Global Luxury Brands Face Rising ESG Compliance Demands as Regulation Matures Across Markets in 2026

Global law firm Baker McKenzie and Positive Luxury today released new cross-jurisdictional analysis showing that 2026 represents a decisive moment for the luxury sector as ESG regulation across major markets becomes more prescriptive, more interconnected and considerably more operational in nature. The analysis finds that global policymakers have entered a new phase in which sustainability rules move from principles-based frameworks to concrete expectations around circular design, substantiated environmental claims, traceable supply chains and structured climate reporting.

According to the guide, the most significant development this year is not the volume of regulatory activity but its maturity. Regulators in Europe, the US, Asia-Pacific, the Middle East and Latin America are beginning to converge on the type of information they want companies to disclose and the quality of supporting evidence required. At the same time, approaches differ in pace and scope, creating an environment in which luxury brands often operating across several regions simultaneously must interpret how various laws interact and where expectations overlap.

Katia Boneva-Desmicht, who leads Baker McKenzie's Global Consumer Goods & Retail Group, described this shift as one defined by clarity rather than disruption. "Across jurisdictions, we are seeing a shift toward clearer definitions, tighter claims standards and more structured reporting. The overall direction is consistent, even if the instruments differ. For luxury businesses, this is an important moment to take stock of internal systems and ensure they align with the level of transparency regulators now expect," she said.

One of the most notable themes in the analysis is the growing emphasis on circularity. In the EU, developments such as the Ecodesign for Sustainable Products Regulation and the forthcoming Digital Product Passport framework require brands to understand, measure and communicate the environmental profile of materials and designs more rigorously. Similar pressures are emerging in the US, where state-level laws on packaging, plastics and textile recovery are taking effect, and in APAC, where governments are introducing recyclability frameworks and updated product standards. Rather than high-level aspirations, circular economy policies are becoming detailed operational requirements, particularly for sectors such as fashion, accessories and beauty.

Environmental claims are also entering a more scrutinized phase. Authorities in Europe, Latin America and parts of Asia are increasingly demanding evidence behind sustainability-related statements, with penalties, product restrictions and legal action becoming more common where marketing claims lack substantiation. This trend is prompting closer collaboration between legal, compliance and marketing teams, as environmental communication becomes subject to the same evidentiary standards as financial disclosure.

Supply chain expectations continue to expand, particularly in relation to forced labor and deforestation. New laws in Europe and the US require brands to demonstrate clear traceability often beyond first-tier suppliers and to maintain documentation that can be verified by authorities. This is increasingly relevant for luxury supply chains, which often span multiple regions and involve small artisanal producers. The analysis suggests that the ability to provide credible sourcing data will become one of the sector's most defining operational challenges in the next two years.

Climate reporting is another area where global approaches are beginning to align. While the US federal landscape is unsettled, state-level developments and investor expectations continue to push companies toward structured disclosures. Meanwhile, APAC jurisdictions, including Japan, Singapore and Australia have begun adopting ISSB-aligned standards, creating a clearer baseline for multinational companies. This trend is moving faster than many anticipated, and brands with international footprints may find themselves subject to several reporting regimes concurrently.

The Middle East, traditionally less associated with sustainability regulation, is now introducing frameworks that influence commercial practice, particularly in the UAE, where new climate legislation and a national carbon credit registry are beginning to affect contracts, leases and partnerships. The guide finds that although most luxury businesses are not directly regulated, they should expect ESG obligations to flow indirectly through commercial relationships.

Positive Luxury emphasised the broader implications of Baker McKenzie's findings. "Luxury is at a crossroads. As regulation matures across markets, sustainability is moving from aspiration to accountability. For luxury brands - and their suppliers - it is an opportunity to strengthen trust, embed transparency into operations and turn sustainability into a driver of resilience and growth. This Guide is designed to help brands navigate that shift and move forward with clarity and confidence. Credibility will be defined not by what a brand promises, but by what it can prove", Jamie Moore, Managing Director, Positive Luxury said.

The analysis concludes that while regulatory divergence remains a challenge, the underlying direction across markets is becoming more consistent: increased disclosure, more detailed evidence requirements and a growing expectation that sustainability commitments are backed by measurable action. The guide suggests that 2026 offers luxury brands an opportunity to align global practices before further harmonization takes shape, strengthening governance and ensuring that internal systems are robust enough to support future regulatory demands.

Download the full ESG Policy Guide 2026.

Explore Other Resources

• Positive Luxury: Green Claims Guide

• Off the Shelf: The Global Consumer Goods & Retail Podcast

Baker McKenzie combines deep sector expertise with a globally integrated approach to support consumer goods and retail companies. From luxury brands to consumer health and food & beverage, our lawyers understand the complexities of the sector. These include issues around brand, technology, R&D, supply chains, data, and product regulation, helping clients navigate challenges and accelerate future growth.