At the beginning of 2026, the discussion around ESG (environmental, social and governance) changed significantly. Business no longer asks whether ESG is important. The question is different: how to implement it effectively in conditions of constant control and uneven regulation?
Why do we even need to break down these complex abbreviations into details? Today, it is a question of the value of the enterprise, its competitiveness and, ultimately, the security of our jobs and investments.
Artem Lyashanov
What is an ESG fund?
An ESG fund is an investment instrument whose strategy is based on the integration of environmental, social and governance factors into the process of selecting investment objects. Unlike traditional funds, where profitability analysis is dominant, in ESG structures these three factors significantly affect the formation of a portfolio.
Geography of rules
The end of 2025 clearly showed that there is no single global path in ESG. We see a serious gap in the approaches of different jurisdictions.
The CSRD (Corporate Sustainability Reporting Directive) has come into full force in the EU. Now not only giants, but also medium-sized businesses are required to report on hundreds of indicators. Moreover, the introduction of the CBAM (carbon import adjustment) mechanism forces exporters from all over the world to pay for emissions when importing goods into Europe;
The CSRD obliges companies to disclose in detail information about how their activities affect the planet and people (ecological and social footprint), as well as how sustainability risks (for example, climate change or resource scarcity) affect the financial condition of the business itself.
- In the US, against the backdrop of political discussions, there is a certain cooling off towards mandatory environmental metrics at the federal level, instead the emphasis is shifting to the financial materiality of risks;
- Meanwhile, Singapore (through MAS) and Australia are actively implementing IFRS (S1 and S2), making them mandatory for public companies.
IFRS S1 (along with the accompanying climate-focused IFRS S2) is the first attempt to create a single, global and universal language for ESG reporting that investors and auditors around the world will understand, similar to the classic International Financial Reporting Standards.
ESG data
One of the most significant developments of late 2025 was the way organizations began to use ESG data internally. What was previously perceived as a formal annual reporting exercise is now becoming an integral part of strategic planning, procurement and risk management.
Case study
Large retailers such as Walmart or Europe’s Carrefour are now using ESG metrics to assess the sustainability of their supply chains. If a supplier is located in a region with a high risk of water shortage (for example, certain states in India or Mexico), the company looks for alternatives in advance to avoid stopping production.
Social capital
For a long time, the letter S (Social) in the ESG acronym was considered the most blurred. If carbon emissions can be measured in tons, then how to measure “social responsibility”? However, the events of late 2025 changed this approach: social indicators moved from the category of “good deeds” to the category of operational sustainability.
Today, investors and partners evaluate the social block through the prism of specific business threats:
- Workforce sustainability;
- Supply chain ethics;
- Materiality of social data.
“We finally realized that social capital is about whether your factory will be able to operate tomorrow if key specialists leave you due to poor working conditions, or if your brand is blocked in the market due to a scandal in the supply chain,” notes Artem Lyashanov.
Technology Infrastructure
Manual scaling of ESG processes has become impossible due to excessive complexity and demands for accuracy. Technology has become the foundation that allows you to turn the chaos of regulatory requirements into a clear management system.
Modern digital ESG platforms solve the following critical tasks:
- Automation and control;
- Flexibility of standards;
- Transformation of data into insights.
The main challenge for the investor remains the risk of greenwashing, when a fund exaggerates its positive impact or ethics without proper evidence. To protect your capital, you need to carefully study prospectuses and annual reports, paying attention to the fund’s compliance with strict disclosure standards.
This material is prepared for informational purposes only. It does not constitute financial advice, investment recommendation or a call to buy or sell any financial instruments.
