Climate and Energy: EU Policy and Regulation Update for 15 October 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

• EIOPA Chairperson publishes contribution on the management of climate risk amid calls for regulatory simplification
• TNFD, PRI, ECB, OIC (Italy) and AMF (France) publish technical input in response to the EFRAG consultation on the revised ESRS standards
• EFRAG issues Endorsement Advice on the reduced disclosure standard
• European Commission sends a letter to the ESAs regarding the de-prioritization of certain Level 2 acts
• Major EU companies call for repeal of the CSDDD

European Union/International

• EU submits a statement of intent on its post-2030 nationally determined contribution to the UNFCCC
• European Commission publishes harmonized label for commercial guarantee of durability under the Directive on Empowering Consumers for the Green Transition
• EFRAG releases two supporting reports for VSME implementation
• EFRAG updates VSME Digital Template with Multi-Language Support
• ESMA issues its ECEP Statement for 2025
• ESMA releases report on 2024 corporate sustainability reporting practices

Germany

• Approval by the Federal Government of a draft legislation regarding the implementation of the Corporate Sustainability Reporting Directive
• Publication of action plan for future energy supply in Germany by the Ministry for Economic Affairs and Energy
• Obligation of the Federal Ministry of Agriculture to set up a program to protect water from nitrate pollution by the Federal Administrative Court
• The Federal Government approved a draft legislation regarding the amendment of the Carbon Dioxide Storage Act

France

• French market regulator issues report on investor expectations, notes sustainability concerns remain a key issue for investors

Sustainability Omnibus Package

17 September 2025 [EU] – EIOPA Chairperson publishes contribution on the management of climate risk amid calls for regulatory simplification

Petra Hielkema, European Insurance and Occupational Pensions Authority (EIOPA) Chairperson, published a contribution in Eurofi Magazine, entitled “Managing climate risk while balancing calls for regulatory simplification” [full contribution available here].

Hielkema notes a clear and positive shift in the undertakings’ risk management of climate change risk, which is increasingly being integrated into insurers’ risk management processes. However, the availability of data and loss models still presents a challenge for regulators. In that regard, amid calls for reducing regulatory burdens, it is EIOPA’s view that striking the right balance between simplification and sustainability is important.

While a more efficient and proportionate regulatory framework will be beneficial, Hielkema states that “simplification cannot be at any cost, nor can it undermine financial stability or high standards of consumer protection.” 

19 September – 7 October 2025 [EU] – TNFD, PRI, ECB, OIC (Italy) and AMF (France) publish technical input in response to the EFRAG consultation on the revised ESRS standards

The Taskforce on Nature-related Financial Disclosure (TNFD), the Principles for Responsible Investment (PRI), a United Nations-backed network of investors, along with the European Central Bank (ECB, through a staff response), the Italian Accounting Organization (OIC) and the French Financial Markets Authority (AMF) published their response to the EFRAG consultation on the revised and simplified Exposure Drafts of the European Sustainability Reporting Standards (ESRS). These Exposure Drafts, published by the European Financial Reporting Advisory Group (EFRAG), are under public consultation until 29 September 2025.

• The three institutions generally welcomed the proposed consolidation and simplification efforts, along with the proposed alignment of the ESRS with the ISSB standards – but set forward amendments or warnings, specifically regarding data availability.
  • The TNFD [full paper available here] highlighted four areas of improvement, namely (i) the provision of structured materiality assessment guidance for nature-related issues, (ii) an elevated recognition of “dependencies” on nature, (iii) the incorporation of the TNFD’s core disclosure metrics to help streamline the number of datapoints and aid global comparability across and within sectors; and (iv) the retention of a requirement for quantitative information about anticipated financial effects of material nature-related risks and opportunities.
  • The PRI [input available here, along with key recommendations available here] noted that some simplifications risk undermining investors’ access to relevant, high-quality and comparable data across a broad range of material issues – which they need to make investment decisions, conduct stewardship effectively and meet their own reporting requirements. In this regard, the PRI submitted key recommendations to EFRAG, setting out which additional ESRS datapoints should be retained or amended. In particular, it recommended that 53 of the datapoints EFRAG proposes to remove be added back into the standards.
  • The ECB staff response [available here] noted that ESRS disclosures were an important enabler for the ECB to take into account climate- and nature-related risks when discharging its mandate. Additionally, meaningful, reliable and comparable sustainability information is needed by banks themselves as a key input for their transition strategy and product offering, and to adequately manage their risks. The ECB specifically considered that quantitative information is essential for disclosures on anticipated financial effects.
• The OIC [input available here], in its letter, welcomes EFRAG’s effort to streamline the current standards within the tight timeframe set by EU ESG framework but considers the proposal only a first and insufficient step towards genuine simplification. In OIC’s view, stakeholders expect additional reduction of complexity, going beyond the mere reduction in the number of disclosure requirements.
  
  OIC further notes that meaningful simplification should address substantive and structural aspects of sustainability reporting. The areas for improvement are detailed in an annex to OIC’s letter and include, among the others, limiting the request for quantitative indicators along the value chain in the ESRS as much as possible (i.e. GHG emission scope 3) and requesting entity-specific information only on a voluntary basis (removing references to the fair presentation and materiality) or, as an alternative, requiring such an information only when it is financially material.
  
  The organization urges EFRAG to make significant progress before the proposal is finalized, warning that otherwise the delegated act could face implementation challenges.
• The AMF [input is available here] also welcomes EFRAG’s efforts to propose new standards that are significantly simplified in both substance and form, while identifying a number of key points for EFRAG’s consideration, including the following:
  • Double Materiality Assessment: The AMF supports a more proportionate approach but encourages EFRAG to require that companies, at a minimum, specify whether each material topic is associated with an impact, a risk, or an opportunity. However, the AMF does not support EFRAG’s proposal to assess impact materiality after taking mitigation measures into account, considering this approach unnecessarily complex.
  • Climate reporting: The AMF objects to the removal of ’net-zero’ target definitions, noting that these significantly enhanced the quality and comparability of corporate climate reporting in 2024. It suggests that, in the absence of sector-specific standards, EFRAG should make some adjustments to harmonise and facilitate climate reporting for financial actors, taking into account their particularities.
  • Assessment of anticipated financial effects: The AMF supports Option 1, which requires quantitative information on climate-related matters to ensure alignment with ISSB standards. However, it supports offering more flexibility on other matters.
  • Reporting reliefs: The AMF supports the introduction of the “undue costs or efforts” concept but recommends setting time-bound limits to accommodate learning curves while maintaining alignment with international standards.
  • Social reporting: The AMF advocates for further simplification, particularly regarding metrics on adequate wages and the gender pay gap.

25 September 2025 [EU] – EFRAG issues Endorsement Advice on the reduced disclosure standard

EFRAG has published its final endorsement advice on IFRS 19 Subsidiaries without Public Accountability: Disclosures, concluding that the standard meets all technical endorsement criteria and is conducive to the European public good, therefore recommending its endorsement in the EU [full advice available here].

Issued by the IASB on 9 May 2024, IFRS 19 Subsidiaries without Public Accountability: Disclosures aims to simplify financial reporting for eligible subsidiaries by allowing them to prepare IFRS-compliant financial statements with the reduced disclosures.

EFRAG has concluded that it meets the qualitative characteristics required to support economic decisions and that it did not create any distortion in its interaction with other IFRS Accounting Standards – meaning it is therefore compliant with the true and fair view principle.

1 October 2025 [EU] – European Commission sends a letter to the ESAs regarding the de-prioritization of certain Level 2 acts

As part of its broader agenda to enhance regulatory efficiency and reduce unnecessary complexity, the Commission has announced that 115 provisions have been identified as non-essential to the effective implementation of the Level 1 framework [see here and here]. It states that it does not intend to adopt these Level 2 acts by 1 October 2027 and will propose amending or repealing the relevant Level 2 acts where there is an obligation to act within a specified deadline in the context of any ongoing amendments to relevant Level 1 acts. The non-essential Level 2 acts include various revised regulatory technical standards under Regulation (EU) 2019/2088 (SFDR), as well as delegated acts under Directive (EU) 2022/2464 (CSRD). This includes the delegated acts relating to the European Sustainability Reporting Standards for certain third-country undertakings and the sector-specific European Sustainability Reporting Standards.

6 October 2025 [EU] – Major EU companies call for repeal of the CSDDD

The CEOs of TotalEnergies and Siemens, representing 46 major European companies, have called on EU governments to repeal Directive (EU) 2024/1760 on corporate sustainability due diligence (CSDDD) [see here]. In a letter to President Emmanuel Macron and Chancellor Friedrich Merz, they argued that repealing the CSDDD would demonstrate the EU willingness to ease regulatory burdens and strengthen the global competitiveness of its industry.

European Union/International

18 September 2025 [EU/International] – EU submits a statement of intent on its post-2030 nationally determined contribution to the UNFCCC

The Council approved a statement of intent [available here] in view of the EU submission of a nationally determined contribution (NDC) of the EU and its Member States to the United Nations Framework Convention on Climate Change (UNFCCC). The statement confirms the EU’s commitment to the Paris Agreement and indicates the EU’s intention to submit its post-2030 NDC ahead of COP30 with an indicative target of reducing GHG emissions by between 66.25% and 72.5% compared to 1990 levels by 2035.

25 September 2025 [EU] – European Commission publishes harmonized label for commercial guarantee of durability under the Directive on Empowering Consumers for the Green Transition

The European Commission has published a draft of the Commission Implementing Regulation concerning the design and content of the harmonized notice on the legal guarantee of conformity and the harmonized label for the commercial guarantee of durability [available here].

These were established by Directive 2011/83/EU, as amended by Directive (EU) 2024/825 on empowering consumers for the green transition. The harmonized label is a voluntary commercial guarantee of durability, representing a commitment by the producer to the consumer that the good will maintain its required functions and performance through normal use during a certain period.

The design and content of the label must follow the specifications set out in Annex II of the draft Commission Implementing Regulation, which will apply from 27 September 2026.

25 September 2025 [EU] – EFRAG releases two supporting reports for VSME implementation

Following calls for interest in February 2025, EFRAG has published two reports to support small and medium-sized enterprises (SMEs) in implementing the Voluntary Sustainability Reporting Standard for SMEs (VSME).

• Report 1 [available here] provides SMEs with practical support for reporting their GHG emissions under the VSME. Based on an analysis of 100 digital tools, it identifies existing or developing digital tools, platforms and initiatives relevant to SME sustainability reporting across the European Union. The report highlights a significant alignment between these tools and the GHG Protocol, the European Sustainability Reporting Standards (ESRS) or the VSME. Also, most of the tools address all three environmental, social and governance pillars, either individually or in combination.
• Report 2 [available here] provides an overview of the 223 platforms and initiatives for SME reporting. It explores the characteristics of these platforms, including their alignment with the VSME, the type and nature of the initiative, development status, size of user base, technical features and embedded tools, reporting functionalities, country of initiative base and available languages, and access and cost structures. Key findings show that around 82% of platforms are privately developed and that the majority are fully aligned with the VSME, generally reflecting its modular structure. Most platforms offer guidance and automation tools, and have a variety of cost models with an emphasis on data privacy. The report then provides an in-depth analysis of a selected group of shortlisted platforms.

3 October 2025 [EU] – EFRAG updates VSME Digital Template with Multi-Language Support

EFRAG released an updated version of its VSME Digital Template for SME sustainability reporting, now featuring multi-language support [see here] . The tool, aligned with the European Commission’s VSME Recommendation, enables report generation in Spanish, Polish, Lithuanian, and Portuguese, alongside English. Additional translations from other EU countries are expected by November 2025.

14 October 2025 [EU] – ESMA issues its ECEP Statement for 2025

ESMA published its annual European Common Enforcement Priorities (ECEP) Statement for 2025, setting out the key areas of focus for ESMA and national enforcers when reviewing issuers’ annual financial reports, including their sustainability reporting [see here].

• CSRD: ESMA reminds “Wave 1” companies that the revised ESRS will only become applicable once the corresponding Delegated Act is published in the EU Official Journal. Consequently, companies should not rely on EFRAG’s exposure drafts or final technical advice to the European Commission when preparing their sustainability disclosures in 2026 for financial year 2025. Similarly, to determine their reporting obligations for 2026, “Wave 2” companies are encouraged to monitor the transposition of the Stop the Clock Directive in their respective Member States. In terms of priority for 2025, given the regulatory uncertainty around the CSRD, ESMA has carried forward two priorities from its ECEP 2024, namely: (i) the implementation of ESRS requirements on materiality assessment; and (ii) the scope and structure of the sustainability statement.
• Taxonomy Regulation: Although the revised Taxonomy Disclosures Delegated Act and Climate and Environmental Delegated Act, adopted in July 2025, are not yet in force—pending the completion of the scrutiny period and absent any objections from the co-legislators—ESMA encourages in-scope companies to apply the updated requirements in their 2026 disclosures (covering the 2025 financial year). However, companies may still choose to apply the previous framework for that reporting period. ESMA has not issued specific recommendations on Taxonomy disclosures in the 2025 ECEP.

14 October 2025 [EU] – ESMA releases report on 2024 corporate sustainability reporting practices

ESMA published the results of a fact-finding exercise examining 2024 corporate sustainability reporting practices by EU issuers, assessing the quality of materiality disclosures under ESRS Set 1 [see here]. The review covered 91 issuers across 23 EU Member States, including 60 issuers subject to mandatory ESRS-compliant reporting and 31 voluntary reporters. Following this exercise, ESMA has requested that issuers: (i) avoid boilerplate disclosures when describing their materiality assessment process; (ii) map material IROs with the ESRS sustainability matters and use ESRS terminology to describe them, while identifying the IROs for which entity-specific disclosures are provided in addition to ESRS disclosures; (iii) disclose adopted Policies, Actions, Targets and Metrics for each material sustainability matter—or explicitly state their absence—including for entity-specific matters; and (iv) ensure the sustainability statement fulfils its overall objective of disclosing material IROs and explaining how they are managed, while enhancing usability by establishing clear connections between IRO disclosures and topical disclosures.

Germany

3 September 2025 [Germany] – Approval by the Federal Government of a draft legislation regarding the implementation of the Corporate Sustainability Reporting Directive

The Federal Government approved draft legislation to implement the European Corporate Sustainability Reporting Directive (Directive (EU) 2022/2464) (CSRD) [available here].

Although the CSRD is currently under review within the European Omnibus procedure, the implementation deadline expired on 6 July 2024, making Germany’s implementation significantly overdue.

Regarding substance, the draft legislation adheres strictly to the directive’s requirements whilst seeking to minimize bureaucratic burden for affected companies. The draft also incorporates Directive (EU) 2025/794, which amended the Corporate Sustainability Reporting Directive through a “stop-the-clock” mechanism previously addressed in earlier newsletters [see here for Newsletter of 30 April 2025]. This mechanism grants small and medium-sized enterprises a reprieve from reporting obligations until 2028. [see further here, German only].

15 September 2025 [Germany] – Publication of action plan for future energy supply in Germany by the Ministry for Economic Affairs and Energy

The Federal Ministry for Economic Affairs and Energy has published ten political measures regarding the strategic outlook of Germany’s energy supply [available here; German only]. The measures are based on a monitoring report, which examined uncertainties in the development of demand for electricity and hydrogen as well as glaring gaps in the existing future scenarios for the energy transition. Moreover, the report revealed that too little attention has been paid to the actual ability of industry, commerce and households to pay – and the resulting public financial requirements have not yet been reliably calculated. Accordingly, the proposed measures outline the political agenda the ministry intends to take regarding promoting pragmatism, market economy rationality, innovation-friendliness and broad technological openness in order to secure prosperity, jobs and climate targets for the next generation in equal measure.

They mainly stress the need for maintaining a secure supply and staying competitive while pursuing the transition towards climate neutrality. Furthermore, demand flexibility and the digitalization of the electricity system are highlighted as systemic levers for increasing efficiency. The document emphasizes the indispensable European dimension of energy policy and calls for coordination with EU partners. Lastly, the ministry intends to review all support measures and subsidies on their economic benefit and reduce them to the absolutely necessary level, while promoting more market, technology openness, innovation as well as a holistic and system-oriented approach to maintain Germany as an attractive industrial location and pioneer for smart energy policy in Europe.

6 October 2025 [Germany] – The Federal Government approved a draft legislation regarding the amendment of the Carbon Dioxide Storage Act

On 6 October 2025, the Federal Government approved a draft legislation regarding the amendment of the Carbon Dioxide Storage Act [available here].  This amendment extends the previous authorization of CO2 storage for research purposes to commercial purposes.

According to the German government, the amendment is intended to provide a basis for investment decisions and favor the development of a substantial storage infrastructure by the early 2030s.  The main content of the amendment includes inter alia enabling the construction of storage facilities on the German mainland, the German continental shelf and in its exclusive economic zone, as well as speeding up authorization procedures [see further here, German only].

8 October 2025 [Germany] – Obligation of the Federal Ministry of Agriculture to set up a program to protect water from nitrate pollution by the Federal Administrative Court

On 8 October 2025, the Federal Administrative Court upheld the complaint of Environmental Action Germany (‘Deutsche Umwelthilfe’), a German NGO that campaigns for environmental protection, and ruled that the Federal Ministry of Agriculture is obliged to set up a program to protect water from nitrate resulting from agricultural sources.

According to the Federal Administrative Court, the obligation to set up such a program arises from Section 3a (1) of the Fertiliser Act and exists already since 2017.  In addition, the Federal Administrative Court not only established the obligation to draw up the program in general, but also defined certain content requirements for the plan. Based on the limit value of the EU Nitrates Directive (Directive 91/676/EEC), the plan must ensure that the groundwater does not contain more than 50 milligrams of nitrate per litre [see further here, German only].

France

22 September 2025 [France] – French market regulator issues report on investor expectations, notes sustainability concerns remain a key issue for investors

The AMF Observatoire de l’épargne (Household Savings Observatory) has published the results of its biennial survey on responsible investment, among a representative sample of 2,006 French people aged 18 and over [press release available here].

Findings point to sustainable development issues remaining a major concern for a majority of French people, including young people. However, while 64% have heard of responsible investment, only 12% are well informed about it and 59% doubt that it is actually “responsible”. Fewer than one in two believe that such investments have a real environmental impact. Similarly, although 28% of French people have heard of the SRI label and 18% of Greenfin, only 25% and 29% respectively have full trust that they guarantee the responsible nature of an investment.