Climate and Energy: EU Policy and Regulation Update for 14 May 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

• France implements the Stop-the-Clock Directive and related provisions
• OHCHR publishes commentary on the Sustainability Omnibus Package
• ECB publishes Opinion on the Sustainability Omnibus Package

European Union/International

• EBA Q&A on ESG Pillar 3 reporting
• ISSB publishes Exposure Draft proposing amendments to greenhouse gas emissions disclosures
• ESMA launches Consultation on technical standards under the Regulation on the transparency and integrity of ESG rating activities
• European Commission launches call for evidence on revising the SFDR
• Publication of short-term climate scenarios for central banks and supervisors by the NGFS

Sustainability Omnibus Package

2 May 2025 [France] – France implements the Stop-the-Clock Directive and related provisions

The French Law 2025-391 concerning various provisions of adaptation to European Union law, and containing several amendments linked to the recent Sustainability Omnibus package, was published in the French Official Journal [final text available here, in French only].

This law introduces, among others, the following measures:

• Two-year postponement of reporting requirements under CSRD for in-scope entities, which will start reporting either in 2028 or 2029, based on the previous financial year. The postponement is set from 2025 to 2027 for large, non-listed companies meeting two out of the three applicable thresholds, and from 2026 to 2028 for listed SMEs.
• Entities required to publish a sustainability report in 2025 (for the 2024 financial year) may omit the phased disclosure requirements set out in Appendix C of ESRS 1 [available here] for the first three financial years. Entities may as such omit datapoints on scope 3 emissions and total GHG emissions, or the information specified in the disclosure requirements of ESRS E4, provided that they do not exceed the average number of 750 employees during the relevant financial year.
• Entities may omit information that could be detrimental to their competitive position if this omission does not hinder the fair and balanced understanding of the company’s situation and of its operations’ impacts, and if the information is still shared with the Autorité des marchés financiers (AMF).
• The French legislator had previously introduced criminal sanctions for company directors failing to comply with certain CSRD rules. These sanctions – which were not required by the EU directive – have now been removed, and have not been replaced by administrative penalties.

3 May 2025 [International] – OHCHR publishes commentary on the Sustainability Omnibus Package

The Office of the United Nations High Commissioner for Human Rights (OHCHR) released commentary [available here] on the Sustainability Omnibus Package.

In its commentary, the OHCHR raises concerns over proposed changes to the CS3D, highlighting that the amendments could weaken corporate accountability.

Specifically, the OHCHR criticises proposals to narrow corporate due diligence obligations and scale back the civil liability regime, cautioning that such rollbacks could “damage global efforts” to establish robust, mandatory human rights and environmental due diligence standards.

For more background on the Sustainability Omnibus Package, please refer to our previous newsletters dated 30 April 2025 [available here] and 5 March 2025 [available here].

8 May 2025 [EU] – ECB publishes Opinion on the Sustainability Omnibus Package

The European Central Bank (ECB) published an opinion on the Sustainability Omnibus Package, raising what it considers to be potential risks, in particular regarding the availability of reliable sustainability information [available here].

While the ECB emphasizes its support for the Commission’s goal to enhance the European economy’s long-term competitiveness, it insists that a proper balance should be struck to that end. In particular, the ECB noted that the 80% scope reduction of the CSRD could lead to:

• Significantly limiting stakeholders’ access to important information;
• Removing all sustainability reporting requirements for certain large undertakings that currently report under the Non-Financial Reporting Directive (NFRD);
• One in eight significant credit institution no longer being subject to sustainability reporting requirements. This would mean having an incomplete set of publicly available ESG information from the banking sector.

The ECB invites Union legislators to give further consideration to the scope of sustainability reporting, in order to ensure that it remains well calibrated. In addition to this request, the ECB proposed including in the CSRD scope medium-large undertakings (500-1000 employees) to be subject to simplified and proportionate reporting standards.

European Union/International

11 April 2025 [EU] – EBA Q&A on ESG Pillar 3 reporting

On 11 April 2025, the European Banking Authority (EBA) published Q&A No. 7225/2024 (Q&A) on ESG Pillar 3 reporting [the Q&A is available here].

The Q&A provides instructions on how to disclose specific qualitative information on ESG risks pursuant to Article 449a of the Capital Requirements Regulation (CRR – Regulation (EU) 575/2013) and Commission Implementing Regulation (EU) 2021/637, with particular reference to “Banking book- Indicators of potential climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity”.

28 April 2025 [International] – ISSB publishes Exposure Draft proposing amendments to greenhouse gas emissions disclosures

The International Sustainability Standards Board (ISSB) published an Exposure Draft proposing amendments to IFRS S2 Climate-related Disclosures [available here].

The ISSB’s amendments aim to simplify greenhouse gas emissions disclosures, reduce redundant reporting burdens, and clarify the scope of available reliefs. In particular, the Exposure Draft proposes to:

• allow entities to limit disclosure of Scope 3 Category 15 emissions to financed emissions only;
• permit entities with commercial banking or insurance activities to use alternatives to the Global Industry Classification Standard to assess financed emissions in certain cases;
• clarify that jurisdictional relief applies where an alternative standard to the Greenhouse Gas Protocol (2004) is mandated by a local authority or stock exchange; and
• extend jurisdictional relief to cases where local authorities or stock exchanges mandate the use of different global warming potential values.

The Exposure Draft is open for comments until 27 June 2025, with the ISSB planning to finalise the amendments by the end of 2025.

2 May 2025 [EU] – ESMA launches Consultation on technical standards under the Regulation on the transparency and integrity of ESG rating activities

The European Securities and Markets Authority (ESMA) launched a public consultation on draft technical standards under Regulation (EU) 2024/3005 on the transparency and integrity of ESG rating activities (ESG Ratings Regulation) [consultation paper available here].

The Consultation Paper, which seeks to operationalise the ESG Ratings Regulation in line with the ESMA’s statutory obligations thereunder, specifies detailed requirements for:

• operational and technical information ESG rating providers must submit when seeking regulatory approval;
• the internal safeguards and procedures to mitigate the risk of conflicts of interest in ESG rating activities; and
• the format and scope of public disclosures required to be made by ESG rating providers.
The ESMA invited stakeholders to submit comments by 20 June 2025 and intends to submit the draft technical standards to the European Commission by the end of October 2025.

2 May 2025 [EU] – European Commission launches call for evidence on revising the SFDR

The European Commission launched a call for evidence [available here] ahead of planned revisions to the Sustainable Finance Disclosure Regulation (SFDR) in Q4 2025. The call for evidence builds on a comprehensive assessment conducted by the Commission which identified key issues with the current framework, such as unclear legal concepts, regulatory overlaps and inconsistencies, and data availability challenges.

The Commission aims to simplify SFDR requirements to create a more coherent regulatory framework. In accordance with these objectives, policy options cited in the call for evidence include targeted changes to existing disclosures as well as more far-reaching reforms, such as introducing new financial product categories with tailored sustainability objectives.

The feedback period for the call for evidence closes on 30 May 2025, and responses gathered will inform the impact assessment for the upcoming SFDR revisions.

7 May 2025 [International] – Publication of short-term climate scenarios for central banks and supervisors by the NGFS

The Network of Central Banks and Supervisors for Greening the Financial System (NGFS) published short-term climate scenarios for analyzing the potential impacts and risks of climate policies and climate change for the financial sector [available here].

These four short-term scenarios focus on a five-year time period. The first scenario (Disasters and Policy Stagnation) focuses on the economic and financial consequences of short-term regional weather events. The second (Highway to Paris) and third (Sudden Wake-up Call) scenarios depict a policy transition towards a green economy and take into account the associated transition risks. Finally, the fourth scenario (Diverging Realities) considers the different impact that worsening extreme weather events will have on developed and developing economies.

The NGFS emphasizes that expectable climate events can lead to substantial GDP losses and severe macroeconomic disruptions. On the other hand, an early, ambitious and globally coordinated transition is likely to limit economic losses, although rapid and unexpected policy shifts increase transitionary economic costs and may cause significant financial tension.