ESG in 2026: Seven Global Trends Shaping Legal and Investment Priorities

Published on Feb 20, 2026

What does ESG look like in practice today, as geopolitical pressures, energy demand, and regulatory expectations continue to evolve? A recent meeting of World Law Group’s ESG Practice Group brought together lawyers from around the globe to compare what they are seeing on the ground. The discussion revealed a landscape that is not retreating, but rather recalibrating—expanding in some areas, becoming more complex in others, and increasingly shaped by regional priorities. The commonality, however, is that competition for sustained access to key resources remains high and continues to drive companies’ varied approach to ESG strategy.

Across jurisdictions, seven themes emerged that are likely to influence how companies, investors, and their advisors approach ESG in the year ahead.

1. Sustainable finance is being reframed as "resilience finance.”

In Europe, geopolitical developments and increased defense spending have prompted a shift in how sustainable finance might be understood. Investment frameworks originally designed to channel capital toward environmental and social objectives are now being evaluated for their role in supporting economic and national resilience. European regulators have clarified that defense-related investments are not categorically excluded under sustainable finance rules, provided that each investment is assessed individually and disclosed appropriately. This has triggered a broader reassessment of how ESG investment criteria apply in a changing geopolitical environment.

2. Defense sector investments are being reconsidered through an ESG lens.

This shift is already visible in capital allocation patterns. European ESG funds have increased exposure to aerospace and defense-related assets, particularly where companies produce dual-use technologies or demonstrate broader sustainability practices. Banks and investors that were previously hesitant to finance defense-related businesses are taking a more nuanced view, evaluating sustainability performance alongside the nature of the underlying activities. As a result, legal advisors are seeing increased demand for guidance on structuring investments, conducting ESG due diligence, and ensuring compliance with disclosure requirements.

3. Energy demand from data centers is reshaping ESG priorities globally.

The rapid expansion of data centers—driven in part by artificial intelligence and digital infrastructure—has created significant new demand for electricity. In the United States, rising energy consumption is contributing to higher electricity costs and prompting varied responses from individual states, including new legislation to incentivize renewable energy development. Similar pressures are visible elsewhere. In Brazil, government incentives to attract data center investment have generated both economic opportunities and local resistance due to energy constraints and rising utility costs. In China, the state is expanding electricity generation capacity, including solar installations, to support growing energy needs. Notably, data centers continue to create opportunities for lawyers and businesses poised to leverage the intersection of energy and environmental attribute trends, natural resource technology, and real estate and land use developments.

4. Renewable energy markets are generating new legal and commercial disputes.

As electricity prices increase, transactions involving renewable energy certificates and similar instruments are becoming more contentious. Lawyers are seeing more disputes where project developers attempt to renegotiate or exit agreements when market prices shift. At the same time, some market participants are capitalizing on price differences by selling existing certificates and acquiring replacements at lower cost. These developments are creating new risks—and new advisory opportunities—in both transactional and litigation contexts.

5. ESG frameworks are diverging across jurisdictions.

The role of government in driving ESG varies significantly. In China, ESG remains largely state-directed, with regulators expanding mandatory disclosure requirements for listed companies and promoting clean energy development as part of broader industrial policy. In contrast, the United States presents a more fragmented picture, with differing approaches at the federal and state levels. Japan, meanwhile, is navigating complex energy choices, including debate over renewable projects and the potential restart of nuclear reactors. These differences underscore that ESG is no longer a single, uniform framework, but rather a set of regionally distinct regimes.

6. Carbon markets are emerging as a major area of focus.

Participants highlighted carbon markets and carbon financing as an increasingly important and globally relevant topic. Unlike some ESG developments that vary significantly by jurisdiction, carbon markets are evolving on a more international basis and are expected to play a central role in how companies address emissions and climate-related obligations. Lawyers noted that this area is attracting growing attention across jurisdictions, including Israel, where practitioners are closely monitoring global carbon market developments and expect them to have broad implications for businesses and investors. Other important global developments include the Greenhouse Gas (GHG) Protocol’s issuance of updated Land Sector and Removal’s Standard (LSRS) and Science Based Target initiative's (SBTi) moving toward updating its Forest, Land, and Agriculture Criteria (FLAG).

7. The "S” in ESG is gaining renewed attention.

While environmental considerations continue to dominate public discussion, social and governance issues are becoming more prominent in enforcement and compliance. Authorities in Europe are pursuing cases involving supply chain accountability, workforce exploitation, and labor practices, particularly in sectors such as logistics and fashion. Prosecutors are using new tools to require companies to strengthen supply chain oversight and implement more robust due diligence processes. At the same time, regulators are increasing scrutiny of greenwashing and other misleading ESG claims, reinforcing the importance of accurate disclosures and credible compliance programs.

Looking Ahead

Taken together, these developments suggest that ESG is not disappearing, but evolving. This makes sense since, at its core, ESG involves helping entities maintain access to key resources (e.g., financial, natural, and human). The focus is broadening beyond environmental goals alone to include resilience, energy security, social accountability, and geopolitical realities. At the same time, regulatory approaches are becoming more varied across jurisdictions, requiring companies and investors to navigate an increasingly complex landscape. For legal advisors, this environment presents both challenges and opportunities, as clients seek guidance on compliance, investment structuring, disclosure, and risk management. As these trends continue to unfold, ESG will remain a central—if continually changing—feature of the global business and regulatory environment.