the shipping sector, plans exist to include domestic shipping with the UK emissions trading scheme (ETS) from 2026 onwards. Additionally individual vessel owners are now required to reduce their emissions against a 2008 baseline under interim emissions targets set out in the UK’s Maritime Decarbonisation Strategy last year.
Climate Change Committee report outlines need for UK adaption to heat, flood, and drought
The Climate Change Committee highlights a pressing need for widespread adaption in the UK against climate related risks in a new report, emphasising the need for investment and policy change.
This month, the Climate Change Committee (CCC) published ‘A well-Adapted UK’ which highlights the urgent need for UK adaption to climate related risks. Heat, flooding, and drought all pose significant risk to the UK as global average temperature rises, but the CCC have proposed key adaption tactics to tackle the risks.
To address the rise in temperatures, key public services such as schools and hospitals need investment in cooling systems such as air conditioning, heat pumps, and green shading. The CCC also encourage a national maximum temperature for workplaces be set; encouraging private investment in cooling and ongoing worker safety.
Flood risk can be mitigated through increased investment into flood defences, and protection of floodplains. The CCC suggest investment in this area needs to rise to around £1.6-£2.2 billion per year to prevent associated risks from increasing further.
Updates required to UK Energy Performance Certificate (EPC) methodology following research
Household energy use is typically overestimated versus actual consumption and the impact of onsite solar gains understated in the current domestic EPC methodology, according to new research.
A recent report funded by DESNEZ has investigated the methodology behind domestic Energy Performance Certificates (EPC’s).
The report found a number of discrepancies between modelled energy use and actual energy use. In almost all cases, the actual energy use for homes was under the modelled energy usage. In gas-heated homes, energy use was an average of 16% under the modelled amount; electric-heated homes consumed between 31% - 47% less than predicted. EPC modelling was also thought to have underestimated the impact of onsite solar gains by up to 54% over the winter months.
The report noted that part of the significant difference is energy usage is down to post-certification upgrades; a signal that the EPC’s are driving improvement and awareness of energy consumption. However, the report also calls for revisions in the assumptions made and datasets used, to ensure future modelling is better aligned with actual energy use.