Climate and Energy: EU Policy and Regulation Update for 25 June 2025

June 25, 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 Parliament publishes Omnibus Directive rapporteur’s suggested amendments to the European Commission Proposal
  • EFRAG publishes progress report on simplification plans for the ESRS
  • ESMA publishes statement on ESRS supervision under the Omnibus framework
  • Council of the European Union agrees position on the Omnibus Directive, shortly after publishing draft fifth Presidency compromise text

European Union/International

  • European Accounting Boards push for simplified EU Sustainability Reporting Standards
  • ECB publishes speech by Chair of the Supervisory Board of the ECB on “simplification without deregulation”
  • ECB publishes third set of climate-related financial disclosures
  • Basel Committee publishes framework for the voluntary disclosure of climate-related financial risks
  • Commission officials express differing views on the status of the Green Claims Directive, following the EPP’s call for its withdrawal

Italy

  • Italian Insurance Supervisory Authority publishes a report on risks from natural catastrophes and sustainability for 2025

France

  • French Senate approves “anti-fast fashion” bill in first reading
  • Paris Court of Appeal upholds La Poste’s breach of duty of vigilance requirement

Sustainability Omnibus Package

13 June 2025 [EU] – European Parliament publishes Omnibus Directive rapporteur’s suggested amendments to the European Commission Proposal

The European Parliament published the Omnibus Directive rapporteur’s suggested amendments to the European Commission’s Sustainability Omnibus Package, in a draft document dated 26 May 2025 [available here].

The draft proposes several significant changes, including:

  • Raising thresholds under the Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D) to only capture undertakings with 3,000+ employees and €450 million in net turnover;
  • Removing requirements for companies to adopt climate transition plans under both directives;
  • Restricting diligence requirements under CS3D to an undertaking’s own operations and those of its subsidiaries and direct (tier 1) partners;
  • Introducing a scoping stage prior to in-depth risk assessment under CS3D; and
  • Adding explicit protections to exempt the disclosure of trade secrets.

This draft will serve as the Parliament’s starting point for trilogue negotiations with the Council, which itself adopted differing amendments in its general approach (see below).

 

20 June 2025 [EU] – EFRAG publishes progress report on simplification plans for the ESRS

20 June, the European Financial Reporting Advisory Group (EFRAG) published its progress report on its work to simplify the European Sustainability Reporting Standards (ESRS) [press release available here].

EFRAG’s report describes the six simplification “levers” it has been exploring to cut mandatory datapoints by over 50% while maintaining core CSRD objectives. These levers, informed by extensive stakeholder consultation, include:

  • Simplifying the double materiality assessment;
  • Enhancing readability and conciseness of sustainability statements;
  • Modifying the relationship between minimum disclosure requirements and topical specifications; • Improving understandability, clarity and accessibility of the standards;
  • Introducing suggested burden-reduction reliefs; and
  • Enhancing interoperability.

EFRAG aims to approve an exposure draft in mid-July 2025, with public consultation launching in the last week of July and to finalise and deliver its technical advice to the European Commission by 31 October 2025.

 

20 June 2025 [EU] – ESMA publishes statement on ESRS supervision under the Omnibus framework

ESMA published a Public statement on ESRS supervision in the Omnibus environment, following the first group of large public-interest entities’ reporting in accordance with the ESRS [full statement available here].

The statement first noted the “uncertainty caused by the simultaneous occurrence of the first ESRS application, uneven transposition of the [CSRD] and the Omnibus legislative proposals and the resulting questions around [NCAs] approach to supervision of sustainability reporting”. In this context, ESMA reaffirms its commitment to clear and transparent sustainability reporting aimed at reducing greenwashing risk.

Supervision by NCAs is now governed by ESMA’s new Guidelines on Enforcement of Sustainability Information (GLESI), which have been in effect since January 2025, and by national transpositions of the Transparency Directive.

Acknowledging the need for an adjustment period, ESMA outlined that application of the GLESI during this phase would be “proportionate and realistic”, and that while NCAs can play a supportive role through dialogue and informal measures, they will use enforcement actions where necessary. ESMA further clarified that temporary non-compliance with the GLESI does not mean that NCAs do not fulfil their supervisory obligations at national level, as established by the Transparency Directive.

 

17-23 June 2025 [EU] – Council of the European Union agrees position on the Omnibus Directive, shortly after publishing draft fifth Presidency compromise text

The Council of the European Union circulated its updated Presidency compromise text on the Omnibus Directive to Member State delegations in advance of an upcoming meeting of the Committee of Permanent Representatives (“COREPER II”) [available here]. The fifth iteration of the text incorporates revisions discussed in the Antici Group on Simplification on 4 and 13 June, for which a fourth compromise text was also published [available here].

As concerns CSRD, the Presidency set forward a new €450 million net turnover threshold, complementing the Commission’s existing proposal to remove listed SMEs from the scope and increase the employee threshold to 1,000.

As concerns CS3D, the following key amendments were proposed by the Presidency:

  • Establishment of a €1.5 billion turnover and 5,000 employee threshold;
  • Alignment of CSDDD climate change mitigation transition plan requirements with the CSRD;
  • Replacement of ‘best efforts’ standards with ‘reasonable efforts’ standards in relation to transition plans;
  • Deferral of transition plan obligations adoption obligation by two years; and
  • Extension of the transposition deadline by one year.

On 23 June 2025, Members of the European Parliament agreed the Council’s negotiating mandate on simplifying sustainability reporting and due diligence requirements to boost EU competitiveness [press release available here, negotiating mandate available here]. This mandate is mostly aligned with the fifth compromise text (see above), including the €450 million net turnover and 1,000-employee threshold for the CSRD, along with the €1.5 billion net turnover and 5,000-employee threshold for the CS3D.

Regarding the CS3D, the Council’s mandate confirmed a risk-based approach, focusing on areas where actual and potential adverse impacts are most likely to occur. Companies should conduct a general scoping exercise, rather than a comprehensive mapping exercise. The limitation of the relevant obligations to the “tier 1” is maintained, with a possible extension beyond “tier 1” made possible through the addition of a review clause. The Council’s position also postpones the CS3D transposition deadline by one year, to 26 July 2028.

The CS3D requirement to put transition plans into effect is replaced by a clarification that they include outlining implementing actions (planned and taken). The adoption requirement is furthermore postponed by two years. Supervisory authorities are empowered to advise the companies on design and implementation of those plans, but the design elements originally set out in Article 22(1), second paragraph of the CS3D are now made optional. Authorities shall be made able to provide advice to companies regarding the adoption, design and implementation of such transition plans, upon request. General supervisory powers under Articles 24 and 25 still include the power to require companies to provide information and carry out investigations related to compliance with the obligations set out in Articles 7 to 16.

Next steps include the European Parliament reaching its own negotiating position, after which it will be able to enter into negotiation with the Council, with a view to reaching an agreement. 

European Union/International

6 June 2025 [EU] – European Accounting Boards push for simplified EU Sustainability Reporting Standards

The French, German, Italian and Spanish European Accounting Standards Boards (namely, the Autorité des Normes Comptables (ANC), the Deutsches Rechnungslegungs Standards Committee (DRSC), the Organismo Italiano di contabilità (OIC), and the Instituto de Contabilidad y Auditoria de Cuentas (ICAC)) have submitted a joint staff working paper to the European Financial Reporting Advisory Group (EFRAG) proposing a significant simplification of the EU’s sustainability reporting standards (ESRS) [link].

The proposal advocates for a more pragmatic, business-friendly approach to ESG reporting within the EU.

The initiative calls for a substantial reduction in the number of data points companies are currently required to collect and disclose, many of which fall outside undertakings’ business scope and are difficult to obtain. In particular, the recommendations include:

  • Simplifying double materiality assessments (DMA) by streamlining how companies evaluate mutual impacts between business activities and ESG factors;
  • Limiting value chain disclosure requirements, particularly quantitative data on upstream and downstream activities (which are often inaccessible or overly burdensome to collect);
  • Clarifying anticipated financial effects disclosures by specifying whether qualitative, quantitative, or combined reporting is expected, in line with the standards of the International Sustainability Standards Board (ISSB);
  • Making operational control reporting optional to introduce more flexibility in reporting boundaries;
  • Increasing flexibility and global interoperability with ISSB standards to ease compliance for multinational companies; and
  • Enhancing coordination with the Sustainable Finance Disclosure Regulation (SFDR) to better integrate EFRAG standards with existing EU sustainability disclosure regulations.

 

11 June 2025 [EU] – ECB publishes speech by Chair of the Supervisory Board of the ECB on “simplification without deregulation”

The ECB published a speech made by Claudia Burch – Chair of the Supervisory Board of the ECB – at the Goldman Sachs European Financials Conference 2025, entitled “Simplification without deregulation: European supervision, regulation and reporting in a changing environment” [available here].

Ms. Burch emphasized that simplifying banking supervision must not come at the expense of deregulation, especially as regards sustainability. She reaffirmed the ECB’s commitment to integrating environmental and climate-related risks into supervisory practices, stating that these are now considered core components of risk assessments rather than peripheral concerns.

The ECB’s supervisory priorities for 2025–2027 maintain a strong focus on environmental and climate risks. Simplification of processes – such as through a more efficient SREP – aims to improve transparency and effectiveness, but not at the cost of weakening environmental safeguards. Banks demonstrating shortcomings in ESG governance or risk controls will face remediation measures.

Ms. Burch also outlined the importance of aligning supervisory tools with the EU’s broader sustainable finance agenda, including the Taxonomy Regulation and the Corporate Sustainability Reporting Directive (CSRD). The ECB supports regulatory reforms, such as the implementation of Basel III and the revised Capital Requirements Regulation, which reinforce sustainability integration across the banking sector.

 

12 June 2025 [EU] – ECB publishes third set of climate-related financial disclosures

The ECB published its third set of climate-related financial disclosures, covering the Eurosystem assets held for monetary policy purposes and of the ECB’s foreign reserves [available here] and of the ECB’s non-monetary policy portfolios [available here].

The disclosures include a new indicator that measures the exposure of the ECB’s and the Eurosystem’s corporate portfolios to sectors with material dependencies or impacts on nature. Around 30% of Eurosystem monetary policy bond holdings are concentrated in the three most nature-exposed sectors: utilities, food, and real estate.

Emissions from monetary policy portfolios and foreign reserves continued to decline both in absolute terms and relative to portfolio size. Corporate bonds remain the most climate-exposed asset class. Tilting reinvestments toward lower-emission issuers contributed to about 25% of emissions reductions from 2021 to 2024.

The ECB indicated that data challenges remained, including inconsistent emissions reporting across issuers and limited data availability for certain asset classes. The ECB emphasized the need for harmonised, reliable reporting standards to support effective investment and risk decisions.

 

13 June 2025 [EU] – Basel Committee publishes framework for the voluntary disclosure of climate-related financial risks

The Basel Committee on Banking Supervision published a framework for the voluntary disclosure of climate-related financial risks [available here], which builds on its November 2023 consultative draft [available here].

Aimed at strengthening global banking practices and financial stability, the framework includes templates for both qualitative and quantitative disclosures, covering banks’ financed emissions, physical risks, energy efficiency in real estate portfolios and sector-level emission intensity metrics. Key changes relative to the November 2023 draft include:

  • the replacement of references to “forecasts” with “targets,” in line with the voluntary nature of the revised framework;
  • revisions to align terminology with the materiality principle under the Pillar 3 framework; and
  • the removal of the reporting template for facilitated emissions associated with capital market activities.

 

18-25 June 2025 [EU] – Commission officials express differing views on the status of the Green Claims Directive, following the EPP’s call for its withdrawal

In a letter published on 18 June 2025, the European People’s Party (EPP) asked the European Commission to scrap the Green Claims Directive (GCD), the EU’s proposed anti-greenwashing legislation [full letter available here].

EPP shadow rapporteurs argued the directive would impose disproportionate costs and administrative burdens on businesses, particularly objecting to the preapproval requirement for environmental claims. They cited the lack of a dedicated impact assessment and potential conflicts with the EU’s Better Regulation Agenda and competitiveness goals.

Shortly following this announcement, Maciej Berestecki, a spokesperson for the Commission, reportedly announced in a press conference on 20 June 2025 that “in the current context, indeed the Commission intends to withdraw the Green Claims proposal”.

The announcement came just days prior to trilogue negotiations to finalize the proposed rules on 23 June 2025. It was criticized by Chairs of the responsible committees at the European Parliament [press release available here], who asked that negotiations continue as soon as possible.

On 25 June 2025, specialized media outlets reported that Commission officials disputed the initial allegation, noting that the Presidency had no intention to backtrack on the Green Claims Directive, and that it “would only kill the file if a resolution was not found over a specific issue: whether the law should cover businesses with fewer than 10 employees.” The Commission had not confirmed this statement through its official channels, as of 25 June 2025.

Italy

10 June 2025 [Italy] – Italian Insurance Supervisory Authority publishes a report on risks from natural catastrophes and sustainability for 2025

On 12 June 2025, the Italian Insurance Supervisory Authority (IVASS) published a report on risks from natural catastrophes and sustainability, summarising the results of the third annual survey (launched in 2022) involving all companies operating in the national insurance sector [link, in Italian].

The survey is divided into a quantitative section, with reference to data as of 31 December 2023, and a qualitative section, based on information updated at the end of 2024. The survey monitors (i) the integration of ESG factors into strategic policies and risk management processes over the short, medium, and long term, (ii) the impact of physical risks from extreme natural events on underwriting and insurance transactions (iii) and the relevance of transition risks on investment portfolios.

The report highlights the insurance sector’s exposure to climate-related risks from natural catastrophes, emphasizing its essential role in climate adaptation strategies, narrowing the protection gap, and supporting the transition to a more sustainable economy. This is also in light of the 2024 Budget Law, which required companies to have a coverage for risks from natural catastrophes.

The IVASS presents findings by thematic area, including:

  • Improved data quality and methodologies for climate risk underwriting and carbon emissions;
  • Widespread integration of ESG factors in governance, especially among larger undertakings;
  • Gradual increase in the collection of premiums in connection with coverage of natural catastrophe risks, with reinsurers playing a key role in mitigating losses;
  • Adoption of sustainable investment strategies by a large number of undertakings; and
  • Diversified approaches to transition risk assessment and carbon footprint measurement.

Challenges remain, particularly in developing transition plans. Only a few major insurance groups have finalized such plans, while others are still in the process of finalising them, hindered by regulatory complexity, data gaps, unclear metrics, and concerns about the profitability of decarbonization strategies. 

France

10 June 2025 [France] – French Senate approves “anti-fast fashion” bill in first reading

The French Senate approved in its first reading a bill [available here] targeting the environmental impact of the textile industry, addressing “fast fashion” practices [press release available here].

  • Article 1 defines fast fashion based on new reference thresholds and commercial practices that reduce product lifespan through large numbers of new references or low repair incentives. Products meeting these criteria must display messages informing consumers of environmental and social impacts. The provision targets “ultra fast fashion” thus excluding French enterprises with physical stores, seen as contributing to territorial economic life.
  • Article 2 enables eco-contribution modulation within the Extended Producer Responsibility textile scheme (part of the 2021 French Resilience and Climate Law), with a view to have it increase to €10 per product by 2030. The bill also imposes the designation of a “financial proxy” for producers not established in France, in an effort to curb eco-contribution-related frauds.
  • Article 3 addresses advertising restrictions. The competent legislative committee had favoured balanced regulation targeting influencer promotions and requiring environmental impact information in advertisements. The Senate chose generalised advertising prohibition of fast-fashion products whilst maintaining the committee’s regulatory measures.

Additional provisions include prohibiting “free delivery” mentions and requiring delivery impact information and eliminating tax credits on unsold donations for fast fashion companies. It also includes the introduction of a tax on small parcels delivered by companies based outside the European Union, ranging from €2 to €4 per parcel.

Enforcement mechanisms include information-sharing capabilities between competent administrations (DGPR, DGCCRF, DGDDI), penalty caps at €3,000 for individuals and €15,000 for legal entities, and empowering DGCCRF agents to investigate environmental information breaches. Article 3 bis also prohibits the promotion of fast-fashion products by influencers and sets a maximum €100,000 fine.

The bill, initially adopted by the French National Assembly in 2024, requires bicameral discussions (Commission Mixte Paritaire) before it can be promulgated.

 

17 June 2025 [France] – Paris Court of Appeal upholds La Poste’s breach of duty of vigilance requirement

Duty of Vigilance Law, which requires large companies to prevent human rights and environmental abuses across their operations and supply chains [press release available here, full decision available here, both in French only].

The court found La Poste’s 2021 vigilance plan insufficiently detailed, notably lacking risk prioritization and meaningful stakeholder consultation. It ordered La Poste to revise its vigilance plan and awarded legal costs to the plaintiff, a workers’ union. The Vigilance Plan’s key shortcomings were listed as follows:

  • Although structured around the mandated three areas (human rights, health & safety, environment), the plan failed to distinguish serious risks by not identifying, analyzing, and prioritizing them clearly;
  • The three-stage supplier assessment (self evaluation, documentation audits, onsite audits) did not align with the risk-based approach set out in the plan, omitting the link between identified risks and mitigation measures;
  • La Poste did not fulfil its obligation to hold a genuine consultation on alert mechanisms with trade unions, which the court emphasized should occur prior to finalizing the plan;
  • The monitoring indicators were not clearly linked to risk prevention objectives; there was no effective mechanism for assessing outcomes of the vigilance measures.

The Court of appeal thus affirmed the lower court’s injunction to revise the plan – now legally binding, with the published version serving as the authoritative reference. In its decision, the Court also referred to risk mapping provisions of Articles 8 and 9 of the CS3D, even though the directive has not yet entered into force.

Originally brought by the Sud PTT union in December 2021 over alleged poor working conditions in logistics subsidiaries, this decision marks the first instance an appeals court has upheld a ruling on the substantive requirements of the Vigilance Law.