What is the difference between SFDR and SDR for investment funds?

SFDR (EU) uses Article 6/8/9 classifications based on sustainability integration level, while SDR (UK) uses four sustainability labels (Focus, Improvers, Impact, Mixed Goals) based on investment strategy and outcomes. Funds marketing in both jurisdictions must comply with both frameworks, though the UK aims for some equivalence recognition with EU requirements.

Which ESG reporting standards are mandatory versus voluntary?

SFDR, EU Taxonomy, UK SDR, US SEC Climate Rules, and Singapore MAS Guidelines are mandatory for relevant entities. GRI Standards and TCFD (now ISSB) started as voluntary but are increasingly incorporated into mandatory frameworks. Most jurisdictions now require some form of ESG disclosure for investment funds.

How do UAE and Saudi Arabia ESG requirements compare to European standards?

UAE and Saudi regulations are developing rapidly but remain less comprehensive than EU SFDR. Both are building taxonomies influenced by EU principles while adapting for regional context including Islamic finance. The UAE focuses on sustainable finance mobilization while Saudi emphasizes alignment with Vision 2030 and climate commitments.

What are Principal Adverse Impact (PAI) indicators under SFDR?

PAI indicators are mandatory metrics measuring negative sustainability impacts of investments. They include 14 mandatory indicators covering GHG emissions, biodiversity, water, waste, social and employee matters, human rights, and anti-corruption. Additional voluntary indicators can be selected based on materiality assessment.

How should funds prepare for evolving ESG regulations in 2026?

Funds should implement flexible data systems capable of capturing multiple metrics, engage with regulatory developments through industry associations, conduct gap analyses against emerging requirements, invest in staff training, and work with specialized ESG consultants. Building modular reporting capabilities allows adaptation to regulatory changes.

10 Examples of ESG Reporting Standards and Frameworks Requirements in 2026 for Funds in UK Europe US Singapore UAE and Saudi

A comprehensive guide to the essential ESG reporting standards and regulatory frameworks that investment funds must comply with in 2026 across the UK, Europe, US, Singapore, UAE and Saudi Arabia.

Published: December 18, 2025 By David Kim Category: ESG

10 Examples of ESG Reporting Standards and Frameworks Requirements in 2026 for Funds in UK Europe US Singapore UAE and Saudi

Executive Summary

As sustainable finance regulations mature globally, investment funds face an increasingly complex landscape of ESG reporting requirements. From the EUs comprehensive SFDR framework to emerging standards in the Middle East and Asia, understanding compliance obligations is essential for fund managers operating across jurisdictions.

This guide examines the 10 most important ESG reporting standards and frameworks that funds must navigate in 2026, covering regulatory requirements in the UK, Europe, US, Singapore, UAE, and Saudi Arabia.

1. EU Sustainable Finance Disclosure Regulation (SFDR)

The SFDR remains the most comprehensive ESG disclosure framework globally. Effective since March 2021 with Level 2 requirements fully implemented by 2024, SFDR requires all EU-domiciled funds and those marketed to EU investors to:

Classify products as Article 6 (no sustainability focus), Article 8 (promoting ESG characteristics), or Article 9 (sustainable investment objective)
Publish pre-contractual disclosures including Principal Adverse Impact (PAI) indicators
Provide periodic reports on sustainability metrics
Disclose taxonomy alignment percentages for green investments

In 2026, the European Commission is reviewing SFDR with proposed amendments to simplify classifications and enhance comparability across funds.

2. EU Taxonomy Regulation

The EU Taxonomy establishes a classification system for environmentally sustainable economic activities. Funds must disclose:

Percentage of investments aligned with taxonomy environmental objectives
Technical screening criteria compliance for climate mitigation and adaptation
Do No Significant Harm (DNSH) assessments
Minimum social safeguards verification

From 2026, expanded taxonomy criteria cover all six environmental objectives including water, circular economy, pollution, and biodiversity.

3. UK Sustainability Disclosure Requirements (SDR)

The FCA Sustainability Disclosure Requirements introduced in 2024 establish the UKs post-Brexit sustainable finance framework. Key requirements include:

Four sustainability labels: Sustainability Focus, Sustainability Improvers, Sustainability Impact, and Sustainability Mixed Goals
Anti-greenwashing rule requiring claims to be fair, clear, and not misleading
Consumer-facing and detailed disclosures for labeled products
Naming and marketing restrictions for sustainability-related terms

UK funds marketing to EU investors must comply with both SDR and SFDR, creating dual reporting obligations.

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