Climate and Energy: EU Policy and Regulation Update for 16 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.

European Union/International

• ESMA consults on rules for external reviewers of European Green Bonds
• EFRAG launches a public call for input on ESRS Set 1 Revision
• ESMA calls for simplified and clearer ESG disclosure rules for benchmark administrators
• EFRAG’s comment letter on the Exposure Draft IFRS Foundation Due Process Handbook amendments
• ESMA publishes a report on inclusion of ESG terms in EU fund names

Germany

• Deutsche Bank subsidiary DWS is fined €25 million for greenwashing
• Coalition Agreement 2025: Key Sustainability Impacts

France

• French ACPR publishes assessment of integration of sustainability risks into their governance by insurance and reinsurance companies 

European Union/International

7 April 2025 [EU] – ESMA consults on rules for external reviewers of European Green Bonds

On 7 April 2025, the European Securities and Markets Authority (ESMA) launched its second public consultation [available here] on regulatory technical standards (RTS) and implementing technical standards (ITS) specifying certain provisions of the external reviewers regime under the European Green Bond Regulation (i.e. Regulation (EU) 2023/2631) (Second Consultation on EGBR).

The Second Consultation on EGBR, that will last until 30 May 2025, covers 5 draft RTS and 1 ITS on the: (i) criteria for assessing the appropriateness, adequacy and effectiveness of the systems, resources and procedures; (ii) criteria for assessing whether the compliance function has the authority to discharge its responsibilities properly and independently and for assessing the necessary resources, expertise and access to relevant information; (iii) criteria for assessing the soundness of administrative and accounting procedures and internal control mechanisms and the effectiveness of control and safeguard arrangements for information processing systems; (iv) criteria for assessing whether the information used when providing reviews is of sufficient quality and from reliable sources; (v) information, form and content of applications for recognition; and (vi) standard forms, templates and procedures to notify ESMA of material changes in the information provided at registration.

A first public consultation on EGBR was published on 14 February 2025 [final report available here] covering 4 draft RTS and 1 ITS on: (i) criteria to be assessed at the time of registration relating to senior management, board members and analytical resources; (ii) criteria to assess sound and prudent management and management of conflicts of interest; (iii) criteria for assessing knowledge and experience of analysts; (iv) criteria applicable to outsourcing of assessment activities; and (v) the standard forms, templates and procedures for the provision of registration information. The draft RTS and ITS have been submitted to the European Commission and will be subject to non-objection procedure by the European Parliament and Council.

ESMA will consider the feedback received to the Second Consultation on EGBR and expects to publish a final report in Q4 and submit the draft technical standards to the European Commission for endorsement by 21 December 2025, at the latest.

8 April 2025 [EU] – EFRAG launches a public call for input on ESRS Set 1 Revision

On 8 April 2025, the European Financial Reporting Advisory Group (EFRAG), in its role as technical advisor to the European Commission (EC) under the Corporate Sustainability Reporting Directive (CSRD) launched a public call to gather input on the Set 1 Revision of the existing European Sustainability Reporting Standards (ESRS) [see here], following the specific mandate received on 27 March 2025 from the EC to provide technical advice for the adoption of a delegated act to revise and simplify the ESRS in view of the Omnibus proposal issued by the EC on 26 February 2025. Feedbacks can be submitted through an online questionnaire [available here] by 6 May 2025.

Inputs are welcome, in particular, on the key areas of simplification identified in the Explanatory Memorandum of the Omnibus proposal (e.g., among others, suggestions on how to improve the ESRS provisions on materiality to ensure that undertakings report only material information, do not report unnecessary information and do not dedicate excessive resources to the materiality assessment process, and suggestions on how to further enhance interoperability with global sustainability reporting standards).

EFRAG is expected to deliver its technical advice to the EC by 31 October 2025.

9 April 2025 [EU] – ESMA calls for simplified and clearer ESG disclosure rules for benchmark administrators

On 9 April 2025, the European Securities and Markets Authority (ESMA) published the findings of its 2024 Common Supervisory Action (CSA) on environmental, social, and governance (ESG) disclosures under the Benchmarks Regulation (BMR) [available here].

This was the first CSA that ESMA conducted together with National Competent Authorities in its role as a direct supervisor of benchmarks administrators, with the purpose of assessing how benchmark administrators comply with the ESG disclosure requirements set out in the BMR. The ESMA final report includes recommendations to both the European Commission (EC) and benchmark administrators. In particular:

• ESMA recommends that the EC amend BMR Level 2 provisions in order to alleviate the regulatory burden on benchmarks administrators (e.g., by reducing the scope of ESG factors on which disclosure is required to only those that are relevant to the sustainability objectives of the index, plus certain ESG factors/indicators such as GHG emissions or impact on biodiversity, irrespective of their relevance to the index). To this end, ESMA states that it is ready to provide technical advice to the EC;
• ESMA recommends that benchmarks administrators enhance transparency and comparability of ESG information for the benefit of users of benchmarks. In this respect, ESMA notes that “[t]he comparability of ESG benchmarks is hindered by the fact that there are inconsistencies between (i) the methodologies that administrators use to calculate the ESG factors, and (ii) the ESG data estimated and used as input data for the purpose of the calculation of the factors”.

10 April 2025 [EU/International] – EFRAG’s comment letter on the Exposure Draft IFRS Foundation Due Process Handbook amendments

On 10 April 2025, the European Financial Reporting Advisory Group (EFRAG) published its final comment letter [available here] to the Exposure Draft Proposed Amendments to the IFRS Foundation Due Process Handbook, issued by the IFRS Foundation in December 2024 to reflect the creation of the International Sustainability Standards Board (ISSB) in 2021, together with some proposed enhancements and clarifications.

In its comment letter, EFRAG recommends:

• The development of a conceptual framework dedicated to sustainability reporting;
• The creation of an interpretations committee for sustainability reporting;
• The inclusion of Sustainability Accounting Standards Board (SASB) standards and the SASB standards Taxonomy in the scope of the due process procedures foreseen for ISSB standard setting;
• The Post-implementation Review process to be more forward-looking, assessing whether the Standard under review remains effective within an evolving economic environment; and
• To take more steps to ensure connectivity, in particular when deciding upon new IFRS Accounting Standards or major amendments.

10 April 2025 [EU] – ESMA publishes a report on inclusion of ESG terms in EU fund names

vulnerabilities (TRV) risk analysis report on the increased incorporation of environmental, social and governance (ESG) terms into EU fund names from 2009 to mid-2024 and the impact of this on investment flows [available here]. The key takeaways of the analysis, that covers both UCITS and alternative investments funds (AIFs), include the following:

• Even though ESG terms appear less popular among AIFs compared to UCITS funds, in both cases the proportion of funds with ESG-related names increased significantly from less than 3% before 2015 to around 9% by mid-2024. The sharp growth in use of ESG names starting in 2015 was suddenly curtailed in mid-2021 (remaining positive since then), probably as a consequence of legislative changes, such as the application of the SFDR, as well as increasing concerns about greenwashing raised by regulatory and supervisory authorities;
• The use of ESG terminology has a material impact on investment decisions by retail and institutional investors. Indeed, adding an ESG term can significantly boost fund inflows, especially in the immediate quarter following the name change, with a sustained positive impact in subsequent quarters. However, the impact varies depending on the specific ESG terms used, with environmental-related terms showing the most substantial effect on inflows, highlighting the importance of ensuring that name changes are reflected in portfolio investments.

In the conclusive section of the report, ESMA confirmed its aim to explore the analysis in greater technical detail, including whether and how funds adjust their portfolio to align with the use of ESG terms in their names.  

Germany

2 April 2025 [Germany] – Deutsche Bank subsidiary DWS is fined €25 million for greenwashing

The Frankfurt am Main public prosecutor’s office has concluded its three-year investigation into DWS, a subsidiary of Deutsche Bank, on suspicion of investment fraud. A fine of €25 million was imposed on the DWS Group and DWS Investment GmbH for greenwashing, based on the prosecutor’s findings that they advertised their financial products with ESG characteristics that they did not actually fulfill.  For example, the prosecutor found they had presented themselves as “leaders” in the field of sustainability. The fine was based on the revenues of the parent company Deutsche Bank and represents a first in “revenue-based sanctioning” by a German prosecutor’s office, which had searched DWS headquarters in Frankfurt several times. DWS accepted the penalty and emphasized that it had already improved its internal processes.

A dispute with the US Securities and Exchange Commission (SEC) for violations of anti-money laundering guidelines and false information on ESG investments was settled in 2023 with the payment of $19 million [see further here, German only].

9 April 2025 [Germany] – Coalition Agreement 2025: Key Sustainability Impacts

On April 9, Germany’s new coalition of CDU, CSU, and SPD presented their agreement, negotiated by the party leaderships, outlining future government goals. They set a joint agenda across economic, environmental, and regulatory topics — with several notable impacts on corporate sustainability management:

Climate & Energy: The goal of climate neutrality by 2045 remains. Emissions trading will be expanded, and CO₂ revenues returned to citizens and businesses via subsidies. CCS/CCU technologies and hydrogen will be key tools, while the coal phase-out by 2038 is reaffirmed.

Supply Chains: The German Supply Chain Due Diligence Act (LkSG) will be repealed and replaced by a streamlined implementation of the EU’s CSDDD. Until then, non-compliance will not be sanctioned (except for severe human rights violations). Reporting Requirements: The new coalition supports the EU “Omnibus” initiative to ease reporting for SMEs and aims to minimize EU-level bureaucracy in sustainability disclosures and taxonomy rules.

Environmental Protection: The coalition focuses on voluntariness, incentives, and responsibility for environmental and climate goals. It also aims to exclude the EU Deforestation Regulation through a “zero-risk variant.”

The government also plans to reduce regulatory burden through a “Bureaucracy Reduction Program.” There will be no unified Climate & Economy Ministry; climate policy will return to the Environment Ministry (SPD-led), while the Economy Ministry (CDU-led) retains energy policy.

The coalition’s plan has yet to be implemented and that the exact implementation remains to be seen. The coalition agreement also has to be approved by the political parties involved. The election of Friedrich Merz as Germany’s Chancellor is currently planned for the beginning of May 2025 [see also here, German only].

France

7 April 2025 [France] – French ACPR publishes assessment of integration of sustainability risks into their governance by insurance and reinsurance companies

The French Autorité de Contrôle Prudentiel et de Résolution (ACPR) published an assessment on how French insurance and reinsurance companies integrate sustainability risks into their governance [available here, French only]. The Solvency II regulations require these risks to be addressed in corporate governance and risk management frameworks. The ACPR surveyed 91 entities covering 90% of the French market, and found that, while all have started addressing sustainability risks, progress varies. 

Half of the surveyed entities have embedded sustainability into their remuneration, investment risk, and underwriting policies, with investment risk policies being the most developed. Insurers must account for climate and ESG risks affecting both assets and liabilities. The ACPR outlined that this was especially critical for property insurance, given rising climate events, and health insurance, due to environmental health impacts. The ACPR urged stronger integration into reinsurance and risk mitigation strategies. Many insurers recognize the business model impact but need better evaluation and long-term scenario planning. Challenges identified include poor data quality, reliance on third-party providers, and inconsistent reporting.