Climate and Energy: EU Policy and Regulation Update for 11 June 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

• European Commission opens public consultation on amendments to the Batteries Regulation
• Council of the European Union adopts negotiating position on CBAM simplification
• Council of the European Union publishes third Presidency compromise proposal on the Omnibus Directive Proposal
• European Parliament publishes amendments to the Omnibus Directive Proposal from the Committee on International Trade, and the Committee on the Environment, Climate and Food Safety
• French National Consultative Commission on Human Rights publishes Position on Sustainability Omnibus Package

European Union/International

• Commission publishes risk classification of countries under Deforestation-free Products Regulation
• EBA publishes Q&A on ESG disclosures implementing technical standards
• EFRAG comments on ISSB Exposure Draft
• European Climate Advisory Board issues 2040 emissions target recommendation

Germany

• Higher Regional Court Hamm dismisses climate claim filed by a Peruvian farmer against RWE while laying grounds for further climate-related claims
• Hearing before the Frankfurt Regional Court regarding the allegation of greenwashing against Apple

Italy

• Bank of Italy identifies findings and best practices of less significant institutions in the management of climate and environmental risks

Sustainability Omnibus Package

23 May 2025 [EU] – European Commission opens public consultation on amendments to the Batteries Regulation

Following the publication of the fourth Simplification Omnibus package on 21 May 2025, the European Commission issued a public consultation [available here] on its proposal to delay the entry into force of due diligence obligations under Batteries Regulation (Regulation (EU) 2023/1542) by two years. For more information on the Commission’s proposal, please refer to our EU Policy and Regulation Update for 28 May 2025 [available here].

The consultation period closes on 31 July 2025.

27 May 2025 [EU] – Council of the European Union adopts negotiating position on CBAM simplification

The Council of the European Union formally adopted its negotiating position on simplifying the EU’s Carbon Border Adjustment Mechanism (CBAM) as part of the Sustainability Omnibus Package [press release available here].

The Council endorsed the Commission’s February proposal [available here] to introduce a new mass-based de minimis exemption for importers not exceeding 50 tons of imported goods (replacing the existing, much narrower exemption for goods of negligible value), and proposed further simplifications and clarifications to the authorization procedures, data collection, emissions calculation and verification requirement amendments put forth by the Commission.

Following the adoption of the Council’s position, negotiations between the presidency and the European Parliament are expected to commence in short order.

29 May 2025 [EU] – Council of the European Union publishes third Presidency compromise proposal on the Omnibus Directive Proposal

States delegation for discussion ahead of the Antici Group meeting (COREPER II working group) of 4 June 2025. The document likely represents the Council’s position for upcoming negotiations with the European Parliament [full informal draft available here].

The amendments to the Commission’s proposal include the following significant changes:

• Companies with over 1,000 employees would only be required to provide specific information under Article 8 of the Taxonomy Regulation if their net turnover reaches or exceeds 450 million euros. Companies below this threshold would benefit from a more flexible disclosure regime, following a revision of Article 8’s scope.
• Reporting undertakings should be prohibited from requiring information exceeding certain limits – as set by a Commission delegated act – from undertakings in their value chain that have up to 1,000 employees on average during the financial year. These reporting undertakings may also omit certain data if disclosure would seriously harm their commercial position or reveal trade or business secrets.
• The Commission should adopt a delegated act to revise the first set of ESRS to remove datapoints deemed least important for general purpose sustainability reporting, prioritize quantitative datapoints over narrative text and further distinguish between mandatory and voluntary datapoints. The Commission should also adopt sector-specific guidance facilitating the application of ESRS within a given sector.
• The Council proposes removing the initial text that prevented Member States from introducing in their national law a ceiling or cap for any pecuniary penalties imposed on companies under their jurisdiction that would prevent supervisory authorities from imposing penalties in accordance with the factors laid down in CSDDD.

Apart from these general amendments, the Council sets forward two options to Member States regarding the due diligence approach: (i) a “full risk-based approach”, targeting the negative incidences on the environment and human rights, and (ii) a “risk-based approach limited to Tier 1”, limiting the scope of sustainability regulations to immediate business partners. In any event, the strict entity-based approach is set aside.

4 June 2025 [EU] – European Parliament publishes amendments to the Omnibus Directive Proposal from the Committee on International Trade, and the Committee on the Environment, Climate and Food Safety

The European Parliament published the amendments proposed by the Members of the European Parliament (MEPs) forming the Committee on International Trade (INTA) and of the Committee on the Environment, Climate and Food Safety (ENVI) to the Omnibus Directive Proposal [amendments available here for INTA, and here and here for ENVI].

The amendments tabled by MEPs from both Committees vary depending on political allegiance. Some aim at rejecting the Commission’s proposal altogether, labeling it as a dismantling of core corporate sustainability obligations. Other aim at raising the employee threshold to 5,000, with some MEPs proposing a 10,000-employee threshold, coupled with either a 1.5 billion euros net turnover or 2 billion euros balance sheet total.

4 June 2025 [EU] – French National Consultative Commission on Human Rights publishes Position on Sustainability Omnibus Package

The French National Consultative Commission on Human Rights (CNCDH) adopted a position opposing the European Commission’s Omnibus I directive proposal [available here, in French only].

The CNCDH presents the proposal as a significant deregulation effort, undermining human rights and environmental protections and challenges what it considers a lack of transparency and public consultation in the development process.

The CNCDH specifically opposes the limitation of CSDDD due diligence obligations to in-scope entities’ direct business partners. It considers that this restriction contradicts international standards emphasizing a risk-based approach addressing the most severe risks throughout the value chain, as it would exclude approximately 94% of high-risk suppliers from due diligence assessments. The CNCDH also objects to:

• The expanded maximum harmonization clause, seen as preventing member states from adopting more protective measures.
• The removal of enforcement mechanisms, including of provisions on financial penalties, civil liability, cross-border application, and collective action mechanisms.
• The reduction of monitoring frequency from one to five years, seen as contradicting the continuous nature of due diligence under international standards.
• The introduction of concepts such as “plausible information”, viewed as creating legal uncertainty and shifting burdens onto third parties.

The CNCDH calls on the French government to resist the “deregulatory changes”, emphasizing that backing away from ambitious sustainability rules would have repercussions beyond Europe and potentially undermine international negotiations on business and human rights standards.

European Union/International

23 May 2025 [EU] – Commission publishes risk classification of countries under Deforestation-free Products Regulation

Commission Implementing Regulation (EU) 2025/1093 was published in the Official Journal, establishing the list of low and high-risk countries under the Regulation on Deforestation-Free Products (DFPR) (Regulation (EU) 2023/1115) [available here].

The DFPR imposes mandatory due diligence requirements on operators placing cattle, cocoa, coffee, oil palm, rubber, soya, and wood products on the EU market, with simplified obligations applying for products from low-risk countries.

The Commission Implementing Regulation, which meets the Commission’s 30 June 2025 deadline for country risk assessment, identifies four high-risk countries (Belarus, North Korea, Myanmar, and Russia) and numerous low-risk countries (including the United States, United Kingdom, and many European countries). All unlisted countries are classified as standard risk.

23 May 2025 [EU] – EBA publishes Q&A on ESG disclosures implementing technical standards

The European Banking Authority (EBA) published a Q&A aimed at clarifying rules on the reporting of lending or financing where the use of proceeds is unknown, in the context of Commission Delegated Regulation (EU) 2021/2178 (Disclosures Delegated Act) [Q&A available here].

The EBA states that exposure to central governments, central banks, and supranational issuers by the institutions irrespective of the use of proceeds, should be excluded from both the numerator and denominator of the green asset ratio (GAR) according to Article 7(1) of the Disclosures Delegated Act. Institutions should therefore disclose them in row 46 – Sovereigns of Template 7, even where the use of proceeds is unknown.

28 May 2025 [International] – EFRAG comments on ISSB Exposure Draft

The European Financial Reporting Advisory Group (EFRAG) published its draft comment letter on the International Sustainability Standards Board’s (ISSB) Exposure Draft on amendments to IFRS S2 climate-related disclosures [press release available here]. For more information on the ISSB’s exposure draft, please refer to our EU Policy and Regulation Update for 14 May 2025 [available here].

While EFRAG generally agrees with the ISSB’s proposals, it raises several concerns regarding the amendments to IFRS S2. EFRAG believes exemptions for derivatives, insurance-associated emissions, and facilitated emissions from investment banking activities should be temporary rather than permanent, allowing methodologies to evolve. The draft comment letter highlights definitional ambiguities around “facilitated emissions” and “insurance-associated emissions,” questions the cost and comparability implications of the GICS industry classification system and expresses concern that omitting emissions data might obscure material information for users. EFRAG recommends that more detailed guidance be issued to ensure consistent reporting across different financial instruments.

Stakeholders can submit comments on EFRAG’s draft comment letter through its website until 20 June 2025.

2 June 2025 [EU] – European Climate Advisory Board issues 2040 emissions target recommendation

The European Scientific Advisory Board on Climate Change (ESABCC) has released its ‘Scientific advice for amending the European Climate Law - Setting climate goals to strengthen EU strategic priorities’ report, notably recommending a 90-95% net domestic greenhouse gas emissions reduction by 2040 compared to 1990 levels. [full report available here]

The report notes that recent progress in emissions reduction, particularly through wind and solar energy deployment, generally aligns with scenarios supporting the recommended target range. However, it identifies uneven progress across sectors and Member States.

The ESABCC indicates that setting a clear 2040 target would provide policy certainty beyond 2030, potentially supporting clean technology deployment and reducing fossil fuel imports. The report recommends aligning EU legislation with global adaptation efforts, particularly in preparation for anticipated milestones at the upcoming COP30 conference, and advises against using international carbon credits to meet the proposed target.

Germany

28 May 2025 [Germany] – Higher Regional Court Hamm dismisses climate claim filed by a Peruvian farmer against RWE while laying grounds for further climate-related claims

On 28 May 2025, the Higher Regional Court Hamm dismissed the appeal in a climate claim filed by a Peruvian farmer against RWE, a German energy supplier, confirming the judgment of the previous instance [see further here, German only].

The plaintiff lives near a glacial lake in Peru that is at risk of rising due to climate change and the associated melting of the nearby glacier. Because of this, plaintiff claimed that RWE is obliged to bear part of the costs for protective measures to prevent flooding. He based this claim on RWE’s considerable contribution to climate change.

Even though the court ultimately rejected the claim due to the lack of sufficient level of risk of damage to plaintiff’s property, it affirms the potential responsibility of energy suppliers for damages resulting from climate change.

• Firstly, the court states that the geographical distance between plaintiff and defendant has in principle no influence on the potential existence of a claim.
• Secondly, according to the court, the emissions generated by RWE establish a sufficient causal link to the rise of the glacial lake due to climate change, qualifying the company as one of the responsible parties for the rise and potential flooding.
• Thirdly, the court rejects the objection, that issues regarding climate change cannot be solved by civil law but only by political means (so-called ‘political question doctrine’).
• Lastly, the court finds that neither the statutory regulations on power generation nor the significant public interest in it give rise to an obligation on the part of the plaintiff to acquiesce to related emissions and the risks resulting from them.

3 June 2025 [Germany] – Hearing before the Frankfurt am Main Regional Court regarding the allegation of greenwashing against Apple

On 3 June 2025, a hearing before the Frankfurt am Main Regional Court took place dealing with an allegation of greenwashing against Apple.

The lawsuit, which aims at an injunction of Apple’s advertisement with CO2-neutrality regarding three types of Apple Watches, is initiated by Environmental Action Germany (‘Deutsche Umwelthilfe’), a German NGO that campaigns for environmental protection. The NGO primarily alleges that Apple does not ensure a CO2-storage period of 100 years with regard to these products, which according to German case law is required for such an advertisement.

The plaintiff NGO therefore claims that Apple deceived its customers. Apple, on the other hand, considers the allegations to be unfounded and partly based on incorrect factual information. In a statement, Apple criticizes the NGO’s actions as hindering meaningful contributions to fighting climate change [see further here, German only].

Italy

27 May 2025 [Germany] – Bank of Italy identifies findings and best practices of less significant institutions in the management of climate and environmental risks

On 27 May 2025, the Bank of Italy published its findings on the progress of less significant institutions (LSI) supervised by the Bank of Italy and relevant best practices in integrating climate and environmental risks into their operations, based on their 2023-2025 action plans [link, only in Italian]. The 2024 supervisory activities focused on the alignment with the 2022 Supervisory Expectations and the relevant outcomes have been taken into account for the purposes of the SREP process.

Overall, the Bank of Italy’s main findings concern:

• Governance and organizational structure: LSIs have made notable progress, but many institutions still face delays in incorporating ESG factors into internal reporting systems and remuneration policies;
• Business strategy: a range of good practices was identified, particularly among banks already engaged in ESG matters, such as offering loans with rate reductions linked to sustainability targets, distributing climate risk insurance products, and issuing green or social bonds;
• Risk management: while some LSIs have begun to integrate climate and environmental risk factors into credit and operational risk assessments, widespread delays remain, especially for SMEs;
• Materiality: assessments are generally proceeding on schedule, with most LSIs recognizing credit risk as significantly affected by ESG factors, and about half also acknowledging its impact on liquidity, reputational, and market risks;
• ESG Disclosure: early efforts were highlighted in this area, with some LSIs including emissions data in financial reports and preparing for the CSRD through gap analyses.

The Bank of Italy identified certain best practices covering different aspects, including enhanced oversight by the board of directors, structured action plans, climate-related loss tracking, inclusion of ESG factors among the elements to be taken into account for the purposes of variable remuneration, supplier ESG due diligence, inclusion of ESG factors in the ILAAP, publication on a voluntary basis of an integrated sustainability disclosure even before the entry into force of the CSRD, and specific disclosure in line with the Task Force on Climate Related Financial Disclosure (TCFD) framework.