Sustainability: Evolving asset management regulation 2026 report

The focus on sustainability is shifting from expansion to recalibration, with established regimes in the EU and UK being simplified while others strengthen disclosure, anti-greenwashing and transition planning requirements.

In this year's edition of KPMG International's Evolving Asset Management Regulation report, KPMG professionals explore the recalibration of sustainable finance regulation to uncover opportunities and risks for asset managers.

Sustainable finance regimes continue to evolve unevenly across jurisdictions, creating a more complex and fragmented operating environment for asset managers around the world. For firms operating across borders, diverging frameworks make it difficult to apply consistent product strategies, disclosures and governance arrangements.

David Neuenhaus

Global Sector Head of Private Capital and Asset Management

KPMG International

Key highlights

Sustainable finance rules diverge

EU and UK recalibrate while others tighten requirements

Corporate reporting is rolled out and simplified

ESG ratings face growing oversight

Sustainable finance frameworks and regulatory disclosures

The drive for international competitiveness and domestic growth has led many jurisdictions to reconsider their sustainable finance frameworks. Although new initiatives demonstrate continued commitment to the sustainability agenda, simplification and streamlining now dominate.

Meanwhile, jurisdictions with less established sustainable finance frameworks are implementing measures to catch up.

Simplifying corporate reporting requirements

The roll-out of corporate reporting requirements is at a slightly earlier stage than developments in wider sustainable finance disclosures, but the same competitiveness mandates that drive simplification and possible divergence are apparent here too.

As with other sustainability frameworks, the simplification of corporate reporting may reduce certain burdens but can lead to increased global fragmentation. Download the full report to see how they are changing for different jurisdictions.

Tightening fund naming requirements

As predicted in last year’s EAMR report, new restrictions have now entered into force around the ESG- and sustainability-related terms that funds may use in their names and marketing materials.

Fund managers in larger jurisdictions have worked at pace to ensure their products’ names are aligned to the new requirements. In some cases, regulators have pushed back their compliance deadlines to provide firms with more time to meet their requirements.

Product governance and sustainability preferences

Regulators continue to focus on how asset managers consider customers' sustainability preferences, with some taking a more pragmatic approach to supervision while others are especially proactive on enforcement.

Download the full report to see how different jurisdictions are approaching product governance.

Sustainability in the capital markets

Some regulators are expanding their remit to capture broader ESG activity in the capital markets, with EU rules for ESG ratings providers now live and similar UK requirements expected from 2028. Check out the list of changes within specific markets in the full report.

Opportunities and risks

Potential opportunities
Possible risks for asset managers

Simplified regulations in established markets

Streamlining in the UK and EU could reduce duplicative reporting, product-level disclosure costs and operational complexity. Asset managers could potentially redirect resources from report production towards data quality, stewardship and investment decision-making.
Clearer product positioning and investor communication

Revised SFDR categories, UK SDR labels and fund-name guidance create scope for more credible product comparisons. Firms with robust strategies can differentiate themselves through clearer sustainability propositions and reduced potential for greenwashing risk.
Growth in transition and climate-solutions finance

Regulatory focus on transition planning, natural capital and climate-solution finance may support product innovation. Managers able to evidence credible transition strategies could capture institutional demand and private capital opportunities in some jurisdictions.
Better data, better decisions

The expansion of mandatory corporate sustainability reporting presents a significant opportunity for asset managers. Higher quality and more standardized sustainability disclosures should reduce information gaps, strengthen investment decision-making and enhance the ability to assess long-term risks and opportunities across portfolios. As reporting frameworks mature, improved transparency can support more efficient capital markets by enabling capital to flow towards businesses with credible transition strategies and sustainable long-term value creation.

Cross-border fragmentation

Divergence between the UK, EU, US and Asia increases complexity for global managers. Firms may need to adjust their investment strategies across jurisdictions and may need multiple disclosure, classification and data approaches, thereby increasing governance burdens and operational risk.
Implementation and reclassification costs

With several regimes now being revisited and amended, significant product reclassification exercises may be required. Firms heavily invested in existing frameworks could face costly product reviews, documentation changes and client communication exercises in the event of product reclassifications.
Greenwashing and suitability enforcement

Regulators continue to scrutinize disclosures, sustainability preferences and ESG claims. Weak controls, unclear thresholds or misalignment between strategy and marketing could trigger enforcement, reputational damage and investor challenge.