S&P Global Ratings releases EU Sustainability Insight: regulatory recalibration reshapes transition risks
S&P Global Ratings has published a new Sustainability Insight assessing how the EU is recalibrating its sustainability framework to balance climate ambition with competitiveness.
The report highlights ongoing regulatory simplification within the EU, notably through the Omnibus Regulation, which streamlines sustainability and disclosure requirements by significantly narrowing the scope of reporting obligations while maintaining a strong focus on large corporates.
At the same time, evolving carbon pricing mechanisms - such as the EU Emissions Trading System (EU ETS) and the Carbon Border Adjustment Mechanism (CBAM) -continue to expand, sustaining pressure on emissions-intensive sectors. These developments are increasingly complemented by targeted industrial policy measures under the Clean Industrial Deal, including greater flexibility in state aid to support decarbonisation while preserving Europe’s competitiveness.
As a result, transition risks for European corporates entering 2026 are being reshaped, a shift already reflected in recent policy developments. Overall, S&P assesses climate transition risks as elevated but broadly manageable in the near term.