Environmental, Social & Governance
As AI adoption accelerates, the energy and water demands of data centres are drawing sharper scrutiny from regulators and stakeholders alike. Increasingly sophisticated AI models require rising computing power, which in turn drives higher electricity consumption and the need for reliable, scalable, and cost-effective energy supply. Tech companies are under pressure to treat water and energy management not just as environmental concerns, but as operational and reputational considerations.
2026 will intensify this scrutiny, with The UK and EU moving into a stricter era of accountability for green claims. The EU is raising expectations for environmental advertising, requiring companies to back up claims with evidence rather than broad sustainability slogans. At the same time, national authorities are pushing ahead with enforcement against alleged greenwashing, even before new rules apply.
The EU’s Omnibus I Simplification Package also signals a scale back and restructure of core CSRD and CSDDD elements. With an increasingly complex, evolving regulatory landscape, the next year will be shaped by hybrid national approaches and ongoing political negotiations. This will be underpinned by a drive to ensure that regulatory burden isn’t an obstacle to innovation and economic competitiveness.
ESG compliance
2026 will be a pivotal year for the EU’s sustainability and due diligence framework in the Tech & Comms sector. Following months of political debate and shifting priorities, the EU’s Omnibus I Simplification Package signals a scale back and restructure of core CSRD and CSDDD elements.
However, rather than a true simplification, it may create a fragmented ESG landscape. By enabling quick revisions to EU law through the Omnibus process, the Commission has triggered a wave of simplifications affecting other types of ESG legislation. Considering that the initial Green Deal was set up to create an integrated approach, revising and repealing certain provisions may create a regulatory ‘Jenga’.
Recent postponements and simplification proposals have reduced administrative burdens but triggered sharp criticism. Investors, regulators, and civil society warn that these measures risk legal uncertainty and undermine the EU's global leadership in sustainability regulation - weakening companies' ability to address supply chain impacts. Exemptions do not equal immunity: other sustainability obligations remain, and narrowing scope doesn't shield businesses from liability for human rights violations or environmental damage.
For large businesses operating in Europe, the key challenge in 2026 will not be compliance, but navigating an increasingly complex, shifting regulatory framework. Expect a transition period marked by legal uncertainty, hybrid national enforcement, and ongoing trilogue negotiations. With political pressure high and economic competitiveness driving the Commission’s agenda, 2026 is unlikely to bring regulatory relaxation. Instead, it may redefine what ESG regulation in Europe looks like for the decade ahead.
Green claims
As the economy embraces the use of AI, data centres’ enormous energy and water usage has put tech companies under renewed scrutiny, at a time when the UK and EU are entering a new era of accountability for green claims.
No longer just a reputational risk, misleading sustainability claims are now a financial and legal hazard. Since April 2025, the UK CMA can fine companies up to 10% of global turnover for misleading environmental claims - giving a lot more power to regulators than they previously had. In the EU, the Empowering Consumers Directive is currently being implemented across the single market, and the EU Green Claims Directive is also on the horizon. Scrutiny is intensifying as courts and regulators are cracking down and NGOs are actively monitoring green claims.
Expect renewed enforcement, tighter standards, and early test cases. Marketing teams will need airtight substantiation for every claim. Lawyers and compliance teams will play a bigger role and can even leverage AI e.g. to scan marketing materials for risk before they go live.
Two things will happen in 2026: First, the EU is raising the bar for environmental advertising, with a focus on substance over slogans. Second, national authorities and courts across the EU will continue their ongoing litigation against alleged greenwashing, even before new rules apply.
The Empowering Consumers Directive (Directive (EU) 2024/825) was published in March 2024 and will apply from September 2026. It amends the Unfair Commercial Practices Directive and introduces new rules for environmental and social advertising, sustainability labels, and claims about future performance - aiming to protect consumers and ensure transparency.
Generic environmental claims (e.g. “energy efficient”, “eco-friendly,” “green”) will be prohibited unless backed by recognised, verifiable environmental performance in line with applicable Union Standards – a very high bar, impossible to pass for certain claims and products. It also bans claims based on carbon offsetting and imposes strict requirements for sustainability labels and future performance commitments (e.g. “We will be Net Zero by 2050”).
Even before application of the new Directive, we’re seeing a clear trend of increasing litigation against alleged greenwashing and unsubstantiated claims. While enforcement will increase even more under the new Directive, many of these rules are already applied and enforced under the current law.
Marketing strategies and product communications require significant review. Businesses should start auditing current claims, labels, and future pledges to ensure compliance. They should prepare robust evidence, certification schemes, and transparent implementation plans now to avoid reputational and legal risks when the rules take effect in 2026.
ESG procurement requirements
ESG prioritisation is now central for tech vendors seeking public sector contracts. Compliance alone is insufficient - public sector buyers expect proactive, transparent, and innovative ESG leadership throughout the supply chain.
In the UK, the Procurement Act 2023, National Procurement Policy Statement, and the new Procurement Specific Questionnaire (PSQ) have transformed procurement requirements. ESG disclosures are mandatory not only for prime contractors but also for subcontractors and startups. Public sector buyers increasingly demand robust evidence of responsible ESG practices.
The shift from “Most Economically Advantageous Tender” (MEAT) to “Most Advantageous Tender” (MAT) allows buyers to prioritise broader value, including environmental and social impact. For contracts exceeding £5 million, at least three relevant KPIs, which could be ESG-related, must be set and reported on annually.
Tech vendors should map their supply chains, assess ESG risks, and ensure data is robust and auditable. Those who embed ESG into their operations and supplier selection will be best positioned to succeed in the new public sector procurement landscape.
