i-ESG
Insight Letter
No. 03
Aug 21, 2026
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In this issue of the i-ESG Insight Letter, two forces are moving in opposite directions — Washington is pressing Europe over its sustainability rules, while US sustainable fund flows turn positive for the first time since 2022 and grid-storage companies raise $1.75 billion within ten days.
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ESG News & Trends
ESG News & Trends
News Sentiment Analysis
Aug 05 – Aug 17, 2026
Each issue, we track ESG coverage across 30+ trusted news sources, then classify it as positive, neutral, or negative — a quick read on how the period leaned.
Positive 45%
Neutral 30%
Negative 25%
Share of coverage this period (~90 articles).
Positive coverage was led by the return of capital — US sustainable funds recorded their first quarterly net inflow since 2022, Form Energy raised $750M to scale its 100-hour batteries, and Base Power closed a $1B round.
Negative coverage clustered around the transatlantic standoff over sustainability rules — Washington pressing the EU over the CSRD and CSDDD, and the prospect of sustainability obligations increasingly becoming part of trade negotiations.
Key Issues & Trends
01
Washington puts Europe’s sustainability rules on the trade agenda
On August 14, US Ambassador to the EU Andrew Puzder publicly backed a US government submission calling for further changes to the CSRD and CSDDD. The submission said the Omnibus reforms had failed to fully address US concerns and warned that Washington could take further action if what it sees as unreasonable burdens on US commerce remain unresolved. It also urged the EU not to reintroduce mandatory net-zero transition-plan requirements through CSDDD guidance or Member State implementation — an obligation that Omnibus I had already removed from the directive.
02
Sustainable fund flows turn positive for the first time since 2022
US sustainable funds drew nearly $3 billion in Q2 2026, ending 14 straight quarters of redemptions, while assets in US sustainable funds reached a record $398 billion — up 13% on the quarter. Globally, excluding China, sustainable funds attracted an estimated $3.7 billion in net inflows, and global sustainable fund assets reached an estimated $3.7 trillion, with Europe remaining the dominant market. The mix is telling: passive strategies in the US pulled in $6.5 billion, while active funds saw $3.6 billion in outflows. Capital returned, but the rebound was heavily concentrated in passive strategies.
03
Grid storage raises $1.75B within ten days
Form Energy raised $750 million in a round led by T. Rowe Price to scale production of its 100-hour iron-air batteries. The deal came shortly after Base Power closed a $1 billion round at a $13 billion valuation earlier in the month. Together, the two deals point to strong investor appetite for grid reliability, rising electricity demand, and energy-storage deployment as load growth accelerates.
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Focus Issue
Behind the Top Trend
Trend 1 put the transatlantic standoff at the top of the period. The dispute pushes sustainability reporting and due diligence further into the realm of trade policy, adding another layer of uncertainty to compliance planning.
Top Trend This Issue
Disclosure becomes a trade issue — Washington takes aim at the CSRD
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Why Now
On August 14, US Ambassador to the EU Andrew Puzder highlighted a US government submission pressing Brussels for further changes to the Corporate Sustainability Reporting Directive and the Corporate Sustainability Due Diligence Directive. The US argues that the directives’ extraterritorial reach creates disproportionate burdens for American companies and that the EU’s Omnibus reforms have not gone far enough.
The submission goes beyond questions of scope. It also calls on the EU not to reintroduce mandatory net-zero climate transition plans through CSDDD guidance or Member State implementation. Omnibus I had already removed the CSDDD’s transition-plan obligation. The significance, therefore, is not a new rule but the fact that US pressure is continuing even after substantial concessions from the EU.
Related Regulations
#EU CSRD
#EU CSDDD
#Omnibus I
Business Impact
To understand the US position, it helps to see how much Europe has already changed. Omnibus I, in force since March 18, 2026, substantially narrowed the scope of both directives.
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Before Omnibus I |
After Omnibus I |
| CSRD scope |
Large undertakings and listed SMEs under the previous thresholds |
1,000+ employees and €450M+ net turnover |
| Non-EU parent trigger |
€150M+ EU turnover plus a qualifying EU subsidiary or branch |
€450M+ EU turnover in each of the last two financial years, plus an EU subsidiary or branch with €200M+ turnover |
| Estimated non-EU companies in CSRD scope |
~10,000 |
~1,200 |
| CSDDD scope — EU companies |
1,000+ employees and €450M+ worldwide net turnover |
5,000+ employees and €1.5B+ net turnover |
| Climate transition plan under CSDDD |
Mandatory |
Removed |
| CSDDD penalty ceiling |
Maximum penalty threshold of at least 5% of worldwide net turnover |
Uniform maximum of 3% of worldwide net turnover |
Omnibus I entered into force Mar 18, 2026 · CSDDD transposition due Jul 26, 2028 · obligations apply from Jul 26, 2029
If your company falls between the old and new CSRD thresholds, direct reporting obligations may no longer apply. That does not necessarily eliminate requests for sustainability data from customers, investors, or lenders.
In-scope companies may still need relevant value-chain information, although Omnibus I now limits CSRD-related information requests to smaller value-chain companies through a value-chain cap tied to the EU’s voluntary reporting standard. In other words, the channel through which information is requested may change even when the underlying need for that information remains.
Scope relief does not always mean data relief.
Our Take
A rule that has entered trade negotiations is harder to manage as a fixed compliance project. Europe has sharply narrowed the scope of the CSRD, removed the CSDDD transition-plan obligation, and reduced the estimated number of non-EU companies directly covered by the CSRD from roughly 10,000 to 1,200. Washington is still asking for more.
That makes regulatory timelines less stable than the underlying business questions. Customers, investors, and lenders may still ask about emissions, supply-chain impacts, and the quality of the data behind them even as the legal scope changes. Companies that build reusable sustainability data systems can adapt more easily when the reporting perimeter shifts. Companies whose systems are built around a single regulation or reporting deadline may face repeated redesign as the rules change.
Build for the question, not just the deadline.
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ESG in Data
The Money Came Back Before the Rules Did
Macro Data · Sustainable Fund Flows, Q2 2026
US flows turn positive after 14 quarters
≈$3B
into US sustainable funds in Q2 2026 — the first quarterly net inflow since 2022, ending 14 straight quarters of redemptions
US sustainable fund assets closed the quarter at a record $398 billion, up 13% from $351 billion three months earlier.
Globally, sustainable funds excluding China drew an estimated $3.7 billion in net inflows during the quarter, with Europe contributing $3.5 billion. Regional flows remained uneven, underscoring that the rebound was not yet broad-based.
Global sustainable fund assets reached an estimated $3.7 trillion, up from $3.5 trillion at the end of Q1. The increase was driven primarily by market appreciation rather than new inflows. Morningstar notes that the global asset figure remains an estimate because China’s June AUM was unavailable and its March quarter-end level was carried forward.
Product development also picked up modestly: 32 sustainable funds launched globally in Q2, up from 17 in Q1, although the total remained below the roughly 50 launched in Q4 2025.
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Q2 2026 |
Q1 2026 |
| Asia |
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16 |
— |
| Europe |
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13 |
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| United States |
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3 |
0 |
New sustainable fund launches by region · 32 globally in Q2 2026, up from 17 in Q1 but still below the ~50 launched in Q4 2025 · Morningstar
ESTFLOWS ARE ESTIMATED, NOT REPORTED
Passive +$6.5B · Active −$3.6B · Passive share of US sustainable assets ~50% · Equity share of assets ~85%
Morningstar estimates net flows from reported assets and returns; quarterly figures may be revised. Treat the direction as the signal, not the decimal.
Key Insight
The money returned while sustainability rules were still being renegotiated — and US inflows were driven primarily by passive strategies. That matters because index-tracking products rely on structured, comparable datasets and predefined methodologies rather than on company narratives alone.
The takeaway is not that every dollar of the $398 billion follows the same ESG screen. It is that as passive strategies account for a larger share of sustainable assets, consistent and comparable sustainability data becomes increasingly important to how companies are assessed, classified, and represented across market datasets and indices.
Regulatory scope may narrow or shift. Market demand for usable data can remain.
Q2 2026 net flows and assets · Source: Morningstar – US Sustainable Funds Returned to Positive Flows in Q2 2026
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From i-ESG
i-ESG CEO Bell Jongwoong Kim spoke on AI-driven ESG decision-making at the UN Global Compact’s Forward Faster Now | APAC 2026.
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