Omnibus I: state of play on the Requirements Proposal

The Requirements Proposal forms part of the Omnibus I package and proposes substantive changes to the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD or CS3D). The Council agreed its negotiating position (general approach) on the Requirements Proposal on 23 June 2025. The Council position includes an additional EUR 450 million turnover threshold for the CSRD and further restricts the scope of the CSDDD by requiring 5,000 employees and EUR 1.5 billion net turnover. The Council position also pushes back the application date of the CSDDD by one year to 26 July 2029. For more information on the Council position, see our blog post.

The draft Parliament JURI Report on the Requirements Proposal is now in circulation (see here). The JURI committee had until 27 June to submit amendments to the draft report. The Parliament will then vote on its final negotiating position in October 2025.

As we reported in last month’s edition of the ESG newsletter, on 18 April 2025, a number of non-governmental organisations (NGOs), including ClientEarth, filed a formal complaint with the European Ombudsman concerning the manner in which the European Commission prepared the first Omnibus proposal. The European Ombudsman announced on 21 May 2025 that it had opened an inquiry to investigate the complaint.

ClientEarth commissioned a law firm to assess the legal risks of the Omnibus I proposal should it be passed into law. In a legal opinion published on 24 June 2025, the firm identified several grounds for legal challenge to the proposal, including violations of the principles of proportionality, legal certainty, legitimate expectations, coherence, and environmental integration, as well as the Charter of Fundamental Rights. The analysis warns that breaches of essential procedural requirements could lead to the Omnibus I being found invalid. The report also notes that these legal challenges could be brought before European Union courts by EU institutions, Member States, civil society organisations, and private operators. However, ClientEarth have not indicated that they intend to commence legal proceedings against the Commission at this stage.

To stay on top of all Omnibus developments, see our Omnibus Tracker.

EFRAG delivers progress report to the Commission on simplification of ESRS

On 20 June 2025, EFRAG published its Progress Report to the European Commission on the simplification of the European Sustainability Reporting Standards (ESRS). During the SRB meeting on 19 June, EFRAG announced that the first draft of the amended ESRS will be shared by the end of June and will be discussed at the SRB meeting scheduled for 2 July 2025. The final draft of the revised ESRS is expected to be opened for public consultation at the end of July. For more information, see our blog post.

Omnibus I: political agreement reached on CBAM simplification

On 18 June 2025, the European Parliament and the Council reached a political agreement on amendments to simplify the Carbon Border Adjustment Mechanism (CBAM) Regulation. Although the compromise text is not yet available, the European Parliament’s press release indicates that the co-legislators supported the Commission’s proposal for the introduction of a new de minimis mass threshold. Under this provision, imports up to 50 tonnes per importer per year will not be subject to the CBAM rules, replacing the current threshold that exempts goods of negligible value (set within the customs duty framework). The agreed text will now need to be formally adopted by the Parliament first, followed by the Council. According to the Council press release, they expect the formal adoption process to be finalised by September 2025. For more information, see our blog post.

Omnibus IV: Council agrees its negotiating position on due diligence rules for batteries

On 19 June 2025, the Council approved its negotiating position (general approach) on the Battery Due Diligence Proposal (see Council press release). The text of the Council position is not available yet. The Batteries Regulation sets due diligence rules for operators who must verify the source of raw materials used for batteries placed on the EU market. These due diligence obligations are set to apply from 18 August 2025. Also, the Commission is currently required to publish guidelines on these due diligence requirements by 18 February 2025. The Battery Due Diligence Proposal postpones the due diligence requirements until 18 August 2027, and the date of publication of the Commission’s guidelines until 26 July 2026. The proposal forms part of the Omnibus IV package adopted by the Commission on 21 May 2025 (for more information on this package, see our previous blog post).

In the Parliament, the Rapporteur’s draft Report is expected to be approved by the ENVI Committee on 3 July. Once the Parliament has adopted its negotiating position, trilogue discussions with the Council can start.

EU: sustainable finance and environmental elements of the Defence Readiness Omnibus

On 17 June 2025, the European Commission adopted the Defence Readiness Omnibus. According to the Commission, this package aims to facilitate up to EUR 800 billion in defence investments over the next four years. The package comprises a Commission Communication alongside several legislative and non-legislative proposals, covering both defence-specific and broader regulatory areas.

One of the elements of this Omnibus package is the Commission Notice on the application of the sustainable finance framework and the Corporate Sustainability Due Diligence Directive (CSDDD) to the defence sector. In the Notice, the Commission explores the risk mitigation provisions in different legislative files of the sustainable finance framework and the CSDDD. The Commission also approved the Commission Delegated Regulation where it clarified that only companies involved in prohibited weapons must be considered in the context of the Paris-Aligned and Climate Transition Benchmark exclusions.

Another element of the Defence Omnibus are several proposed changes to existing environmental and chemicals legislation - including a draft Regulation amending the REACH, CLP, Biocidal Products and POPs Regulations.

Read our blog post for more details on the sustainable finance and environmental aspects of this package.

Global: Basel Committee publishes international voluntary climate risk disclosure framework for banks

On 13 June 2025, the Basel Committee on Banking Supervision (the primary global standard setter for the prudential regulation of banks) published its framework for the voluntary disclosure of climate-related financial risks. At a high level, the framework is intended to guide banks across jurisdictions on disclosing their climate-related financial risks. It includes both qualitative and quantitative guidance on how banks can report their exposures. The framework is voluntary (a departure from the original proposal to make some elements mandatory). Implementation will only become mandatory where required by national supervisors at a jurisdictional level. For more information, see our blog post.

EU Green Bond Regulation: Commission adopts voluntary pre- and post-issuance disclosure templates

The EU Green Bond Regulation establishes (i) an official label for issuers that can meet the stringent requirements of the EU Green Bond Standard and (ii) creates a standalone voluntary disclosure regime for bonds marketed as environmentally sustainable and sustainability-linked bonds. On 16 April 2025, the Commission adopted (i) its Communication establishing non-binding guidelines for pre-issuance disclosures (and templates) and (ii) delegated acts (and templates) relating to the post-issuance disclosures, under the voluntary disclosure regime of the EU Green Bond Regulation.

If there are no comments from the European Parliament and the Council of the EU on these delegated acts, the scrutiny period will end on 16 July 2025. The delegated acts will be published in the Official Journal of the EU in the weeks thereafter. The official publication of the Commission Guidelines relating to the voluntary pre-issuance disclosures will follow the expiration of scrutiny period applicable to the delegated acts (i.e. 16 July 2025). We expect these Guidelines will also be published in the Official Journal in the weeks after the scrutiny period has ended. For more detail on the European Green Bond Regulation, see our EU Green Bond Regulation Hub.

Global: IOSCO Sustainable Bonds Report

On 21 May 2025, the International Organization of Securities Commissions (IOSCO) published its Sustainable Bonds Report which looks at the key characteristics and trends tied to the sustainable bond market. The report aims to provide a comprehensive analysis of the sustainable bond market and support initiatives of IOSCO's member jurisdictions in this area. The report includes several key considerations, designed to address market challenges, including enhancing investor protection, ensuring sustainable bond markets are operating in a fair and efficient way, and improving accessibility. For more information, see our blog post.

Global: ICMA publishes new materials at Annual General Meeting of Green, Social, Sustainability and Sustainability-Linked Bond Principles

On 26 June 2025, the International Capital Market Association (ICMA) released new materials and guidance to support the Green, Social, Sustainability and Sustainability-Linked Bond Principles. The new materials and guidance include Sustainable Bonds for Nature: A Practitioner’s Guide, an updated 2025 version of the Green Bond Principles, and a new annex to the Green Enabling Projects Guidance containing dedicated FAQs. Additionally, a new annex with dedicated FAQs has been added to the Sustainability-Linked Loan Financing Bonds Guidelines. For more information, see our blog post.

EU: ESAs launch consultation on how to integrate ESG risks into the financial stress tests for banks and insurers

On 26 June 2025, the European Supervisory Authorities (ESAs) launched a consultation on their draft joint guidelines on ESG stress testing. The consultation closes on 19 September 2025. The final guidelines are expected to be finalised and published by 10 January 2026.

The guidelines provide proposed guidance on the design and features of stress tests with ESG elements, as well as the organisational and governance arrangements such stress tests would need to have. There is an expectation that, given the evolving nature of ESG risks and stress testing methodologies, competent authorities should regularly review and refine their stress testing frameworks. For more information, see our blog post.

EU: ESMA Final Report on amendments to EU Prospectus regime

The EU Listing Act, amending (in particular) the Prospectus Regulation, entered into force on 4 December 2024. However, many of the new provisions, including new requirements for product specific ESG disclosures for non-equity securities, will not apply until 5 June 2026 since they are reliant on level 2 measures (technical standards and delegated acts).

ESMA was mandated by the Commission to provide technical advice on many aspects of the delegated acts. Following its consultation in autumn 2024, ESMA published its Final Report on technical advice concerning the Prospectus Regulation on 12 June 2025, which includes its proposed changes to Commission Delegated Regulation (EU) 2019/980 setting out format amendments and updated disclosure annexes. For more information, see our client briefing.

EU: ESMA finds improvements needed in supervision of sustainability risks and disclosures

On 30 June 2025, European Securities and Markets Authority (ESMA) published its final report on the 2023-2024 Common Supervisory Action on the integration of sustainability risks and disclosures (see also the ESMA press release) . ESMA launched this supervisory action in July 2023 to assess how sustainability risks are integrated and disclosed within the investment fund sector (for more information on the Common Supervisory Action, see our previous blog post).

The results show that, while most national competent authorities (NCAs) found an overall satisfactory level of compliance, there is still scope for improvement in managers’ adherence to the framework for integrating sustainability risks and disclosures. The report provides examples of both good and non-compliant practices.

ESMA acknowledges the challenges reported by NCAs, noting that key concepts in the Sustainable Finance Disclosure Regulation (SFDR) - such as the definition of sustainable investment under Article 2(17) of the SFDR - are currently left to the discretion of market participants. A future review of the SFDR, establishing product categories with clear criteria, would help mitigate this issue. In the interim, market participants must continue to comply with the current rules, and NCAs are encouraged to use their enforcement powers as appropriate in cases of regulatory breaches.

ESMA also highlights that concrete changes resulting from a future review of the SFDR will not be applicable in the near term. It is therefore important that NCAs remain vigilant in supervising the current framework, and that supervised entities continue to apply the existing provisions.

EU: ESMA calls for proportionate approach to ESRS supervision

The European Securities and Markets Authority (ESMA) has published a statement on the supervision of the initial ESRS-compliant disclosures. ESMA highlighted the uncertainty created by the concurrent introduction of the first European Sustainability Reporting Standards (ESRS), inconsistent transposition of the Corporate Sustainability Reporting Directive (CSRD), and the Omnibus legislative proposals. This has raised questions about how national competent authorities (NCAs) will supervise sustainability reporting.

ESMA further noted that applying the ESMA Guidelines for Enforcement of Sustainability Information (GLESI) in the early years of ESRS implementation will involve a learning curve for all parties. Supervisory efforts will need to be “proportionate and realistic” (for more information on GLESI, see our blog post). ESMA also observed that NCAs can play a supportive role by identifying areas where issuers can enhance their reporting. NCAs in Member States where the CSRD has not yet been transposed will continue to fulfil their supervisory responsibilities in line with current national law. While these NCAs cannot formally declare compliance with the GLESI, they will apply comparable procedures consistent with ESMA’s guidance on sustainability information.

EU: EIOPA report on biodiversity risk management by insurers

On 30 June 2025, EIOPA published a report exploring the extent to which (re)insurers in the EU are already identifying, measuring and managing biodiversity risks and the tools that they are using to do so. EIOPA’s press release provides an overview of the report.

Despite the challenges that EIOPA says exist in assessing biodiversity risks due to their complexity and their interconnectedness with other environmental risk factors, the report notes what EIOPA describes as “promising market practices” among (re)insurers. At the same time, EIOPA points to areas where it believes further engagement will be essential to strengthen the industry’s ability to respond to biodiversity-related risks going forward.

Global: UN Ocean Conference

The UN 2025 Ocean Conference was held in France from 9 - 13 June 2025. Key outcomes of the Conference include:

• Nice Ocean Action Plan: The Conference adopted a declaration titled “Our ocean, our future: united for urgent action”, stressing that the ocean plays an essential role in mitigating the adverse effects of climate change. This is a two-part framework that comprises a political declaration and over 800 voluntary commitments by governments, scientists, UN agencies, and civil society since the previous conference. The declaration reaffirms the goal of protecting 30 percent of the ocean and land by 2030, while supporting global frameworks like the Kunming-Montreal Biodiversity Agreement and the UN International Maritime Organization’s (IMO) climate goals.
• High Seas Treaty: Progress was made towards the ratification of the Biodiversity Beyond National Jurisdiction (BBNJ) agreement, also known as the High Seas Treaty. The Treaty was adopted in 2023 to safeguard marine life in international waters. Sixty ratifications are needed for it to enter into force. During the Conference, 19 countries ratified the Treaty, bringing the total number, as of 13 June, to 50.
• Deep sea mining: Many world leaders, including heads of state from France and Costa Rica (the host countries), renewed calls for a global moratorium on deep sea mining. Their position was that no commercial mining should be allowed until there is solid scientific evidence demonstrating that it can be done without harming marine ecosystems. The Conference did not establish new legal restrictions or frameworks for deep sea mining, but it firmly reinforced global calls for a pause or moratorium.
• Global Plastics Treaty: 95 countries issued the “Nice Call for an Ambitious Treaty on Plastic Pollution,” urging for a global target to reduce plastic production and to reach agreement on the treaty by August 2025. The next meeting for the treaty negotiations will take place in Switzerland from 5 to 14 August 2025.

EU: European Ocean Pact

On 5 June 2025, the European Commission published the European Ocean Pact. It includes Communication, Factsheet and a Q&A document. The Commission describes the Ocean Pact as a comprehensive strategy designed to better protect the ocean, promote a thriving blue economy, and support the well-being of people living in coastal areas. The Pact brings together the European Union’s ocean-related policies and actions, creating a unified and coordinated plan for ocean management.

The Pact is structured around six priorities: protecting and restoring ocean health; boosting the competitiveness of the EU sustainable blue economy; supporting coastal and island communities and outermost regions; advancing ocean research, knowledge, skills and innovation; enhancing maritime security and defence; and strengthening EU ocean diplomacy and international ocean governance.

The Pact envisages that, by 2027, the Commission will propose an “Ocean Act” building on a revision of the Maritime Spatial Planning Directive. This Act would provide a single framework to facilitate the implementation of the Pact’s objectives, while reducing administrative burden. It aims to strengthen and modernise maritime spatial planning through increased cross-sectoral coordination at national level and by promoting a more organised sea basin approach.

The Commission will also establish an Ocean Board composed of representatives from relevant sectors linked to the ocean. The Board will assist the Commission in the monitoring and implementation of the Ocean Pact.

EU: Water Resilience Strategy

On 4 June 2025, the European Commission adopted its Communication on the European Water Resilience Strategy. Water resilience was identified as a priority within the European Commission’s 2024-2029 Political Guidelines. According to the Strategy, it aims to help all regions of the EU improve the management of their waterbodies, address water scarcity, enhance the competitive and innovative edge of the water industry, and foster a clean and circular approach. The Strategy primarily sets out non-legislative actions.

The Strategy outlines three key objectives: (i) restoring and protecting the water cycle as a basis for sustainable water supply; (ii) building a water-smart economy that supports EU competitiveness, attracts investment, and promotes a thriving water industry; and (iii) ensuring clean and affordable water and sanitation, as well as empowering citizens for water resilience.

The Communication establishes a target to improve water efficiency by at least 10 per cent by 2030. During the scheduled review of the Strategy in 2027, the Commission intends to develop common benchmarks. Member States are encouraged to set their own targets for water efficiency, tailored to national circumstances.

The Strategy also addresses the simplification of EU water rules, including streamlining and enhancing the efficiency of electronic reporting under the Water Framework Directive and revising the Marine Strategy Framework Directive. In relation to the extended producer responsibility system introduced by the Urban Wastewater Treatment Directive, the Commission intends to conduct an updated study on costs and potential impacts for the sectors concerned.

The Commission has emphasised the importance of assessing and, wherever feasible, limiting additional water demand associated with the clean industrial and digital transformation, supporting this through water-smart planning. Specifically, to encourage water savings in data centres, the Commission will rate their energy efficiency and overall sustainability, and propose minimum performance standards, including for water consumption.

EU: upcoming Danish Presidency publishes its programme

The upcoming Danish Presidency of the Council published its programme, outlining the working areas on which it intends to focus by priority. The programme provides that the green transition will be continued in a way that maintains the level of ambition while also supporting EU competitiveness, security of supply, and ensuring Europe’s independence from Russian energy. The Presidency will prioritise negotiations on a forthcoming proposal for a new EU climate target for 2040 and the Commission’s Omnibus packages and other proposals aimed at simplification. The first Omnibus package, centred on sustainability reporting and due diligence, will be given particular priority (for more information on Omnibus I, see our previous blog post).

EU: Commission proposes EU Space Act

On 25 June 2025, the European Commission published a Proposal for a Regulation of the European Parliament and of the Council on the safety, resilience, and sustainability of space activities in the Union (EU Space Act). According to the press release, the Act introduces a set of measures designed to make Europe’s space sector cleaner, safer, and more competitive, both within Europe and in export markets.

The EU Space Act aims to cut administrative burdens, protect space assets, and establish a fair and predictable environment for businesses. The three key pillars of the proposed Act include sustainability: operators will be required to assess and minimise the environmental impact of their space activities, while benefiting from support for innovation in emerging technologies such as in-orbit servicing and debris removal. The new rules would apply to both EU and national space assets, as well as to non-EU operators providing services in Europe. Regulatory requirements are intended to be proportionate, taking into account company size and maturity, and calibrated according to the associated risks.

The legislative proposal will be subject to the ordinary legislative procedure, which may take approximately 18 months.

EU: Commission publishes draft Implementing Regulation on the disclosure of information on unsold goods

On 12 June 2025, the European Commission published a consultation on a draft Implementing Regulation setting out the details and format for the disclosure of information on discarded unsold consumer products as required by the Ecodesign Regulation for Sustainable Products (ESPR).

The ESPR requires economic operators that discard unsold consumer products directly or have unsold consumer products discarded on their behalf to disclose certain information relating to the destruction (e.g., on the weight and number of the discarded products). The Implementing Regulation will specify the delimitation of the product types concerned, the format for the disclosure of information and how such information is to be verified. The consultation closes on 10 July 2025.

For more information on the ESPR, see our client briefing.

UK: FRC’s streamlined Stewardship Code 2026 redefines long-term sustainable value

The Financial Reporting Council (FRC) has finalised revisions to its UK Stewardship Code. The Stewardship Code 2026 will begin to take effect next year and aims to maintain high standards in relation to investments in a wide range of asset classes, including listed equities and private capital. At the same time, the new streamlined Code seeks to encourage competitiveness and growth by reducing reporting obligations for the investors, asset managers, and related service providers that choose to follow it. One of the key changes in the Code is an updated definition of what stewardship is for. This now emphasises the FRC’s view that it is for shareholders to decide what long-term sustainable value means for their own investments. This may, but does not need to, include the pursuit of environmental, social or governance benefits. For more information, see our blog post.

Webinar: Transition plans in focus

As part of London Climate Action Week, we ran a webinar discussing transition plans and what the evolving regulatory landscape looks like, including in the UK and under the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). We also looked at practical legal considerations, including alignment with broader strategies and communications and key legal issues to bear in mind when developing and preparing transition plans. Click here to watch the recording of our webinar.

Global: IFRS Foundation publishes guidance on transition plans

On 23 June 2025, the IFRS Foundation (which is responsible for the ISSB) published new guidance on disclosures about transition plans (see press release). The IFRS guidance builds on the disclosure-specific materials developed by the Transition Plan Taskforce (TPT), for which the IFRS Foundation took responsibility in 2024. The guidance is intended to support entities in applying IFRS S2 on Climate-related Disclosures. It is intended to help preparers determine what information is relevant to disclose regarding their strategy and goals related to their climate-related transition. The guidance does not add to or change the requirements in IFRS S2. Also, the guidance document does not provide guidance on the transition planning process – e.g. how to develop a transition plan. Importantly, IFRS S2 does not require a preparer to produce a transition plan if it does not yet have one or to publish a transition plan where it has one. What it requires is the disclosure of certain information about how the preparer is preparing to transition.

UK: Government consults on draft UK SRS, transition plans and sustainability assurance

On 25 June 2025, the UK government published three related consultations:

• The Department for Energy Security and Net Zero (DESNZ) published a consultation on transition plans.
• The Department for Business and Trade (DBT) published Exposure Drafts of the UK Sustainability Reporting Standards (UK SRS) for consultation. The UK SRS will implement the ISSB's sustainability disclosures standards (IFRS S1 and IFRS S2) into UK law.
• The DBT has also published a consultation on the government's proposal for greater regulatory oversight of third-party assurance services for sustainability-related financial disclosures.

See our blog posts for more information:

• UK consults on draft UK SRS: implementation of ISSB sustainability disclosure standards
• UK government consults on transition plans: keeping its options open
• UK government proposals for overseeing third-party assurance of sustainability related financial disclosures

Global trends in climate litigation

On 25 June 2025, the Grantham Research Institute on Climate Change and the Environment published its seventh annual ‘Global Trends in Climate Change Litigation: 2025 Snapshot’ Report. The report focuses on developments in global climate change litigation over the calendar year 2024 through to May 2025. Key takeaways include:

• Climate litigation continues to evolve and mature with more cases reaching highest level courts (i.e. supreme or constitutional courts). In 2024, claims were brought against a wider range of actors - including governments, companies, professional services firms and financial institutions - and concerned a diverse range of topics, including climate strategies, climate-washing, financed emissions and climate-related damage.
• Courts are increasingly recognising that companies may have responsibilities in relation to the consequences of their emissions but remain cautious about imposing on companies binding emissions reduction targets or plans.
• More strategic litigation is expected on the standard of care to which companies should be held, particularly in high emitting sectors in relation to their emissions, although these cases are likely to continue to face legal, procedural and evidentiary hurdles.

For more information, see our blog post.

EU Council sets fight against environmental crime as key priority for coming years

The EU Policy Cycle for organised and serious international crime (commonly known as the “European Multidisciplinary Platform Against Criminal Threats” or EMPACT) was launched by the EU Council in 2010. EMPACT works in four-year cycles. Each cycle starts with an EU Serious and Organised Crime Threat Assessment (EU SOCTA), which highlights the most pressing threats and serves as an input for the Council conclusions that define EU crime priorities. The 2025 EU SOCTA, drawn up by Europol, underpins the priorities for the 2026-2029 EMPACT cycle. It highlights seven key threats to EU’s internal security, including waste crimes. In line with the EU SOCTA, the Council has set, in conclusions issued on 13 June 2025, the fight against environmental crime as one of the key priorities of the next EMPACT cycle. The Council also calls on Member States, and Europol, to integrate the relevant actions developed within EMPACT into their security strategies and planning and allocate resources to support a common EU approach. For more information, see our blog post.

EU: uncertainty on withdrawal of the Green Claims Directive 

An European Commission spokesperson indicated during a daily press briefing on 20 June 2025 that the Commission intended to withdraw the legislative proposal for a Green Claims Directive. This announcement came after the European Parliament’s European People’s Party (EPP) requested the withdrawal of the proposal in a letter sent to Commissioner Jessica Roswall. Following the Commission’s announcement on its intention to withdraw the legislative proposal, the Council cancelled the third trilogue meeting scheduled for 23 June. The Parliament’s co-rapporteurs gave a press conference on 23 June where they confirmed that the Parliament remains ready to negotiate the file. Commission Executive Vice-President Teresa Ribera, responsible for a Clean, Just and Competitive Transition, clarified at a press conference on 25 June that the Commission has not officially withdrawn the Green Claims Directive, despite its previous announcement.

At Council level, there is now a blocking minority of EU countries, including Italy and Germany, against the previously agreed position of the Council, preventing negotiations from moving forward. We are following these developments closely and will be reporting on them on our blog.

Read our previous blog post for more information on the Commission proposal, and these blog posts here and here on the agreed positions of the Council and the Parliament before the start of their trilogue negotiations.

South Korea reintroduces human rights and environmental due diligence bill

South Korea’s “Legislative Bill for the Act on the Protection of Human Rights and the Environment for Sustainable Business Management” was reintroduced to the National Assembly on 13 June 2025 by Representative Jung Tae-ho (referred to as the Corporate Human Rights and Environmental Due Diligence Act (the Act)). The draft legislation was originally introduced in September 2023 (see our October 2023 ESG newsletter). The Act requires companies to identify and address potential adverse human rights and environmental impacts throughout their business operations and supply chains. If passed, it will require companies in-scope (including both domestic and certain foreign entities operating in South Korea) to conduct due diligence processes, report their findings, and potentially implement remedial measures. If passed, the Act would be Asia’s first mandatory human rights due diligence law. (** This newsletter is intended merely to highlight developments and is not intended to provide Korean law advice.)

Hong Kong SAR Government welcomes publication of the IFRS jurisdictional profiles

On 12 June 2025, the Hong Kong SAR Government welcomed the publication of jurisdictional profiles by the International Financial Reporting Standards Foundation, which confirms Hong Kong as among the initial set of jurisdictions having set a target of fully adopting the International Financial Reporting Standards - Sustainability Disclosure Standards (the ISSB Standards) (see press release). On 12 December 2024, the Hong Kong Institute of Certified Public Accountants published the Hong Kong Sustainability Disclosure Standards that are fully aligned with the ISSB Standards, with an effective date of 1 August 2025 (see our previous blog post) and on 10 December 2024, the Government launched the Roadmap on Sustainability Disclosure in Hong Kong (see our previous blog post).

Singapore consults on draft voluntary carbon market guidance

On 20 June 2025, the National Climate Change Secretariat, the Ministry of Trade and Industry, and Enterprise Singapore jointly issued draft guidance on how companies can voluntarily use carbon credits as part of a credible decarbonisation plan. The guidance is intended to be a live document to be updated as new information becomes available. It is not meant to provide exhaustive guidance on all aspects of using carbon credits but covers issues such as the need for carbon credits to have high environmental integrity and criteria to assess that; and that companies should prioritise all feasible abatement efforts before considering the use of credits to address remaining emissions. The guidance also covers the Article 6 mechanism and clarifies that “corresponding adjustments” do not apply to credits purchased by companies looking to meet their voluntary climate commitments as these credits are not counted towards Nationally Determined Contributions. The consultation closes on 20 July 2025.

Singapore, UK and Kenya launches first government alliance to restore confidence in the voluntary carbon market

A new coalition between Singapore, the United Kingdom, and Kenya (named “The Coalition to Grow Carbon Markets”) — launched during London Climate Action Week on 24 June, and is now joined by France, Panama and endorsed by Peru. This coalition seeks to grow and improve the global voluntary carbon market by encouraging companies to voluntarily buy carbon credits as part of their emission-cutting efforts. The Coalition to Grow Carbon Markets plans to release a document at the 2025 UN Climate Change Conference in November, outlining shared principles to guide businesses in their voluntary use of high-quality carbon credits.

Thailand issues the Thailand Taxonomy Phase 2

On 27 May 2025, the Thailand Taxonomy Board (which consists of 13 agencies from Thailand’s public and private sectors, notably, the Bank of Thailand (BOT), the Securities and Exchange Commission and the Thai Bankers’ Association) published Phase 2 of the Thailand Taxonomy (see BOT’s press release). The Thailand Taxonomy Phase 2 covers the following sectors: agriculture, construction and real estate, manufacturing, and waste management sectors. The Thailand Taxonomy Phase 2 follows the Thailand Taxonomy Phase 1, which focused on the energy and transportation sectors (see our September 2023 ESG newsletter).

China issues guidelines to advance market-based allocation of resources and environmental factors

On 29 May 2025, the General Office of the Communist Party of China Central Committee and the General Office of the State Council jointly issued the Guideline on Improving the System for Market-based Allocation of Resources and Environmental Factors (Chinese language) (the Guideline). The Guideline sets out a roadmap to accelerate China’s green transition, with a focus on strengthening market mechanisms for carbon emission rights, water use rights, and pollutant discharge rights. Key reforms include optimising quota allocation, expanding the scope of tradable factors, strengthening trading mechanisms, and improving foundational capacities. Building on China’s green transition goals set in October 2022 (see our November 2022 ESG Newsletter), the Guideline aims to foster dynamic markets, better price-setting processes, and efficient flows of resources and environmental factors. The Guideline supports China’s vision to establish a comprehensive national trading system for carbon emission rights and water use rights, and a better well-functioning trading system for pollutant discharge rights by 2027.

China publishes national plan to strengthen climate change standards

On 30 May 2025, the Ministry of Ecology and Environment, together with 15 other government departments jointly published the Plan for Constructing a National Standard System for Addressing Climate Change (Chinese language) (the Plan). The Plan sets out a phased strategy to build a unified national system of climate standards, focusing first on the essential standards across sectors while progressively expanding the system’s scope and operability. The Plan aims to enhance inter-agency coordination for consistency and encourages participation in international standard-setting to enhance China’s global engagement. The Plan is structured around three key functional categories: basic capabilities, climate change mitigation, and climate change adaptation. Under these pillars, the Plan sets out 15 secondary and 45 tertiary standard categories to ensure comprehensive coverage of climate action priorities.

China launches nationwide hydrogen pilot to scale up commercial deployment

On 10 June 2025, China’s National Energy Administration announced a nationwide Pilot Programme for Hydrogen Energy in the Energy Sector (Chinese language) (the Programme) to scale up hydrogen technology, infrastructure, and applications across the nation. The Programme covers 11 specific areas across the hydrogen value chain, spanning four major categories: hydrogen production, hydrogen storage and transport, hydrogen application, and general support. Each pilot project is required to demonstrate technological progression, commercial potential, carbon reduction impact, and the ability to serve as a replicable industry model. The Programme targets comprehensive commercial deployment of the pilot projects by June 2028.

China releases draft application guidelines for corporate sustainability disclosure standards

On 23 June 2025, China’s Ministry of Finance released the Draft Application Guidelines for Corporate Sustainability Disclosure Standards (Chinese language) (the Guidelines) for public consultation. The Guidelines form part of China’s ongoing effort to develop a unified sustainability disclosure standards system, comprising three key components: Basic Standards, Specific Standards, and Application Guidelines. The Basic Standards, namely the Corporate Sustainability Disclosure Standards (Chinese language), were issued in December 2024 (see our February 2025 ESG Newsletter). The Guidelines serve as another pillar of the sustainability disclosure standards system, providing further clarifications and operational guidance, by explaining key concepts in the Basic Standards (such as value chains, reporting entities, information linkage and primary users of sustainability information) and setting out a framework for materiality assessment aligned with international standards. The principle of proportionality is also introduced by the Guidelines to ease reporting burdens, while further guidance is provided on the financial impacts of sustainability risks, resilience assessment, and disclosure of sustainability-related information. The public consultation is open until 18 July 2025.

UAE enacts new Climate Change Law

The United Arab Emirates (UAE) has enacted Federal Decree-Law No.11 of 2024, known as the Climate Change Law. The new Climate Change Law marks a pivotal moment in the nation's ambitious decarbonisation strategy and is a key element of the UAE's Net Zero 2050 Strategy, aiming to drastically reduce greenhouse gas emissions. The Climate Change Law introduces a sector-based framework that mandates businesses to measure, report, and reduce their emissions. For the first time, businesses have mandatory legal obligations to reduce their emissions and must regularly measure and report on their emissions, current and planned emission reduction measures and their expected results via a new online platform to be set up by the Ministry. Under new record-keeping obligations, businesses must hold records of emissions measure for a period of five years from the date of analysis. The new law applies to businesses operating onshore in the UAE and the free zones (including the Dubai International Financial Centre and the Abu Dhabi Global Market). Affected businesses must be compliant with their obligations under the Climate Change Law by May 2026, which is the end of the one-year transition period following the law coming into force in May 2025. Financial penalties for non-compliance may be imposed of up to AED2 million. Businesses engaged in activities that result in greenhouse gas emissions, both those in the private sector and Government-owned entities, need to understand and take steps to comply with the new obligations imposed on them by the Climate Change Law. The UAE is also paving the way for emissions trading, with the recent establishment of a National Register for Carbon Credits through Cabinet Resolution No. 67 of 2024. These developments promise to increase the pace of action towards decarbonisation in more energy intensive sectors.

UK sustainability disclosure regimes in a state of flux: read our publication

UK sustainability disclosure regimes: focus on climate transition plans: read our publication

Unlocking the Potential of Carbon Capture in the Energy Transition: read our publication 

A timeline of UK and EU sustainable finance regulation: read our publication