December 2025 Global Regulatory Brief: Green Finance Developments

Overview

The December 2025 Global Regulatory Brief from Bloomberg Professional Services highlights key recent regulatory and policy developments in green finance, reflecting ongoing efforts worldwide to facilitate the transition to a sustainable, low-carbon economy. This update covers significant initiatives in South Africa, the European Union, the United Kingdom, and Brunei.

South Africa: Proposed Overhaul of Carbon Credit Market

South Africa’s National Treasury is consulting on sweeping reforms aimed at unlocking and expanding the domestic carbon credit market, which is integral to supporting national emissions reduction goals through market-based approaches alongside the existing carbon tax.

Key Proposals:

• Legal Clarification: Carbon credits to be classified as unlisted securities under the Financial Markets Act, enabling better market oversight and trading.
• Infrastructure Enhancement: Upgrades to the Carbon Offset Administration System (COAS) and establishing linkage with international carbon credit registries, including a dedicated Article 6 registry for international transfer of mitigation outcomes (ITMOs).
• Domestic Capacity Building: Empowering the South African National Accreditation System (SANAS) to accredit local validation and verification entities and devising national crediting standards.
• Facilitating Market Access: Proposals to relax capital requirements for financial institutions and allow carbon credit trading through existing financial infrastructures.

Implications:

• Potential regulatory amendments involving tax, financial, and exchange control laws.
• Incremental implementation, evidenced by a proposed +5% offset allowance increase effective 2026.
• Alignment and interoperability with international carbon market frameworks anticipated.

European Union: Simplified Transparency Rules for Sustainable Finance Disclosure Regulation (SFDR)

The European Commission has proposed significant amendments to the SFDR to simplify sustainability disclosure requirements for financial market participants (FMPs) and improve clarity for retail investors while reducing compliance costs.

Context:

Since its inception in March 2021, the SFDR aimed to create transparency in sustainability-related financial products but faced criticism for complexity, cost, and confusion around labelling.

Proposed Changes:

• Streamlined Entity-Level Reporting:

  • Removal of entity-level “principal adverse impacts” disclosures from SFDR to align with the Corporate Sustainability Reporting Directive (CSRD).
  • Only large FMPs above CSRD thresholds will be required to disclose environmental and social impacts, reducing burden on smaller players.

• Simplified Product-Level Disclosures:

  • Focus on essential, comparable sustainability data to aid investor understanding.
  • Introduction of retail-friendly presentation standards.

• Introduction of Three Clear Product Categories:

  1. Sustainable: Investments that meet established high sustainability standards.
  2. Transition: Investments supporting credible pathways toward sustainability.
  3. ESG Basics: General ESG integration or exclusions without qualifying as sustainable/transition products.

• Products must have at least 70% alignment with their sustainable strategy and exclude harmful sectors (e.g., tobacco, human rights violations, high fossil fuels).

• Restrictions on ESG-related product names and marketing to ensure accuracy.

Next Steps:

The proposals will proceed through the European Parliament and Council review processes. Technical implementing rules will follow to specify disclosure and categorization requirements.

United Kingdom: FCA Consultation on ESG Ratings Regime

The UK Financial Conduct Authority (FCA) has launched an extensive consultation to establish a regulatory framework for ESG rating providers, aiming to enhance transparency, governance, and reliability in ESG assessments.

Highlights:

• Incorporates baseline FCA regulatory standards adapted to ESG rating providers.
• Addresses transparency in methodologies, conflicts of interest, and stakeholder engagement.
• Consultation period open until March 31, 2026; final rules expected in Q4 2026.
• The new ESG ratings regulatory regime will commence June 29, 2028.
• Framework developed following HM Treasury legislation adding ESG rating providers under FCA supervision, aligning with International Organization of Securities Commissions (IOSCO) standards.

Brunei: Launch of Sustainable Finance Roadmap

Brunei has introduced a Sustainable Finance Roadmap designed to promote ESG integration across financial markets and support sustainable economic development, marking an important policy commitment to green finance in Southeast Asia.

Conclusion

These regulatory developments signify a global intensification of efforts to strengthen frameworks around green finance markets, enhance transparency, and improve ecosystem integrity. Market participants should monitor these evolving policies closely to align strategies and compliance efforts within emerging legal standards.

Further Information

Bloomberg Terminal customers can access detailed regulatory insights via the REGS function or contact Bloomberg representatives for tailored analysis and updates.

Sources: Bloomberg Professional Services, December 23, 2025 Global Regulatory Brief on Green Finance.

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