Climate and Energy: EU Policy and Regulation Update for 23 July 2025
July 23, 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
- EFRAG publishes draft amended ESRS Exposure Draft
- Commission adopts “Quick Fix” Delegated Regulation amending the first set of ESRS
- INTA Committee publishes Opinion on the Omnibus Directive Proposal
- Ombudswoman asks Commission for more details on preparation of the Sustainability Omnibus Package
- Commission reported as preparing to launch call for evidence on an “Environmental Omnibus” package
- EBA consults on the revision of product oversight and governance Guidelines for retail banking products to consider products with ESG features and greenwashing risks
- FSB publishes 2025 update on its Roadmap for addressing financial risks from climate change
- Italian accountants release a paper on the importance of ESG assurance after EU delay on ESG framework
Sustainability Omnibus Package
10 July 2025 [EU] – EFRAG publishes draft amended ESRS Exposure Draft
TEG and SRB meetings, laying out a plan to reduce ESRS data points by 66%, as compared to the 50% overall reduction communicated in the 20 June 2025 Progress report [full cover note available here].
The document sets forward a 50% reduction in mandatory “policies, actions and targets” data points (the so-called “shall” datapoints) and the removal of all 277 voluntary disclosures (the so-called “may” datapoints). EFRAG’s objectives are set out in six different “levers” i.e.:
- (i) Simplification of the double materiality assessment (DMA);
- (ii) Better readability and conciseness of the sustainability statements and better inclusion in corporate reporting as a whole;
- (iii) Critical modifications on the relationship between minimum disclosure requirements and topical specifications;
- (iv) Improved understandability, clarity and accessibility of the standards;
- (v) Introduction of other suggested burden-reduction reliefs; and
- (vi) Enhanced interoperability.
The proposed amendments with respect to the DMA refer in particular to the inclusion of a new section on “practical considerations” on executing these assessments and a clarification on the role of information materiality and on the objective of fair presentation. Additionally, EFRAG suggests introducing new guidance on how to consider the implemented remediation, mitigation and prevention policies-actions and targets (PATs) when assessing the materiality of an impact (the so-called “gross versus net” issue). Other suggested burden-reduction reliefs include IFRS reliefs for ‘undue cost and effort’ for DMAs, value chain, all metrics and quantitative financial effects. However, it does not point to such relief for Scope 3 greenhouse gas (GHG) emissions.
EFRAG specifies that this document does not constitute the official Exposure Draft, expected at the end of July 2025.
11 July 2025 [EU] – Commission adopts “Quick Fix” Delegated Regulation amending the first set of ESRS
The European Commission has adopted a Commission Delegated Regulation amending Delegated Regulation (EU) 2023/2772 (i.e., the first set of ESRS) as regards the postponement of the date of application of the disclosure requirements for certain undertakings [full delegated act available here and annex available here]. The Commission has also provided a summary of modifications [available here].
Undertakings reporting on financial year 2024 under the current ESRS (so-called “Wave 1” undertakings) may omit information on the anticipated financial effects of certain sustainability-related risks. The new Delegated Regulation introduces an amendment allowing these companies to omit that same information for financial years 2025 and 2026, meaning Wave 1 undertakings will not have to report additional information compared to 2024. The summary note provided by the Commission reiterates that Wave 1 undertakings that use the temporary exemptions for a complete topical standard must nevertheless report certain summarized information on the topic concerned if they conclude that the topic in question is material, in accordance with ESRS 2, General Disclosures, paragraph 17.
Wave 1 undertakings with up to 750 employees will benefit from an extension to financial years 2025 and 2026 of the possibility to omit (i) scope 3 GHG emissions and total GHG emissions and (ii) all information under ESRS S1 (own workforce). They will also benefit from an extension to financial year 2026 of the possibility to omit (i) all information under ESRS E4 (biodiversity and ecosystems), (ii) all information under ESRS S2 (workers in the value chain), (iii) all information under ESRS S3 (affected communities), and (iv) all information under ESRS S4 (consumers and end-users).
Wave 1 undertakings with more than 750 employees may omit all information required under ESRS E4 (biodiversity and ecosystems), ESRS S2 (workers in the value chain), ESRS S3 (affected communities) and ESRS S4 (consumers and end-users) – for financial years 2025 and 2026. Additionally, the possibility to omit the following information under ESRS 1 was extended to financial years 2025 and 2026 : (i) characteristics of non-employees in the undertaking’s own workforce, (ii) collective bargaining coverage and social dialogue in non-EEA countries, (iii) social protection (iv) percentage of employees with disabilities, (v) training and skills development, (vi) cases of work-related ill-health, (vii) number of days lost to injuries, accidents, fatalities and work-related ill health, (viii) health and safety with regard to non-employees, and (ix) work-life balance.
The Commission noted in its press release [available here] that the “quick fix” was necessary because Wave 1 undertakings were not captured by the “Stop-the-clock” Directive, which delayed by two years the sustainability reporting requirements for companies that report from financial year 2025 and 2026 (so-called “Wave 2” and “Wave 3” undertakings).
15 July 2025 [EU] – INTA Committee publishes Opinion on the Omnibus Directive Proposal
The European Parliament’s Committee on International Trade (INTA) issued its Opinion on the Omnibus Directive Proposal to the Committee on Legal Affairs [full Opinion available here].
The Opinion contains a list of amendments to the Commission’s proposal for a directive, including reference to a risk-based approach in the identification and assessment of actual and potential adverse impacts under Article 8 of CSDDD – and replacing the mapping of own operations by a scoping exercise, based on reasonably available information, to identify general areas across own operations, those of subsidiaries and, where related to the undertaking’s chains of activities, those of business partners, where adverse impacts are most likely to occur and to be most severe.
Under the amendments, companies would also be allowed not to suspend a business relationship where no available alternative exists, and that the suspension would cause substantial prejudice to the company or where the adverse impacts from doing so can be reasonably expected to be manifestly more severe than the adverse impact that could not be prevented or adequately mitigated. In such a case, the company shall refer to a competent supervisory authority to receive guidance on the course of action to take.
15 July 2025 [EU] – Ombudswoman asks Commission for more details on preparation of the Sustainability Omnibus Package
EU Ombudswoman Teresa Anjinho has asked for detailed explanations on why a series of procedural steps were not carried out during the preparation of the Omnibus Sustainability Package [press release available here].
Anjinho asked the Commission to explain its reasoning for not having an impact assessment, public consultation, or climate consistency assessment, as well as why an internal consultation between the Commission’s departments on the draft proposal lasted only 24 hours – as opposed to the usual 10 days or 48-hour fast-track procedure. The Commission was also invited to elaborate on its reasoning for the “critical urgency” of the proposal, and to explain why a further public consultation was not considered necessary.
The Press release emphasizes that under the Better Regulation guidelines, derogations from requirements such as impact assessments must be thoroughly justified and well explained. The Commission has been asked to respond to the inquiry by 15 September 2025.
17 July 2025 [EU] – Commission reported as preparing to launch call for evidence on an “Environmental Omnibus” package
The European Commission was reported by specialized media outlets as being in the process of preparing a call for evidence on an “environmental omnibus” act [please find the initial press article quoting a European Commission spokesperson here].
Reportedly, the European Commission is searching for ways to simplify, consolidate and codify the EU stock of legislation, including environmental rules under the EU’s Green Deal. This simplification package could be launched as early as in fall of 2025.
European Union/International
9 July 2025 [EU] – EBA consults on the revision of product oversight and governance Guidelines for retail banking products to consider products with ESG features and greenwashing risks
The European Banking Authority (EBA) launched a public consultation proposing to revise its Guidelines on product oversight and governance (POG) arrangements for retail banking products to take into account products with ESG features and greenwashing risks [full Consultation Paper available here].
The EBA had published Guidelines on POG arrangements in July 2015 to regulate the internal processes, functions and strategies aimed at designing retail banking products [available here]. In June 2024, the EBA published a report on greenwashing, highlighting an increase in potential cases across all sectors, including among EU banks. In light of this report and of the addition of greenwashing considerations and ESG risk requirements in Articles 76 and 87(a)(4) of the Directive 2013/36/EU (CRD), as amended lastly by Directive (EU) 2024/1619, the EBA decided to give further consideration to such products in the existing POG Guidelines.
The consultation sets out proposed amendments to the content of the POG guidelines, including listing conditions for sustainability-related communication and sustainability claims that are consistent with the requirements in the EBA guidelines on the management of ESG risks.
The consultation will run until 9 October 2025, with the EBA expecting to publish its final guidelines in the first quarter of 2026, which will be applied as of 1 December 2026.
14 July 2025 [EU] – FSB publishes 2025 update on its Roadmap for addressing financial risks from climate change
The Financial Stability Board (FSB) has published a report laying out a 2025 update to its Roadmap for addressing financial risks from climate change [full update available here].
The report, delivered to the July 2025 meeting of G20 Finance Ministers and Central Bank Governors, provides an update on the work undertaken by the FSB, standard-setting bodies and other international organizations in the four areas identified by the 2021 Roadmap, i.e., (i) firms’ disclosures, (ii) data, (iii) vulnerabilities analysis and (iv) regulatory and supervisory practices and tools.
The report also provides an outline of the FSB’s medium-term approach to potential climate-related financial risks, identifying the following areas for FSB work: (i) coordination of international efforts, (ii) information sharing, (iii) vulnerabilities analysis and (iv) external engagement.
Italy
4 July 2025 [Italy] – Italian accountants release a paper on the importance of ESG assurance after EU delay on ESG framework
On 4 July 2025 – following the adoption of Directive (EU) 2025/794 (known as “Stop the Clock”), which delays the implementation of sustainability reporting and due diligence obligations required by the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) – the Italian National Council of Accountants (CNDCEC) and the National Foundation of Accountants (FNC) published a research paper on “The Importance of Assurance in Sustainability Reporting” [available here, in Italian].
The study analyzes the evolving role of assurance in ESG reporting, especially in this period of regulatory uncertainty, highlighting the gap between stakeholder expectations (looking for reasonable assurance) and the actual (limited) scope of assurance.
In particular, the paper examines the international standards used to carry out the reporting assurance, such as ISAE 3000 and ISSA 5000, and the recently adopted Italian SSAE (Standard on Sustainability Assurance Engagement, i.e., a national standard issued by the Ministry of Economy and Finance). The study also stresses the need for auditor training, and practical tools like checklists and guidelines.
Voluntary assurance is presented as a strategic advantage for companies not yet subject to mandatory sustainability reporting, also improving creditworthiness and stakeholder trust.