EU CSRD: EFRAG consults on revised ESRS  

On 27 March 2025, the European Commission tasked EFRAG with simplifying the first set of European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD), as part of its Omnibus simplification plans. 

On 25 April 2025, EFRAG announced that it had submitted its work plan to the Commission, which included public consultation running until early September, and delivery of the revised ESRS to the Commission by the end of October 2025. However, the Commission agreed to move the deadline for EFRAG to deliver the revised ESRS to 30 November 2025. For more information, see our blog post. 

On 31 July 2025, EFRAG published the revised ESRS for a public consultation which closes on 29 September 2025. The revision of the ESRS includes streamlining the double materiality assessment, reducing overlaps across standards, clarifying language and structure, and removing all voluntary disclosures. New relief mechanisms have also been introduced, such as exemptions where reporting would cause undue cost or effort. EFRAG announced that, in total, mandatory datapoints (to be reported if material) have been reduced by 57%, and the overall length of the standards has been shortened by over 55%. For more information, see our blog post. 

EU CSRD: Commission adopts “Quick-Fix” Delegated Act postponing phased-in reporting requirements for “wave one” companies 

On 11 July 2025, the European Commission adopted a so-called “Quick-Fix” Delegated Act to postpone additional phased-in reporting requirements set out in the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD). The Quick-Fix Delegated Act, among others, defers by two years the additional reporting requirements that wave one companies would otherwise have had to meet for the 2025 and 2026 financial years and extends to all wave one companies the phase-in provisions which previously applied only to those with up to 750 employees. Once the Delegated Act enters into force, it will apply for financial years beginning on or after 1 January 2025. For more information, see our blog post.

EU: Commission adopts Delegated Act simplifying Taxonomy reporting 

On 4 July 2025, the European Commission adopted a Delegated Act aimed at simplifying the application of the EU Taxonomy and reducing the administrative burden for EU companies. The Delegated Act makes amendments to the Taxonomy Disclosures Delegated Act, Taxonomy Climate Delegated Act and Taxonomy Environmental Delegated Act. Key simplification measures include exemption for non-financial and financial undertakings from assessing Taxonomy eligibility and alignment for economic activities that are not financially material for their business, changes to KPI reporting by financial companies, adjusting reporting templates and cutting data points, and simplification of criteria for “do no significant harm” (DNSH). 

The Delegated Act has been transmitted to the European Parliament and the Council for review. There is a 4-month scrutiny period (which can be extended by a further 2 months), after which it will be published in the Official Journal of the EU. The measures laid out in the Delegated Act will apply from 1 January 2026, for the 2025 financial period. However, undertakings have the option to defer for one year. For more information, see our blog post. 

EU: Regulation delaying due diligence rules for batteries published in the OJEU 

On 30 July 2025, the “Stop the Clock” Battery Due Diligence Regulation was published in the Official Journal of the EU. It came into force on 31 July 2025. 

The Sustainable Batteries Regulation 2023 establishes due diligence requirements for operators who must verify the source of raw materials used in batteries placed on the EU market. These due diligence obligations were initially scheduled to apply from 18 August 2025. In addition, the European Commission was required to publish guidelines on the due diligence requirements by 18 February 2025. For more information on the 2023 Regulation, see our previous blog post.  

The “Stop the Clock” Battery Due Diligence Regulation postpones these due diligence obligations until 18 August 2027 and extends the deadline for publication of the guidelines to 26 July 2026. This Regulation forms part of the Omnibus IV simplification package published by the Commission on 21 May 2025. For further details on Omnibus IV, see our previous blog post. 

EU: Commission publishes Chemicals Industry Action Plan and Chemicals Simplification Omnibus 

On 8 July 2025, the European Commission published a package of measures to strengthen the competitiveness of the European chemicals sector which included a European Chemicals Industry Action Plan, a Proposal for a Regulation to strengthen the governance of the European Chemicals Agency (ECHA) and the Chemicals Simplification Omnibus (Omnibus VI). 

Omnibus VI consists of two legislative proposals: (i) Proposal for a Regulation amending certain dates of application in the Classification, Labelling and Packaging of Substances and Mixtures (CLP) Regulation, and (ii) Proposal for a Regulation amending certain requirements in the CLP Regulation, the Cosmetic Products Regulation, and the Fertilising Products Regulation. 

The two draft Regulations in the Omnibus VI package and the draft Regulation to strengthen the governance of ECHA will now need to be negotiated and agreed on by the European Parliament and Council before they can become law. The draft Regulations are subject to the “ordinary legislative procedure”, which usually takes around 12-18 months. For more information, see our blog post. 

EU: Commission launches call for evidence to inform forthcoming Environmental Omnibus

On 22 July 2025, the European Commission launched a call for evidence seeking views on how to simplify and streamline administrative requirements related to the environment in the areas of waste, products, and industrial emissions. The call for evidence closes on 10 September 2025. The call for evidence will feed into an Environmental Omnibus in Q4 2025, which will take the form of a draft Regulation. The call for evidence does not identify which pieces of existing environmental legislation might be simplified. Instead, it merely refers to a limited number of policy areas that may be included in the forthcoming Environmental Omnibus but acknowledges that the final list could evolve once the Commission has examined the results of the call for evidence. The Commission has indicated that the aim is to reduce the administrative burden without affecting the environmental objectives under the existing environmental legislation. For more information, see our blog post. 

For more information on the key developments in the EU's efforts to simplify existing sustainability rules, see the Linklaters EU Omnibus Tracker.

EU: Commission adopts Recommendation on voluntary sustainability reporting for SMEs

On 30 July 2025, the European Commission adopted a Recommendation on voluntary sustainability reporting for non-listed small and medium-sized companies (SMEs). The voluntary standard for SMEs (VSME) is intended to make it easier for non-listed SMEs, as well as micro-undertakings, to respond to requests for sustainability information from large companies and financial institutions that are subject to the Corporate Sustainability Reporting Directive (CSRD) and which have such SMEs in their value chains. The VSME Standard was developed by EFRAG, the Commission’s technical advisory body for sustainability reporting. For more information, see our blog post. 

It is important to distinguish this Standard from the voluntary standard for undertakings not subject to mandatory sustainability reporting requirements proposed by the Commission as part of the Omnibus I proposal. The Omnibus I proposal includes a value chain cap, proposing that companies in scope of the CSRD should not seek sustainability information beyond that set out in a voluntary reporting standard from companies in their value chains with fewer than 1,000 employees. This standard will be developed by the Commission and adopted as a delegated act after amendments to the CSRD are finalised. 

EU: EFRAG publishes State of Play 2025 Report on first CSRD reports 

In 2025, the “first wave” companies were required to publish their initial sustainability statements in accordance with the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD). In July 2025, EFRAG launched its EFRAG 2025 State of Play portal. This platform provides access to: (i) a statistics dashboard exploring overall trends and metrics from 656 sustainability statements issued in 2025; and (ii) a repository of company CSRD reports collected between 1 January and 20 April 2025.

EFRAG has also published its State of Play 2025 Report, summarising the statistics and providing key insights. The report highlights that, although many companies have made significant progress, consistent and comparable reporting is still evolving. 

Key findings from the report include:

• Only 10% of companies identified all ten topical ESRS standards as material. Climate Change (E1), Own Workforce (S1), and Business Conduct (G1) were the most commonly disclosed.
• 97% involved internal stakeholders in materiality assessments, but engagement with broader societal stakeholders remains rare.
• 55% per cent of preparers report having a transition plan for climate change mitigation, but clear disclosure of all its elements remains inconsistent, hindering comparability. While approximately 70% of preparers commit to limiting warming to below 1.5°C for their Scope 1 and 2 emissions, only around 40% extend this target to include Scope 3 emissions. 
• Sustainability statements vary significantly in length (from an average of 70 to more than 200 pages, depending on the country), with financial institutions producing longer reports on average.
• Preparers identified Impacts, risks, and opportunities (IROs) in different value chain segments based on their sector. Financial institutions focused on downstream (i.e., financed companies), while non-financial companies prioritised their own operations and upstream segments.
• Biodiversity and internal carbon pricing remain limited in disclosures. 
• Human rights incidents are rarely reported, even where other social data are present.

UK: What do the FCA’s new rules on prospectuses say about climate disclosures and transition plans?

In July 2025, the Financial Conduct Authority (FCA) published Policy Statement PS25/9, which sets out new rules that will govern admissions to trading in the UK from 19 January 2026. The Prospectus Rules: Admissions to Trading on a Regulated Market sourcebook (PRM) will replace the EU-derived Prospectus Regulation (and associated secondary legislation) alongside the Public Offers and Admissions to Trading Regulations 2024 (POATR). Overall, the new rules aim to reduce the disclosure and approval requirements associated with raising further capital, with the hope that tackling disproportionate burdens will improve market liquidity and functioning. However, the rules also introduce some additional sustainability disclosure requirements, together with a new safe harbour for forward-looking statements, in order to make prospectuses more investor-focused and user-friendly. For more information, see our blog post. 

UK: FCA considers simplifying climate reporting requirements for asset managers

On 6 August 2025, the Financial Conduct Authority (FCA) announced that it is considering how to simplify sustainability reporting for asset managers, life insurers and FCA-regulated pension providers, to help reduce greenwashing and ease unnecessary burdens. The announcement follows the FCA’s multi-firm review which examined how its climate disclosure rules have been working for these firms. The rules, which started to apply from 1 January 2022, require firms to disclose climate-related information in line with the Task Force on Climate-related Financial Disclosures (TCFD) recommendations. In light of the review, the FCA states that is now considering how to simplify its disclosure requirements to ease unnecessary burdens, improve the decision-usefulness of reporting and ensure international alignment. The FCA has also updated its sustainability reporting requirements webpage to clarify how firms in scope of both its TCFD and Sustainability Disclosure Requirements (SDR) rules can align reporting from 2026. For more information, see our blog post. 

Global: Transition Finance Council consults on draft Transition Finance Guidelines to help assess credibility of transitioning entities 

On 18 August 2025, the UK Transition Finance Council (TFC) launched a consultation on draft Transition Finance Guidelines to support global alignment on what constitutes credible transition finance. The consultation focuses on finance to transitioning sectors and entities, particularly those in high-emitting or hard-to-abate sectors. Stakeholders - including banks, insurers, asset managers, regulators, governments, public financial institutions and corporates – are invited to provide feedback to ensure the Guidelines are clear, practical, globally interoperable, and usable for all market participants. This preliminary consultation focuses on entity-level application, to help stakeholders assess the credibility of transitioning entities. The voluntary Guidelines are designed to be applicable internationally. For more information, see our blog post.  

Global: NZBA report on emerging transition finance practices among banks 

In July 2025, the Net-Zero Banking Alliance (NZBA) published a report on emerging transition finance practices among banks. Common practices identified by the paper include requiring clients to develop a credible transition plan, specifying a list of eligible transition activities, and utilising internal audit or independent verification to ensure robustness. 

Key findings from the report:

• Framework integration - An increasing number of banks are developing transition finance approaches to complement their sustainable finance frameworks, with eight NZBA member banks featured in this report. These frameworks provide transparency regarding their criteria to categorize transition finance transactions.
• Scope and coverage - Banks’ transition finance approaches cover activity-level and, increasingly, entity-level financing. Transition finance eligibility lists typically focus on hard-to-abate sectors, alongside cross-cutting activities across industries, such as carbon capture and electrification.
• Assessment criteria - Banks use a combination of criteria to assess transition finance transactions, often specifying an activity eligibility list for dedicated-purpose financing and requiring a credible transition plan for general-purpose financing.
• Governance: There is no standard approach to overseeing transition finance. Banks employ varied governance models for their transition finance approach, from centralized committees to decentralized decision-making, often involving sustainability, credit, and risk teams. Internal audit or independent verification processes are used to ensure robustness and transparency.

Global: NZBA has paused its activities and suggested restructuring

The Net-Zero Banking Alliance (NZBA) is a United Nations-backed coalition in the banking sector dedicated to advancing global net zero goals in the banking sector. Launched in 2021, NZBA members commit to transitioning both operational and attributable greenhouse gas (GHG) emissions from their lending activities to align with net zero pathways by 2050. Members are also required to set 2030 financed emissions targets, initially focusing on key emissions-intensive sectors. Starting from 2024, NZBA saw a series of high-profile departures. 

According to a statement from the United Nations Environment Programme (UNEP) on 27 August 2025, the NZBA has initiated a member vote on a proposed transition from a membership-based alliance to establishing its guidance as a new framework initiative. The Steering Group believes this is the most appropriate model to continue supporting banks globally. The NZBA has paused its ongoing activities while members finalise the current voting process and will announce the outcome once voting concludes at the end of September 2025.

Global: SBTi publishes Financial Institutions Net-Zero Standard 

On 22 July 2025, the Science Based Targets initiative (SBTi) published its first Financial Institutions Net-Zero Standard, which sets out a science-based framework for banks, asset managers, insurers and other financial institutions to align their lending, investing, insurance underwriting, and capital markets activities to achieve net-zero emissions by 2050. The SBTi has also published the following summary documents: FINZ Standard in Brief and One-page summary. The new standard has been created in consultation with financial institutions, with pilot testing by more than 30 financial institutions. 

Key elements of the new standard include:

• The “engagement first” approach, which prioritises engaging portfolio companies to set their own science-based targets as the primary mechanism to drive emissions reductions.
• Manage what is measured through required improvements in the quality and scope of emissions and non-emissions data. This includes the share of clean-energy-to-fossil-fuel financial exposure and climate alignment of portfolio companies (including entities, projects, and associated assets), as well as an assessment by 2030 of exposure to deforestation. 
• If there is significant deforestation exposure, an engagement plan to address it must be in place by the target renewal date at the latest.
• The fossil fuel transition policy requires financial institutions to publish a policy committing to the immediate cessation of new finance for coal expansion and new project finance for oil and gas expansion, as well as the phase-out of new general-purpose finance for oil and gas expansion immediately or by no later than 2030.
• The buildings policy recommends no finance for new buildings that are not designed to be zero-carbon-ready and increasing finance for retrofitting existing buildings.
• Near-term targets focus on supporting portfolio company transitions, driving finance for climate solutions, and aligning with key sector benchmarks. 
• Financial institutions have the flexibility to choose the target type: either portfolio climate alignment targets or sector-specific targets for emissions-intensive sectors.
• Long-term targets require counterparties to reach net-zero by 2050 and neutralise their residual emissions where relevant.
• Progress assessment and target renewal are required at the end of the near-term target cycle to incentivise and recognise continued progress toward targets.

Global: IFRS Foundation publishes near-final examples on reporting uncertainties in financial statements

On 24 July 2025, the IFRS Foundation published a staff working document providing near-final examples on the reporting of uncertainties in financial statements using climate-related cases. Although the examples use climate-related fact patterns, they provide guidance that applies broadly to all types of uncertainties. The examples demonstrate how companies can apply IFRS Accounting Standards to enhance disclosure of uncertainties in the financial statements. 

The International Accounting Standards Board (IASB) developed the examples in response to stakeholder feedback about insufficient information about uncertainties, particularly climate-related uncertainties, and apparent inconsistencies in the information a company provides. The IASB worked with the International Sustainability Standards Board (ISSB) to ensure the examples work well with the ISSB’s sustainability-related disclosure requirements.

EU: ESMA promotes clarity in sustainability-related communications

ESMA has published a ‘Thematic note on clear, fair & not misleading sustainability-related claims’ to help promote clarity in sustainability-related communications. The note focuses on ESG credentials (such as ESG labels or awards, voluntary initiatives or alliances, and comparison to peers). It offers helpful guidance on how EU rules apply in the context of promotional materials. It outlines four guiding principles and offers a set of practical “do’s and don’ts”, illustrated by real-life examples based on observed market practices. The note serves as a reminder of the focus that regulators currently have on greenwashing. Importantly, whilst the guidance contained in the note does not introduce new regulatory or reporting requirements, market participants are encouraged to familiarise themselves with the principles to avoid the risk of greenwashing or overstating the significance of ESG credentials. For more information, see our blog post. 

EU: EBA publishes no-action letter on application of ESG Pillar 3 disclosure requirements under EBA disclosure ITS

On 6 Augst 2025, the European Banking Authority (EBA) published a no-action letter (in the form of an Opinion) on the application of the ESG Pillar 3 disclosure requirements under the EBA disclosure ITS. The letter aims to address legal and operational uncertainties following the Omnibus package. The letter formalises the guidance already provided in the EBA’s Consultation Paper published in May 2025 on the amending ITS of the EBA Pillar 3 disclosure framework. Under that Consultation Paper, the EBA had proposed a phased approach for certain disclosure requirements under the ITS. In particular: 

• The EBA considered that large, listed institutions (which are already subject to the existing Pillar 3 ESG disclosure framework) should be able to benefit from a reporting suspension for Templates 6-10, until end 2026. This is because Templates 6-10 are linked to the Taxonomy and Green Asset Ratio - and requiring publication of these templates, while the related Taxonomy delegated acts are simultaneously being revised as part of the Omnibus proposals (see our original blog post on these proposals here), may have led to uncertainty and complexity across these disclosures. 
• The EBA also considered that institutions newly brought into scope of the Pillar 3 ESG disclosures (including small, non-complex institutions and non-listed institutions) should begin to apply their more limited disclosures from end 2026 as well.  

For more information, see our blog post. 

EU: EIOPA statement on the use of climate change scenarios in the ORSA

On 23 July 2025, the European Insurance and Occupational Pensions Authority (EIOPA) issued a statement on the findings of a monitoring exercise exploring how (re)insurers in the EU are integrating climate change-related risks in their Own Risk and Solvency Assessment (ORSA). The exercise follows EIOPA’s 2021 Opinion on the supervision of climate change risk scenarios in the ORSA, as well as related application guidance aimed at establishing consistent practices. 

In its statement, EIOPA says that the results of the monitoring exercise show a clear and very positive shift in firms’ risk management of climate change risk. EIOPA observes that, contrary to the situation observed in 2021, most insurers in the scope of the exercise now include climate change scenarios in their ORSA, considering both transition and physical risks, and scenario analysis has become a key element in assessing the financial impact of these risks. 

However, the exercise has also highlighted some challenges, including significant variations in approaches across jurisdictions, limited availability of high-quality, reliable and granular data, and the difficulty of extending the time horizon of analyses beyond what is typical for an ORSA. 

EIOPA says that the insights gained from its exercise will inform its ongoing work with supervisors and stakeholders. It plans to facilitate workshops between supervisors to share their experience and methodologies in a pragmatic setting.

EU: EBA consults on the revision of product oversight and governance guidelines for retail banking products to consider products with ESG features and greenwashing risks

On 9 July 2025, the European Banking Authority (EBA) published a consultation paper proposing to revise its guidelines on product oversight and governance (POG) arrangements for retail banking products to take into account products with ESG features and greenwashing risks.  
The EBA issued its initial guidelines on POG arrangements in 2015. The EBA is of the view that the guidelines need to be amended to take into account greenwashing considerations and ESG risk requirements contained in amendments to the Capital Requirements Directive (CRD) and the Capital Requirements Regulation (CRR). 

The consultation sets out proposed amendments to the content of the POG guidelines, including:

• Emphasising in the subject matter that manufacturers and distributors that offer and sell products or services with ESG features should establish the necessary POG arrangements, including considering the interest, objective and characteristics of the target market.
• Stating that the manufacturer's management body should put in place sound processes to identify, monitor, prevent and manage risks resulting from greenwashing or perceived greenwashing practices.
• Making explicit reference to ESG features and the target market to ensure that manufacturers establish procedures for ensuring the interests, objectives and characteristics of the target market are met.
• Listing conditions for sustainability-related communication and sustainability claims which are consistent with the requirements in the EBA guidelines on the management of ESG risks.
• Specifying that a distributor should, for products with ESG features offered and sold, ensure that sustainability-related communication is fair, clear, and not misleading, and that sustainability claims are accurate, substantiated, up to date and provide a fair representation.

The consultation closes on 9 October 2025. The EBA expects to publish its final guidelines in Q1 2026, which will be applied as of 1 December 2026.

EU: ECB to adapt collateral framework to address climate-related transition risks

On 29 July 2025, the European Central Bank (ECB) announced that it has decided to introduce a new measure within the collateral framework to address climate-related transition risks. A new “climate factor” will be introduced which “could reduce the value assigned to eligible assets pledged as collateral, depending on the extent to which an asset can be impacted by these [climate change-related] uncertainties." The measure will apply to marketable assets issued by non-financial corporation and will be implemented in the second half of 2026.

EU: ESAs provide further guidance on the SFDR

On 4 August 2025, the European Supervisory Authorities (ESAs) updated the consolidated Q&As on the Sustainable Finance Disclosure Regulation (SFDR) to include new Q&As covering the following:

• The meaning of the term “water usage".
• Clarification on how to calculate useful internal floor area for owned real estate assets.
• Best practice about disclosing percentages of environmentally sustainable investments and socially sustainable investments. 
• Whether financial products should calculate top investments or shares of investments in periodic disclosures in a specific way over the reference period.

UK: Government scraps plans for Green Taxonomy

On 15 July 2025, HM Treasury announced that it has decided not to proceed with plans to develop a UK Green Taxonomy, a classification system to define which economic activities and assets are considered to be environmentally sustainable. The Treasury launched a consultation in November 2024, seeking views on whether the UK should create a UK Green Taxonomy as part of the UK’s sustainable finance framework. The Treasury has published its response to the consultation stating that: “After careful consideration of the consultation responses, the Government has concluded that a UK Taxonomy would not be the most effective tool to deliver the green transition and should not be part of our sustainable finance framework. Whilst our ambitions to continue as a global leader remain unchanged, the consultation responses showed that other policies were of higher priority to accelerate investment into the transition to net-zero and limit greenwashing.” For more information, see our blog post. 

UK: FCA letter on progress in sustainability-linked loan market 

On 14 August 2025, the Financial Conduct Authority (FCA) published a letter reporting on the sustainability-linked loan market (see FCA press release). The letter follows an earlier review undertaken in 2023 in which the FCA identified weaknesses in market integrity, credibility and incentives as well as concerns around conflicts of interest. The new letter reports that since 2023 the sustainability-linked loan market has matured, with better practice and more robust structures. The letter notes that raising standards can help to establish sustainability-linked loans as a viable instrument even if it results in lower volumes of the product. KPIs were previously observed to be poorly designed and of low ambition, whereas now they are generally more relevant to the borrower’s business model. In 2023, the FCA observed that the incentives for borrowers to use sustainability-linked loans were low as a result of the marginal changes in pricing for meeting targets relative to the costs of developing and complying with a reporting framework. The letter notes that this remains an issue, as does borrower concern about potential reputational risks associated with sustainability-linked loans.

UK: Next steps on transition plans for pension schemes 

The Government published a consultation on transition plans in June 2025. This follows the manifesto commitment to mandate “UK-regulated financial institutions (including banks, asset managers, pension funds and insurers) and FTSE 100 companies to develop and implement credible transition plans that align with the 1.5°C goal of the Paris Agreement”. The consultation document defines transition planning as the process entities undertake to define a strategic roadmap for their transition towards net zero. 

In relation to pensions, the consultation says as follows: 

• The Department for Work and Pensions (DWP) will undertake a review of the Occupational Pension Schemes (Climate Change, Governance and Reporting) Regulations 2021 this year, building on evidence provided by the Pensions Regulator. 
• The DWP has asked the Pensions Regulator to assess the practicalities of transition plans for pension schemes. The Pensions Regulator has confirmed that it will work with industry stakeholders, advisers and professional bodies to develop and test a voluntary net zero transition plan template fit for occupational pension schemes, drawing on the work of the UK Transition Plan Taskforce. The Regulator plans to present the template to the DWP later this year. 
• The consultation asks for feedback on how any new transition plan requirements should integrate with the existing requirements for larger schemes to produce TCFD reports and to calculate the portfolio alignment metric. It also asks to what extent schemes already produce transition plans, their intended purposes, what information they draw on, and what challenges have been encountered in developing them. 

The consultation closes on 17 September 2025. For more information about that consultation, see our previous blog post. 

Global: Countries failed to agree on UN Plastics Treaty

In March 2022, representatives from 175 nations resolved at the United Nations Environment Assembly to create an international legally binding instrument to end plastic pollution. The Intergovernmental Negotiating Committee (INC) was established to develop, by the end of 2024, a treaty on plastic pollution, including in the marine environment, potentially using both binding and voluntary approaches. This is supposed be based on a comprehensive strategy addressing the full life cycle of plastics.

The initial aim to finalise the treaty by the end of 2024 was not achieved. Most recently, negotiations in Geneva in August 2025 also concluded without agreement, leaving the treaty’s future uncertain.

Negotiating sessions have taken place in several countries between 2022 and 2025, including Uruguay, France, Kenya, Canada, the Republic of Korea, and most recently, Switzerland. The fifth session in Geneva brought together more than 2,600 participants, including over 1,400 Member State delegates from 183 countries. The goal in Geneva was to agree on the treaty’s text and identify outstanding issues needing further work. Despite intensive engagement, talks adjourned early on 15 August 2025 without consensus, due to significant differences of opinion among States. Negotiations will resume at a future date to be announced.

According to the INC press release, a key division is between certain countries wanting to prioritise reduction of plastic production at its source and those wanting to focus on improved management of existing plastic waste. Oil-producing nations, whose economies depend on fossil fuels used to manufacture plastics, have shown resistance to any treaty limiting production.

EU: Commission proposes new 2040 climate target

On 2 July 2025, the European Commission published a proposal to amend the existing European Climate Law to introduce a new climate target for 2040. The Commission is proposing a 90% reduction in net greenhouse gas (GHG) emissions by 2040 (compared to 1990 levels). The Commission is also proposing to allow the following flexibilities when meeting the 2040 target: limited role (up to 3%) for the use of high-quality international credits under Article 6 of the Paris Agreement starting from 2036; the use of domestic permanent removals in the EU Emissions Trading System (EU ETS); and greater flexibilities across sectors to support cost-effective achievement of targets. The proposal sends a strong signal that the EU remains committed to its decarbonisation agenda. For more information, see our blog post. 

EU: Commission consults on the Circular Economy Act

On 1 August 2025, the European Commission launched a public consultation and a call for evidence to gather views on the upcoming Circular Economy Act. The consultations are open until 6 November 2025. In the Single Market Strategy published by the Commission on 21 May 2025, fragmented rules on packaging, labelling and waste were identified as one of the ten most harmful barriers to the free movement of goods and services in the EU. In the Circular Economy Act, the Commission plans to address the fragmentation created by different national extended producer responsibility (EPR) schemes, including through a digital one stop shop for information, registration and reporting. It also plans to reform end-of-waste and by-product criteria, provide a more harmonised framework for reaching end-of-waste and by-product status and facilitate cross-border shipments of waste feedstocks for recycling. The Circular Economy Act aims to help create sufficient supply of, and demand for, secondary raw materials (including critical ones) and a true single market for waste and secondary raw materials. The Circular Economy Act is planned for adoption in Q4 2026. For more information, see our blog posts here and here. 

EU: Ecodesign Regulation: consultations on information disclosure for discarded goods and exemptions to the ban on destroying unsold clothes

The Ecodesign for Sustainable Products Regulation (ESPR) introduces comprehensive sustainability requirements for nearly all products placed on the EU market, as well as new rules for managing unsold goods. Under the ESPR, economic operators that discard unsold consumer products directly, or have such products discarded on their behalf, must publicly disclose specific information—such as the weight and quantity of goods destroyed. The Regulation also generally prohibits the destruction of certain types of unsold products. From 19 July 2026, this ban will apply to apparel, clothing accessories, and footwear, with the potential for the European Commission to expand the scope to additional products in future. The ESPR requires the Commission to issue secondary legislation setting out the format for these disclosures and any exemptions to the destruction ban.

On 12 June 2025, the European Commission launched a consultation on a draft Implementing Regulation detailing the format and requirements for disclosing information on discarded unsold consumer products.  The draft Regulation specifies the content and structure of disclosures, along with rules on how to classify product types and categories. The consultation closes on 10 July 2025.

On 30 June 2025, the Commission opened a consultation on a draft Delegated Regulation establishing the list of permitted derogations and the conditions for their application. Unsold consumer products listed in the ESPR annex may be destroyed under certain circumstances. The consultation closes on 11 August 2025.

For more information, see our blog post. 

EU: Plans to prevent carbon leakage through extension of CBAM scope and support for EU exporters

On 2 July 2025, the European Commission launched a consultation and call for evidence on extending the scope of the Carbon Border Adjustment Mechanism (CBAM) to include certain downstream products. The objective is to further reduce the risk of carbon leakage and introduce anti-circumvention measures targeting practices intended to avoid CBAM financial obligations. The consultation closes on 26 August 2025. The Commission plans to adopt a proposal for a Regulation in Q4 of 2025. For more information, see our blog post.  

EU: European Commission launches Roadmap towards Nature Credits 

On 7 July 2025, the European Commission launched the Roadmap towards Nature Credits, which sets out, at a high level, the Commission’s plans to establish a nature credit system to incentivise investment in Europe’s nature and biodiversity. It has also published Q&As to accompany the Roadmap and has opened a call for feedback until 30 September 2025 to seek input on the plan. For more information, see our blog post. 

UK: Joint Committee on Human Rights publishes report on forced labour in UK supply chains  

On 24 July 2025, the UK Parliament’s Joint Committee on Human Rights published a report summarising the conclusions from its inquiry into the UK’s current legal and voluntary framework on forced labour in international supply chains. 

The Committee:

• found that the UK’s patchwork of domestic legislation relevant to forced labour and supply chains has not prevented goods linked to forced labour from entering the UK market;
• concluded that the UK is falling behind its main trading partners (such as the US and EU) in its approach to addressing forced labour in supply chains and new legislation is needed to ensure that the UK market is protected from goods tainted by forced labour;
• recommended the introduction of new legislation within one year that covers a new mandatory human rights due diligence duty, a right of action for victims of forced labour and a targeted import ban, as well as updates to the existing Modern Slavery Act 2015 (“MSA”); and 
• made several recommendations falling short of new legislation, including making it an explicit Government policy to include provisions concerning forced labour in future trade deals.

For more information, see our blog post. 

UK: Home Office releases optional international reporting template on modern slavery

On 30 July 2025, the Home Office published an optional international reporting template to help organisations meet modern slavery, forced labour and child labour reporting requirements across the UK, Australia and Canada. The template is designed to streamline compliance for multinational organisations facing overlapping obligations, reducing administrative burdens by enabling the preparation of a single report that addresses the core disclosure requirements of all three jurisdictions. Organisations must still consult and comply with the specific legislation and official guidance in each country, including any administrative requirements and reporting deadlines. 

Key features of the template include:

• Reporting requirements grouped into seven themes - including organisational structure, policies, risk management processes, due diligence and remediation measures, employee training, and assessment of effectiveness of actions taken.
• Proportionate, risk-based reporting - focusing on material risks to people (rather than organisational risk such as reputational or financial harm).
• Two-level reporting - encouraging progress and improvement in year-on-year reporting requirements. To facilitate this, reporting requirements are split into two categories: level 1 being the core disclosure requirements that generally meet or exceed minimum obligations, and level 2 being recommended enhanced disclosures to demonstrate progress, leadership and continuous improvement in supply chain transparency. 

France: Duty of Vigilance Law: Paris Court of Appeal upholds the state-owned postal company’s conviction for breaching its duty of vigilance

On 17 June 2025, the Paris Court of Appeal issued its first decision on the merits based on the French Duty of Vigilance Law. The Court upheld the judgment ordering the French state-owned postal company to revise its vigilance plan. The decision provides valuable guidance on the methodology to be applied under the French Duty of Vigilance Law when establishing a vigilance plan. It signals a shift towards stricter expectations for precision, prioritisation based on the seriousness of the risks identified in the risk mapping, and stakeholder engagement. While several cases are still pending before French courts, companies should proactively review their vigilance plans to reduce litigation risks and align with these clarified standards. For more information, see our blog post.  

Germany: Proposal to delete reporting obligations and reduce penalties under German Supply Chain Due Diligence Act

In line with the government’s coalition agreement, the German Ministry of Labour and Social Affairs proposes to streamline the Supply Chain Due Diligence Act (Lieferkettensorgfaltspflichtengesetz, LkSG). Reporting requirements are set to be abolished, and the imposition of fines will be regulated more restrictively, but due diligence obligations will remain in force. A draft of the proposal was sent to relevant associations on 29 August 2025 with a very short deadline for comments and, according to press reports, it may be adopted by the cabinet very soon. For more information, see our blog post. 

Global: International Court of Justice Advisory Opinion finds States have binding legal obligations to address climate change

On 23 July 2025, the International Court of Justice (ICJ) issued an advisory opinion, finding that States have binding legal obligations under international law to address climate change and protect the environment.  While the ICJ’s opinion is not legally binding, it does provide an authoritative interpretation of legally binding obligations and carries substantial legal and moral weight, so may well influence States’ policies (including in relation to certain sectors, such as fossil fuels).

Key takeaways:

• States have an obligation to protect the climate system and other parts of the environment from the harmful effect of greenhouse gas emissions, including by regulating the activities of private actors such as businesses. 
• These duties arise not just from climate change treaties, but from a wide range of international law (including customary international law, human rights frameworks and other environmental treaties). 
• The ICJ considered in detail States’ obligations under the Paris Agreement and how they are reflected in the obligation to prepare, communicate and maintain Nationally Determined Contributions (NDCs) – particularly notable given the expectation that States submit updated NDCs ahead of COP 30 in Brazil in November 2025. 
• Breach of their obligations constitutes an internationally wrongful act for which States may be liable for full reparation to injured States, including through restitution, compensation, and satisfaction. 
• The ICJ also established that the primary temperature goal under the Paris Agreement is to maintain global warming below 1.5 degrees Celsius, and that developed countries must take the lead in combating climate change and provide financial assistance to developing countries for both climate mitigation and adaptation activities.
• The ICJ opinion is the third of four advisory proceedings at international courts, clarifying state obligations in relation to climate change, including the opinion of the Inter-American Court of Human Rights on 3 July 2025 that States have a duty to mitigate and address environmental harms threatening human rights (such as climate change), including by adopting national laws, policies and actions.

For more information, see our blog post. To sign up for the quarterly ESG Disputes Bulletin, click here.

UK: Which? publishes a study on compliance with the CMA’s Green Claims Code

On 2 July 2025, Which? published a study analysing the compliance of green claims online with the CMA’s Green Claims Code in the UK. The study concludes that that although only around a fifth of product descriptions reviewed included a green claim, the consumer association considers many green claims made by businesses could fall short of compliance. For more information, including what it could mean for CMA enforcement and top compliance tips for businesses, see our blog post.

Singapore extends timeline for climate reporting for listed and large non-listed companies

On 25 August 2025, the Accounting and Corporate Regulatory Authority of Singapore (ACRA) and the Singapore Exchange (SGX) announced an extension to the timelines for implementing climate reporting (including external assurance) requirements for listed companies and large non-listed companies (Large NLCos, defined as non-listed companies with annual revenue of S$1 billion or more and total assets of S$500 million or more). 

With immediate effect:

• All listed companies will continue to report Scope 1 and 2 greenhouse gas (GHG) emissions from the financial year (FY) commencing on or after 1 January 2025.
• For other International Sustainability Standards Board (ISSB)-aligned climate-related disclosures (beyond Scope 1, 2 and 3 GHG emissions):
  • constituents of the benchmark Straits Times Index (STI) will implement these from FY2025, in line with the original timeline;
  • other listed companies with a market valuation of S$1 billion and more will be required to report from FY2028; and
  • those with a market value of less than S$1 billion will follow from FY2030.
• Scope 3 GHG emissions reporting will remain mandatory for STI constituent listed companies from FY2026.
• For non-STI constituent listed companies, Scope 3 GHG emissions reporting will be voluntary until further notice.
• For Large NLCos, ISSB-aligned climate-related disclosures, including Scope 1 and 2 greenhouse gas (GHG) emissions, have been deferred to FY2030. Scope 3 GHG emissions reporting will remain voluntary until further notice. External limited assurance for Scope 1 and 2 GHG emissions has also been deferred, with the requirement only taking effect from FY2032.

Singapore Business Federation proposes to extend deadline to comply with sustainability disclosure requirements

In June 2025, the Singapore Business Federation (SBF) proposed extending the compliance deadline for smaller Singapore Exchange (SGX)-listed companies to adopt International Sustainability Standards Board (ISSB) climate-related disclosures, citing limited readiness and resource constraints. SBF recommended: (i) granting small- and mid-cap listed companies more time to comply with ISSB standards; (ii) making disclosure requirements proportionate; (iii) providing Singapore-relevant, cross-sector and sector-specific guidance; and (iv) designating a central platform for digital reporting of climate-related disclosures.  

Singapore and the UK strengthen collaboration on energy transition and sustainable infrastructure investments in Southeast Asia 

On 12 July 2025, Singapore and the UK announced a collaboration to drive clean energy transition and advance the development of sustainable infrastructure across Southeast Asia (see MAS press release). During his official visit to Singapore, the UK Secretary of State for Foreign, Commonwealth and Development Affairs, David Lammy, announced a landmark pledge of up to £70 million to Singapore’s Financing Asia’s Transition Partnership (FAST-P) initiative, as part of the collaboration. The UK and Singapore are working together to accelerate sustainable infrastructure and investment across the region, including supporting early-stage project development through joint technical assistance and encouraging private sector involvement.

Singapore and China strengthen collaboration in green and transition finance

At the 3rd China-Singapore Green Finance Taskforce (GFTF) meeting in July, the Monetary Authority of Singapore and the People’s Bank of China discussed initiatives to advance cooperation in green and transition finance between the two countries. The discussion broadly covered the alignment of taxonomies building on the launch of the Multi-Jurisdiction Common Ground Taxonomy (M-CGT) (see our December 2024 ESG newsletter), facilitation of green finance flows through the Green Corridor (e.g. by encouraging green panda bond issuances, as well as alignment of debt financing with the M-CGT), and the development of technology-enabled emissions monitoring.

Monetary Authority of Singapore publishes its annual Sustainability Report 2024/2025

On 9 July 2025, the Monetary Authority of Singapore (MAS) published its annual Sustainability Report 2024/2025 which sets out MAS’ strategy on climate resilience and environmental sustainability to strengthen the resilience of Singapore’s financial sector to environmental risks, develop a vibrant sustainable finance ecosystem, build a climate-resilient investment portfolio and incorporate sustainable practices in the MAS. Key initiatives in 2024/2025 included:

• partnering with the Singapore Exchange (SGX) to start to incorporate the climate-related disclosure requirements of the IFRS Sustainability Disclosure Standards for SGX-listed issuers from FY2025;
• establishing an Industrial Transformation infrastructure debt programme, in addition to the Energy Transition Acceleration Finance (ETAF) partnership and Green Investments partnership (GIP), under the Financing Asia’s Transition – Partnership (FAST-P) initiative. A FAST-P Office has been established to support capital deployment across FAST-P’s three partnerships;
• publishing the Multi-Jurisdiction Common Ground Taxonomy (M-CGT) which serves as a technical reference document to identify and assess activities which are classified as green under the EU, China and Singapore taxonomies (see our December 2024 ESG newsletter); 
• publishing the Transition Credits Coalition (TRACTION) interim report that outlines key learnings behind the considerations on the use of transition credits to accelerate the early retirement of coal-fired power plants (see our December 2024 ESG newsletter); 
• launching Gprnt as an independent entity that will operate as part of the Global Finance and Technology Network (GFTN);
• together with the Institute of Banking and Finance (IBF), embarking on initiatives to support upskilling of the financial sector workforce in sustainable finance, focusing on priority job roles identified by the Sustainable Finance Jobs Transformation Map, such as corporate banking and private banking relationship managers as well as credit risk officers. 

MAS has also expanded its Climate Transition Programme (CTP), including its corporate bonds portfolio within the CTP and transitioning its CTP equities portfolios from passive to active management in FY2025.

Singapore Sustainable Finance Association publishes guidance for applying the Singapore-Asia Taxonomy following information paper by MAS

On 9 July 2025, the Singapore Sustainable Finance Association (SSFA) published the “Guidance for Leveraging the Singapore-Asia Taxonomy in Green and Transition Finance”. The Guidance is intended to help financial institutions and corporates across Southeast Asia apply the Singapore-Asia Taxonomy (SAT) in structuring green and transition financing. The Guidance follows the publication by the Monetary of Singapore (MAS) of the Information Paper “Application of the Singapore-Asia Taxonomy in the Financial and Corporate Sectors” in March 2025. The Information Paper sets out how the SAT is being used by a wide range of market participants including the public sector, the financial sector, the professional services sector, and real economy corporates who can reference or align with the SAT green and transition criteria to originate green and transition financing instruments, and use it as a reference tool when developing internal decarbonisation strategies. The Information Paper also sets out the progress in the SAT’s adoption since its launch in December 2023 with financial products being developed based on the thresholds and criteria of the SAT, sustainable finance frameworks across banks and corporates being aligned with or having made reference to the SAT criteria, and some corporates’ decarbonisation plans have also been guided by the SAT. The Guidance addresses practical challenges involved in interpreting and applying the SAT and offers practical solutions for structuring financing where full SAT alignment may not yet be feasible.

Singapore enters into carbon credit agreement with Thailand

On 19 August 2025, Singapore signed an Implementation Agreement on carbon credits collaboration under Article 6 of the Paris Agreement with Thailand, its eighth such Implementation Agreement following earlier deals with Papua New Guinea, Ghana, Bhutan, Peru, Chile, Rwanda and Paraguay (see our June 2025 ESG newsletter). This is Singapore’s first Implementation Agreement with an ASEAN country. The agreement provides a framework for generating and transferring carbon credits from carbon mitigation projects aligned with Article 6 of the Paris Agreement.

China unveils roadmap for green and low-carbon standards

On 26 June 2025, the Ministry of Industry and Information Technology released the “Implementation Plan on Further Promoting Green and Low-Carbon Standardisation of Industry and Information Technology” (Chinese language). The Implementation Plan aims to revise or issue over 100 standards in the green and low carbon fields by 2027, advancing green and low-carbon development in the industrial and information technology sectors. Key priorities include expanding carbon footprint standards, improving comprehensive resource utilisation by addressing gaps in resource utilisation and recycling standards, increasing the use of renewables in industry, and upgrading the energy-saving and green manufacturing standards. 

China issues the Green Finance Endorsed Project Catalogue (2025 edition)

On 14 July 2025, the People’s Bank of China, the National Administration of Financial Regulation, and the China Securities Regulatory Commission jointly issued the “Green Finance Endorsed Project Catalogue (2025 Edition)” (Chinese language) (the Catalogue) based on the “Green and Low-Carbon Transition Industry Guidance Catalogue (2024 Edition)” and the “Green Bond Endorsed Project Catalogue (2021 Edition)”. The Catalogue will take effect from 1 October 2025 and serves as a unified standard for identifying projects eligible for green finance in China, consolidating and updating previous standards for green bonds and low-carbon transition industries. It also expands the scope for eligible projects by introducing the “green trade” and “green consumption” categories to reflect increased focus on areas across the green value chain beyond production. The Catalogue applies to green loans and bonds but is currently not applicable to Chinese listed equities. Approved but undisbursed loans and existing bonds may remain under the previous standards. For bonds with application materials submitted before the publication of the Catalogue but not yet approved or registered, the applicants can choose which standard to follow. Authorities encourage issuers to align disclosures to the new Catalogue. 

EU and China issue joint statement on climate change

On 24 July 2025, at the EU-China Summit in Beijing, China and the European Union issued a joint statement on committing to deeper climate collaboration and renewed global leadership on climate action. The statement said that “… green is the defining color of China-EU cooperation, and that the two sides have a solid foundation and broad space for cooperation in the field of green transition”. In the statement, China and the EU committed to, amongst others, upholding the central role of the UNFCCC and the Paris Agreement and supporting Brazil in hosting COP30 and “promoting ambitious, equitable, balanced and inclusive outcomes of the conference”. There was also a commitment to accelerating global renewable energy deployment and facilitating access to green technologies and products; enhancing adaptation efforts; submitting before COP30 their respective 2035 Nationally Determined Contributions (covering all economic sectors and all greenhouse gases and in alignment with the long-term temperature goal of the Paris Agreement); and collaborating in such areas as energy transition, adaptation, methane emissions management and control, carbon markets, and green and low-carbon technologies.

China launches green foreign debt pilot to boost sustainable financing

On 21 August 2025, China’s State Administration of Foreign Exchange (SAFE) rolled out a pilot programme for green foreign debt financing (Chinese language) (the Pilot) in 16 provincial-level regions and cities. The Pilot encourages non-financial enterprises to use more cross-border financing for projects that meet green or low-carbon transition standards. Under the Pilot, green foreign debt occupies a smaller proportion of the enterprise’s total cross-border financing risk-weighted balance, effectively raising the ceiling for cross-border green investments. The registration process for such foreign debt is also streamlined, as banks now can process the applications directly. Going forward, SAFE states that it will ensure both openness and security while further facilitating cross-border financing to support the high-quality development of China’s real economy.

Hong Kong Monetary Authority launches the formal version of the Physical Risk Assessment Platform

On 10 July 2025, the Hong Kong Monetary Authority (HKMA) released the formal version of the Physical Risk Assessment Platform (the Platform), following the beta version of the Platform developed with KPMG Advisory (Hong Kong) Limited and XDI Pty Ltd last year. Authorised Institutions which have not yet registered for the Platform are encouraged to do so. The Platform is to support industry conduct physical risk assessments and to improve the industry’s understanding of physical risks. The Platform has been expanded to cover 11 physical hazards (including tropical cyclone storm surge and landslides) and it now has been updated with improved localisation, with specific archetype settings for Hong Kong buildings and updated flood maps.

Japan publishes interim report on approach to sustainability-related disclosures 

On 17 July 2025, Japan’s Financial System Council Working Group published an interim report outlining the phased introduction of sustainability disclosures and third-party assurance. To recap - on 5 March 2025, the Sustainability Standards Board of Japan (SSBJ) issued its sustainability disclosure standards (SSBJ Standards) which incorporates key elements of the sustainability disclosure standards published by the International Sustainability Standards Board (ISSB) (see our previous blog post). According to the interim report: (i) the mandatory sustainability disclosure requirement (coupled with third-party assurance from the following year) will apply to listed companies with a market cap of JPY 3 trillion (USD 20.2 billion) or more from the fiscal year ending March 2027, and smaller companies from the subsequent years; (ii) the scope of assurance will be limited to Scope 1 and 2 GHG emissions, alongside information on governance and risk management processes; (iii) there is permission to file detailed sustainability disclosures after the submission of annual report; and (iv) there will be further discussions around the eligibility of assurance providers, safe harbour over liability for uncertain and forward-looking data and additional reforms to ensure the regime’s international alignment.

Japan’s Financial Services Agency releases a number of reports related to climate-risk management and carbon credits 

On 20 June 2025, Japan’s Financial Services Agency (FSA) published a number of reports related to sustainability, including the following:  

• the FSA and the Bank of Japan (BOJ), in collaboration with three major banks,  issued “The Second Scenario Analysis on Climate-Related Risks (Banking Sector)” (see BOJ’s press release). The report focuses on transition risks over a seven-year horizon affecting bank loans, identifying challenges and areas for improvement. 
• the FSA published a report illustrating practices of, and issues for, financial institutions addressing climate-related risks (see FSAs’ press release). It builds on the 2022 “Supervisory Guidance on Climate-related Risk Management and Client Engagement” which outlined the FSAʼs position on supervisory dialogues with financial institutions on their efforts to address climate change. The report sets out the initiatives and challenges related to climate-related risk management by financial institutions, as well as support for clients in mitigating such risks, based on discussions conducted with financial institutions during FY2024.
• the FSA released a report by the Study Group on the “State of Financial Infrastructure for Carbon Credit Trading” (Japanese language) outlining a series of considerations to improve the transparency and financial integrity of carbon credit transactions to ensure investor protection and financial integrity.

Peruvian farmer's defeat against RWE: setback or stepping stone for climate litigation in Germany: read our publication

The UAE’s path to net zero: new regimes for emissions reductions and trading: read our publication

Britain’s wholesale electricity pricing to be reformed: read our blog post

Linklaters advises UK Government on landmark Sizewell C investment: read our press release

EU: Green light for green cooperations: competition authorities welcome joint decarbonisation projects with new guidance: read our blog post