Taking stock of sustainable finance policy developments

Another year starts and we take the time, as it is our custom, to reflect on sustainable finance policy developments and how they will impact the work of responsible investors around the world.

Sustainability issues are incorporated in varied ways across regulatory frameworks – from disclosures, duties and stewardship to net zero policies across most G20 countries. These issues are also clearly signalled in economic policy, with a revival of industrial policies to tackle both economic and core social and environmental challenges. 

Progress in embedding sustainability into policy frameworks  

Our 2024 update of the PRI regulation database shows that 60% of sustainable finance-related policies focus on supporting the economic transition. This is building an enabling environment for investors to understand and manage the outcomes of investment decisions which are relevant to investment beliefs, strategies and returns.  

The increased focus on the economic transition alongside sustainable finance policy developments means that effective policy reform requires a coherent, holistic approach to policymaking across finance and the real economy. Governments need to address societal challenges in a systematic manner – adopting a whole-of-government strategy to the transition to net zero, to competitiveness, nature degradation and human rights, to name just a few. 

In 2025, we will continue supporting signatories with policy research and analysis on financial and economic policy issues.

Investor engagement with policymakers remains strong 

Our 2023 reporting data  showed that 55.9% of signatories engaged with policymakers directly and/or indirectly (through working groups, collaborative initiatives or third party organisations). In 2024,^[1] that number remained steady at 55.7%, with engagement via policy collaborations remaining the favoured method for PRI signatories (accounting for two-thirds of respondents). 

Positively, 12.1% of signatories who did not engage with policymakers in 2023 reported in 2024 that they had begun engaging with policymakers. This percentage increases to 13.5% when looking at only European signatories, and to 18.1% when looking at signatories based in Asia. 

During 2024, the PRI has supported signatory engagement by holding over 100 bilateral and group meetings and by participating in or convening almost 50 events to build a shared understanding on policy reform between investors and policymakers. This included our policy conference alongside PRI in Person in Toronto. The PRI has also continuously monitored policy developments and engaged with policymakers through briefings, consultations, letters and direct engagement.  

We involve signatories in a variety of ways, including through the Global Policy Reference group, the policy collaboration platform and other advisory groups on relevant topics and research (more on our policy homepage). 

A great start for ISSB Standards adoption 

A key development in 2024 was the steadfast adoption of the new ISSB Standards into securities’ disclosure regulations. More than 30 jurisdictions are making progress towards introducing ISSB Standards in their legal or regulatory frameworks; and between October 2023 and March 2024 over 1,000 companies have referenced the ISSB in their reporting. Nearly two decades after the inception of the first international initiative on sustainability reporting, we finally have a pathway to convergence on how companies account for their GHG emissions and management of climate risks.^[2]

Climate disclosures are also now a normative expectation across jurisdictions. As discussed in a previous PRI blog, investors need climate data across their global portfolios – and both governments and companies are reacting accordingly. According to MSCI data, a majority of companies now report GHG emissions globally, however reporting varies widely by region. Excluding the US, the global figure is 73% of listed companies; the figure drops to 49%in the US.^[3]

Some regional highlights 

• The Australian Net Zero Economy Authority Bill 2024 formally established the Net Zero Economy Authority as an independent statutory authority that will promote the net zero economic transition;  
• Japan’s Asset Owner Principles highlight the importance of asset owners considering sustainability from a broad perspective and pursuing action through stewardship and investment decisions;  
• The Canadian Association of Pension Supervisory Authorities updated the Risk Management Guideline for pension funds to clarify that failing to consider material ESG information could be a breach of fiduciary duty;  
• The European Commission recommended a target to reduce the EU’s net greenhouse gas emissions by 90% by 2040 relative to 1990, aiming to further incentivise green investments and discourage carbon lock-in;  
• The UK made substantial progress in building its sustainable finance architecture with the adoption of the UK SDR and anti-greenwashing rules;  
• In the US, in the two years since the passage of the Inflation Reduction Act, clean technology and infrastructure spending reached $493 billion (a 71% increase from the previous two years), including over $160 billion in clean energy production and industrial decarbonisation.^[4]

Looking ahead 

2025 will likely see a variety of developments in sustainable finance policy around the world. Some of the key trends we will be engaging on include:  

• COP30: We expect a strong focus on climate policy in advance of COP30 in Brazil which marks a five-year milestone on global climate negotiations. Net zero policy making across the G20, which the Taskforce on Net Zero Policy assessed for COP29, will continue to increase, with a focus on key aspects of the transition. These include transition planning, disclosures, taxonomies and alignment with the social and nature implications of climate mitigation and adaptation. PRI’s climate policy roadmap outlined key priorities and expectations on climate policy reforms, as governments around the world grapple with a challenging but imperative transition to net zero amid a turbulent geopolitical context.
• EU sustainable finance framework: While we expect that the core intention of the sustainable finance policy framework in the EU will remain, 2025 will likely see an intense debate on streamlining regulatory requirements under CSRD and CSDDD. The PRI and partner organisations will continue to engage the European Commission to preserve the integrity and ambition of the EU’s sustainable finance framework. We see this work as central to efforts to help investors manage risks, identify opportunities and ultimately reorient capital towards a more competitive, equitable and prosperous net zero economy. Another pending revision of a cornerstone policy is the UK’s proposed update of the stewardship code, with the definition of stewardship itself in the balance, spurring similar lively discussions among industry stakeholders.
• Increasing US headwinds: Despite historic investments in the transition to net zero over the past two years, the sustainability efforts in the United States are increasingly rebuffed. The new federal administration has taken a negative view on climate action and is promoting a policy of ”energy dominance” that seeks to maximise production of oil and gas. However, as the new administration withdrew the US from the Paris Agreement, state and local leaders reiterated their commitment to the global climate goals. 
• Merging conversations: While sustainable economic development, climate policy and multilateral finance negotiations used to happen in silos in the past, we expect that all of those topics will be increasingly interconnected in the agendas of key multilateral fora such as the G20 in South Africa and the fourth Financing for Development Conference convened in Spain by the United Nations. 

In 2025, we will continue supporting signatories with policy research and analysis on financial and economic policy issues. New regulatory obligations will be reflected in our own reporting and we will engage with signatories on how regulatory changes may enhance or hinder their approach to responsible investment. 

As always, your thoughts, comments and suggestions on PRI’s policy work are welcome.