Paul Mertenskötter, Jayni Hein, Kevin Poloncarz, and Candido Garcia Molyneux were featured in Thomson Reuters Practical Law’s annual report, ESG Outlook Autumn-Winter 2026: Practitioner Insights. Their commentary addresses key developments across the evolving ESG and sustainability regulatory landscape, including EU sustainability reporting, California climate disclosure requirements, and sustainability regulation affecting data centers.
Paul’s commentary focuses on the continuing complexity companies face following the simplification of the EU Corporate Sustainability Reporting Directive (CSRD). He highlighted challenges for multinational companies considering the “mixed approach” to reporting, as well as questions surrounding the relationship between double materiality assessments and companies’ risk assessments under the Corporate Sustainability Due Diligence Directive (CSDDD).
Paul also emphasized the importance of taking a holistic approach to sustainability, noting that companies will need to develop a coherent view of sustainability-related impacts, risks, and opportunities that holds up across reporting and supply chain due diligence requirements, including the CSRD, CSDDD, EU Forced Labor Regulation, Batteries Regulation, and Deforestation Regulation.
Jayni and Kevin discussed the approaching reporting deadline under California’s Climate Corporate Data Accountability Act (SB 253). They noted that the California Air Resources Board (CARB) “will exercise enforcement discretion for covered entities that make ‘good faith efforts’ to comply with SB 253 and will provide an offramp for companies not collecting or planning to collect GHG emissions information as of December 5, 2024.” They also highlighted that CARB “is preparing a second rulemaking to inform emissions reporting in 2027 and beyond.”
Candido’s commentary addresses the growing regulatory implications for companies that develop, own, operate, or co-locate data centers in Europe. He highlighted an expanding range of EU and national sustainability requirements concerning issues such as energy and water efficiency, fluorinated gases, chemicals, electronic waste, disclosure, and, in some jurisdictions, renewable energy use and waste heat recovery.
Candido also noted that, from August 2027, data centers with installed IT power demand of at least 500 kW will be subject to a European Commission sustainability label. He explained that the broader regulatory requirements can affect permitting, access to public procurement and funding, disclosure of potentially confidential business information, and contractual relationships between data center owners and co-locators offering IT services.
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