Climate and Energy EU Policy and Regulation Update for 30 April 2025

As policy and regulatory landscapes evolve, this publication will provide insights to navigating emerging risks and opportunities in the energy transition. Read previous issues here.

Sustainability Omnibus Package

• Stop-the-Clock Directive published in Official Journal
• NGOs lodge complaint against the EU Commission over Sustainability Omnibus package
• U.S. Chamber of Commerce asks the Trump administration to urge the EU to limit application of the CS3D to the European market Rapporteur on the Sustainability Omnibus package calls to align the sustainability regulations’ scopes at a higher threshold
• EFRAG submits finalized work plan to the European Commission in response to ESRS Omnibus simplification mandate

European Union/International

• The International Association of Insurance Supervisors publishes its Application Paper on the Supervision of climate-related risks in insurance companies
• Net Zero Banking Alliance and UNEP FI publish third edition of guidance for climate target setting for banks
• UNEP FI publishes 2024 Annual overview, reflecting on sustainable finance initiatives
• EBA publishes ESG dashboard providing key indicators on climate risk in the EU/EEA banking sector

France

• French Ministry for the environment publishes Charter on carbon credits

Sustainability Omnibus Package

16 April 2025 [EU] – Stop-the-Clock Directive published in Official Journal

Directive 2025/794 amending the CSRD and the CS3D as regards the dates from which member states are to apply certain corporate sustainability reporting and due diligence requirements (the so-called “stop-the-clock” directive) was published in the European Union Official Journal on 16 April 2025, [final text available here].

The directive, which had been published by the European Commission on 26 February 2025, was adopted at first reading by the European Parliament on 3 April 2025, and approved by the Council of the European Union on 14 April 2025. The European Parliament had elected the use of the urgent procedure, allowing it to adopt the proposal without a committee report. Please refer to the previous version of our newsletter [available here] for a comprehensive summary of the Sustainability Omnibus package.

The directive sets out a two-year postponement to sustainability reporting requirements under the CSRD for all companies that were initially supposed to start reporting in 2026 and 2027 (as regards financial years 2025 and 2026). As concerns CS3D, it postpones both the transposition deadline (to 26 July 2027) and the first-phase application to the largest companies (to 26 July 2028).

The directive entered into force on 17 April 2025, and Member States must now transpose it into their national legislation by 31 December 2025.

18 April 2025 [EU] – NGOs lodge complaint against the EU Commission over Sustainability Omnibus package

In a joint press release published on 18 April 2025, several NGOs (among which the European Coalition for Corporate Justice, ClientEarth and Anti-Slavery International) announced that they had lodged a formal complaint with the European Ombudsman, for what they referred to as “the Commission’s rushed dismantling of three key pillars of the Green Deal” [full press release available here].

In their complaint, the NGOs accuse the Commission (i) of failing to properly assess the environmental and social impacts of its proposal, (ii) of “favour[ing] closed-door meetings dominated by oil and gas industry interests” rather than public consultations, and (iii) of failing to assess whether its proposal aligns with the EU’s climate-neutrality target.

The press release calls on the European Parliament and Council to reject the proposal, and to ensure that any revisions made to the CSRD and CS3D are limited to interpretative measures.

The European Ombudsman is an independent body, created to investigate complaints about “poor administration”, among which “incorrect procedures” by EU institutions and bodies. While the Ombudsman may not require the European Commission to reverse its decisions, it may make recommendations, up to a special report to the European Parliament, which much then take appropriate action.

21 April 2025 [International] – U.S. Chamber of Commerce asks the Trump administration to urge the EU to limit application of the CS3D to the European market

In a letter addressed to U.S. Treasury and National Economic Council officials, the U.S. Chamber of Commerce called on the Trump administration to “urge the EU to refocus application of CS3D exclusively on the European marketplace.” [full letter available here]

The letter noted that the CS3D would require in-scope U.S. companies to establish corporate policies in line with European principles of corporate governance; set environmental transition plans that may conflict with U.S. corporate law; and would subject U.S. companies to an enforcement and liability regime that may significantly increase their liability and reputational risk.

The U.S. Chamber of commerce considered that “U.S. laws and regulations have consistently created exemptions to accommodate European access to the U.S. market” and asked for reciprocity in the exemption that EU laws should provide to accommodate U.S. access to the EU markets. 

23 April 2025 [EU] – Rapporteur on the Sustainability Omnibus package calls to align the sustainability regulations’ scopes at a higher threshold

The EU Parliament’s Committee on legal affairs discussed the Sustainability Omnibus package during its ordinary meeting [full recording available here].

The Rapporteur for the proposed Omnibus directives and regulations, Jörgen Warborn, expressed that the EU should reduce the regulatory burden and cut costs for businesses. In particular, Mr. Warborn noted that “We should align the scope between the different proposals in the Omnibus and we should align it at a higher threshold”.

Other stated goals included an alignment of the terminology using the “chain of activity” wording instead of the “value chain” wording, cited as increasing clarity for businesses. Mr. Warborn also called for further expansion of the full harmonization clause, along with the establishment of a total subsidiary exception.

25 April 2025 [EU] – EFRAG submits finalized work plan to the European Commission in response to ESRS Omnibus simplification mandate

The EFRAG’s Sustainability Reporting Board (SRB) has approved and submitted its work plan and timeline to deliver its technical advice on the revision and simplification of the European Sustainability Reporting Standards (ESRS) [full work plan available here].

The work plan was provided line with the European Commission’s request of 28 March 2025 that EFRAG deliver its technical advice on simplifying the first set of ESRS by 31 October 2025. While the initial mandate letter had asked for the work plan to be provided before 15 April 2025 [see mandate here], the SRB initially failed to secure a qualified majority on the work plan [see 15 April 2025 SRB webcast meeting here].

The final work plan, approved in the 25 April 2025 SRB meeting, contemplates that exposure drafts – based on stakeholders feedback collected from May-July 2025 – will be published at the end of July. It will be followed by a public consultation on the exposure drafts, between the end of July and early September. The final draft is planned to be delivered in October to the European Commission.

European Union/International

16 April 2025 [International] – The International Association of Insurance Supervisors publishes its Application Paper on the Supervision of climate-related risks in insurance companies

On 16 April 2025, the International Association of Insurance Supervisors (IAIS) published the “Application Paper on the supervision of climate-related risks in the insurance sector” (Paper), on the supervision of climate risks in the insurance sector, with best practices and guidance for supervisors [the Paper is available here].

The Paper provides a comprehensive overview of how the IAIS’ existing Insurance Core Principles (ICPs) can be applied to address climate-related risks.

Specifically, the best practices and guidance related to the impact of climate risks in the insurance sector concern the following areas of application of the ICPs: (i) the role of supervisors in assessing climate-related risks; (ii) the integration of climate-related risks into supervisory frameworks for corporate governance, risk management and internal controls; (iii) the impact of climate-related risks on valuation and investment practices; (iv) supervisory reporting, public disclosure and macroprudential supervision of climate-related risks; (v) group supervisory issues; and (vi) the role of climate-related risk scenario analysis and important considerations for the impact of climate-related risks on market conduct.

22 April 2025 [EU] – Net Zero Banking Alliance and UNEP FI publish third edition of guidance for climate target setting for banks

Initiative (UNEP FI), released the third version of their joint Guidance for climate target setting for banks, offering updated strategies for banks to align with the global goal of achieving net-zero emissions by 2050 [guidance available here].

The Guidance, first published in 2021 and revised in 2024, outlines key principles to underpin the setting of targets for achieving net-zero greenhouse gas (GHG) emissions goals in alignment with the Paris Agreement. In this context, it is recommended that banks follow four overarching principles:

• Set and publicly disclose long-term and intermediate targets to support meeting a net-zero GHG emissions goal and towards alignment with the Paris Agreement.
• Establish an emissions baseline and annually measure and report the emissions profile of their lending, investment, and capital markets activities.
• Use widely accepted science-based decarbonization scenarios to set both long-term and intermediate targets that are aligned with a net-zero goal and the goals of the Paris Agreement.
• Regularly review targets to ensure consistency with current climate science.

In particular, it is recommended that banks set a 2030 and a 2050 target. Further intermediate targets should be set at least every five years after the initial intermediate target. UNEP FI and NZBA emphasize the need for transparency in target-setting and encourage banks to disclose their progress while adjusting strategies as climate science evolves. Additionally, the guidance introduces the concept of intermediate targets to allow for more adaptive, short-term progress.

25 April 2025 [EU] – UNEP FI publishes 2024 Annual overview, reflecting on sustainable finance initiatives

The UNEP FI published its 2024 Annual Overview, aimed at capturing key milestones and strategic actions characterizing the financial sector’s sustainability journey in 2024 [full report available here].

The report reflected on initiatives such as the launch of the UNEP FI’s in-depth program to help financial institutions comply with the CSRD and the ESRS, to the development of an insurance-specific transition plan guidance by the newly established Forum for Insurance Transition to Net-Zero.

UNEP FI’s global membership expanded to 553 institutions, representing over $125 trillion in assets. Furthermore, over 160 financial institutions, representing $17.2 trillion in assets, called for a global treaty to end plastic pollution. In response, UNEP FI launched new resources to help banks incorporate circular economy principles into their climate transition plans. Additionally, the ‘Navigating Pollution’ report was updated to guide financial institutions in managing pollution-related challenges.

In October, the PRB introduced the Responsible Banking Blueprint, which provides banks with guidance on key sustainability priorities, including human rights, climate action, nature preservation, and the promotion of inclusive economies.

Noting that “sustainable finance is at a crossroads”, the report emphasized the need for clarity to support proper resource allocations, and clarity in regulation to facilitate the movement of capital into low-carbon global opportunities.

25 April 2025 [EU] – EBA publishes ESG dashboard providing key indicators on climate risk in the EU/EEA banking sector

On 25 April 2025, the European Banking Authority (EBA) published an ESG dashboard [available here] containing key indicators on climate-related risk and allowing for a centralised access to comparable climate risk indicators [press release available here]. The ESG dashboard is based on data published by banks as part of their Pillar 3 ESG disclosures, with reference dates as of 31 December 2023 and 30 June 2024, and is going to be regularly updated.

The ESG Dashboard covers climate risk, both from a transition and a physical standpoint. In addition, it includes specific indicators for exposures secured by immovable property collateral and EU/EEA banks’ alignment with EU Taxonomy. In particular, the data shows:

• A possibly significant exposure to climate-related transition risk, given the substantial exposure (above 70% in most countries) of EU/EEA banks to corporates active in sectors highly contributing to climate change;
• An average share of exposures in areas subject to elevated physical risk below 30% in most countries;
• Relatively limited transition risk related to immovable property collateral, since approximately half of the EU real estate lending is classified in the first two buckets of energy efficiency (lower than 200 kWh/m2 of collateral);
• Low Green Asset Ratio (GAR), slightly below 3% on average, also since the economy is still under transition, with few activities being able to show alignment with Taxonomy criteria.

France

24 April 2025 [France] – French Ministry for the environment publishes Charter on carbon credits

In the context of the ChangeNOW summit, the French Ministry for the environment launched a charter on carbon credits to implement the commitment made in Article 6 of the Paris Agreement [full pledge available here]. The Charter includes a commitment to uphold and promote the following principles:

• Committing to net zero targets consistent with the Paris Agreement, in particular through reporting clearly on all three scopes, publishing a time-bound action plan for climate transition and using carbon credits not as a substitute but only as a complement to France’s gross emission reductions pathway, to address remaining emissions while on the path to net zero.
• Choosing high-integrity carbon credits, aligned with the Article 6.4 standards, i.e., the “best-in-class” international framework. This entails ensuring that any carbon credits used fulfils the highest environmental integrity principles laid out in the G7 High Integrity Carbon Market Principles and the Call for Action on Paris Aligned Carbon Markets.

The Charter also emphasize the role that companies have to play, in particular through supporting ambitious and high-climate-impact projects in emerging countries.