Climate and Energy: EU Policy and Regulation Update for 10 December 2025
December 10, 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
- EU Parliament adopts negotiating position on Omnibus proposal amending CSRD and CSDDD
- EU Ombudswoman finds that the European Commission committed “maladministration” in its handling of the Sustainability Omnibus package
- EFRAG publishes technical advice to the European Commission on draft simplified ESRS
- ECB imposes periodic penalty payment on a credit institution for non-compliance with climate-related requirements
- NGFS publishes declaration on the economic cost of climate inaction, supported by EBA and EIOPA
- European Parliament adopts amendments to EU Climate Law
- NGFS publishes updated Guide to climate scenario analysis for central banks and supervisors
- European Commission publishes final version of the SFDR simplification proposal, along with accompanying Q&A
- French banking and markets regulators publish joint supervisory approach to help professionals take into account clients’ sustainability preferences
- Injunction of FIFA’s advertising with climate neutrality regarding the world cup in 2022 by the Regional Court Berlin II
- Decision of the Federal Government to refine Germany’s Sustainability Strategy
- Federal Court of Justice sets hearing date for the appeals regarding lawsuits for an injunction prohibiting the sale of cars with combustion engines as of 2030
- German Parliament approves financial subsidies to German electricity network operators amounting to €6.5 billion
- Federal Minister for the Environment announces further contributions to the international Adaption Found at COP30
- Hamburg Regional Court orders climate activists to pay damages to German airline Lufthansa
- The Federal Government ratifies the BBNJ Agreement
- Italian draft legislative decree transposing the Directive on Empowering Consumers for the Green Transition submitted to the Parliament
Sustainability Omnibus Package
13 November 2025 [EU] – EU Parliament adopts negotiating position on Omnibus proposal amending CSRD and CSDDD
The European Parliament adopted its negotiating position on simplified sustainability reporting and due diligence duties for businesses, as part of the Omnibus I simplification package [full package of amendments available here]. It had initially rejected the mandate adopted by the Committee on Legal Affairs (JURI), in a 22 October 2025 vote, prompting further amendments.
The final draft of the Omnibus proposal, aimed at amending the EU Corporate Sustainability Reporting Directive (CSRD) and EU Corporate Sustainability Due Diligence Directive (CSDDD), sets forward several changes, both in scope and substance.
The CSRD application thresholds have now been increased, targeting companies with over 1,750 employees and €450 million net turnover (against the initial 250 employees, €50 million net turnover and €25 million balance sheet thresholds).
- With respect to EU subsidiaries and branches of non-EU companies, the CSRD will now apply only where these subsidiaries and branches have more than €450 million in net turnover, but regardless of their non-EU parent company’s turnover in the EU.
- Currently, the threshold is set at €40 million turnover in the EU for the branch/ subsidiary, with an added requirement that the non-EU parent company also has an over €150 million overall turnover in the EU.
- With respect to their value chain, in-scope companies will only be able to request information from undertakings in their value chain where these have more than 1,750 employees and a net turnover of €450 million, except for information requests made for purposes other than CSRD reporting, or for the information to be provided in the sustainability report for voluntary use.
The CSDDD application thresholds have now been increased, targeting EU companies with more than 5,000 employees and a net worldwide turnover of more than €1.5 billion, along with non-EU companies having a net EU turnover of more than €1.5 billion. This increase would mean setting aside the initially proposed alignment of CSRD and CSDDD’s scopes.
- With respect to risk-based assessments, i.e., the identification and assessment of actual or potential adverse impacts, the amendments support a “full risk-based approach”. This entails identifying areas where adverse impacts are most likely to occur and to be most severe, and conduct further assessments only on these areas.
- To that end, companies may only seek information from business partners where “necessary” and may only seek such information from business partners with less than 5,000 employees “as a last resort” and where it could not reasonably be obtained by other means, such as “existing or secondary sources”. The information request shall be “targeted, reasonable and proportionate”.
- With respect to climate transition plans, the negotiating position now proposes to remove requirements relating to the adoption of climate transition plans entirely. The initial Omnibus proposal had only removed the requirement to put such plans into effect.
The Omnibus proposal has now been referred to the JURI Committee to proceed to the trilogue negotiations with the EU Council and Commission. It will then need to be adopted and published in the Official Journal of the European Union before any amendments to the existing CSRD and CSDDD may enter into force.
25 November 2025 [EU] – EU Ombudswoman finds that the European Commission committed “maladministration” in its handling of the Sustainability Omnibus package
EU Ombudswoman Teresa Anjinho found procedural shortcomings in how the European Commission prepared the Omnibus I legislative proposal, as well as other legislative proposals [findings and recommendations available here].
Anjinho found that, with respect to the Omnibus I file, the Commission’s procedural shortcomings included non-compliance with the Commission’s own Better Regulation guidelines, because of the lack of impact assessments, and the insufficiency of the “analytical documents” used as a replacement. In addition, Anjinho found that the interservice consultation was rushed and was not in line with the Commission’s rules of procedure, given that the consultation occurred in 24 hours over a weekend. Anjinho also found that the Commission failed to conduct “climate consistency assessments”, in direct breach of the European Climate Law. Finally, ad hoc consultations replacing public consultations were found to have prioritised certain stakeholders, and were therefore found to have been insufficient.
Based on these findings, the Ombudswoman considered that the shortcomings amounted to “maladministration” on the part of the Commission, and set forward suggestions for improvement.
3 December 2025 [EU] – EFRAG publishes technical advice to the European Commission on draft simplified ESRS
The European Financial Reporting Advisory Group (the “EFRAG”) published its technical advice to the European Commission on the revised and simplified European Sustainability Reporting Standards (“ESRS”) [full technical advice available here].
EFRAG stated that the revised ESRS were shorter, clearer, easier to understand and implement, and announced (i) a 61% reduction in mandatory datapoint, and (ii) the deletion of all voluntary disclosures. The amended ESRS also introduce a clarified and more proportionate approach with respect to the Double Materiality Assessment (the “DMA”), including a streamlined list of topics that is no longer mandatory to consider in the DMA.
The Commission will now prepare the Delegated Act revising the first set of ESRS based on this technical advice, and after consultation with the European Parliament and Council. The stated goal is for the revised standards to apply from financial year 2027.
European Union/International
10 November 2025 [EU] – ECB imposes periodic penalty payment on a credit institution for non-compliance with climate-related requirements
The European Central Bank (ECB) announced it had imposed periodic penalty payment on a credit institution, totaling €187,650, for non-compliance with ECB-set climate-related requirements [press release available here].
The ECB explained that, in December 2023, it had issued a decision requiring the credit institution to conduct a materiality assessment of its climate-related and environmental risks, and to reinforce its identification of material climate-related and environmental risks to which it is or might be exposed. The decision provided for the accrual of periodic penalty payments in the event of a failure to comply with this requirement.
In 2020, the ECB published a Guide on climate-related and environmental risks [available here], which set out supervisory expectations for prudent management and transparent disclosure of such risks by credit institutions. From 2022, the ECB conducted a climate risk stress test and identified relevant shortcomings through a thematic review, which led to all significant institutions receiving feedback letters and timelines for remediation. The accrual of periodic penalty payments was an enforcement measure for these timelines.
The power of the ECB to impose enforcement measures stems from Article 18(7) of the Council Regulation 1024/2013 (SSM Regulation), which provides that the ECB shall consider the materiality of the infringement, the duration of the breach, and the daily turnover of the supervised entity. These decisions may in turn be challenged before the Court of Justice of the EU under the conditions provided for in Article 263 of the Treaty on the Functioning of the EU.
5-13 November 2025 [International] – NGFS publishes declaration on the economic cost of climate inaction, supported by EBA and EIOPA
The Network for Greening the Financial System (NGFS) has published a Declaration on the economic cost of climate inaction, in the context of the COP30 in Belém, Brazil [available here]. The declaration was supported by the European Insurance and Occupational Pensions Authority (EIOPA) and the European Banking Authority (EBA), both members of the NGFS, in press releases dated 5 and 13 November 2025 [available here and here].
The NGFS, a coalition of 146 central banks and financial supervisors, highlights in its declaration the rising economic costs of climate inaction, with material economic and financial risks that have implications for the core mandates of central banks and financial supervisors. It calls for financial institutions to factor climate and nature-related risks into their strategies and operations, through scenario analysis, climate disclosure standards and transition planning.
13 November 2025 [EU] – European Parliament adopts amendments to EU Climate Law
The European Parliament’s plenary session adopted amendments to the original text of the European Commission’s proposal for a Regulation amending the Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality (EU Climate Law) [full set of amendments available here]. The initial Commission proposal was published on 2 July 2025 [for more information, please refer to our previous issue, here].
The EU Climate Law would be amended to set a 2040 greenhouse gas emissions reduction target of 90%, compared to 1990 levels. The European Parliament now calls on the Commission to review progress every two years, and adjust the 2040 target or introduce measures to reinforce the framework where warranted.
The European Parliament has also backed a proposal by Member States to postpone the introduction of the new EU Emissions Trading System (EU ETS2), which addresses CO2 emissions from sectors not covered by the existing EU ETS. Under the proposed amendments, the EU ETS2 would start one year later than initially planned, i.e., in 2028 and not 2027.
The European Parliament may now start informal trilogue negotiations with the Council of the EU and the Commission, under the ordinary legislative procedure.
13 November 2025 [International] – NGFS publishes updated Guide to climate scenario analysis for central banks and supervisors
The Network for Greening the Financial System (NGFS) has published an updated version of its guide to climate scenario analysis for central banks and supervisors, incorporating best practices in climate scenario design, data and modelling [full Guide available here].
The Guide sets forward a “four step process” for users, structured around (i) identifying objectives and scope, (ii) choosing climate scenarios, (iii) assessing economic and financial impacts and (iv) communicating and using results.
To that end, the NGFS sets out the preparatory work that institutions should undertake to ensure the scope of the exercise is focused on key exposures, the main assumptions underpinning climate scenarios, and the processes for using climate scenarios to assess economic impacts and financial risks.
The NGFS Guide refers in part to its 2025 Explanatory notes on NGFS long-term scenarios, published on 7 November 2025 [available here].
20 November 2025 [EU] – European Commission publishes final version of the SFDR simplification proposal, along with accompanying Q&A
The European Commission has published a set of amendments to the Sustainable Finance Disclosure Regulation (SFDR), aimed at simplifying the current framework [full text of the proposal available here]. In particular, the proposal sets forward amendments to (i) simplify disclosures and (ii) create a clear categorization system. The text of the proposal had been leaked in early November [see earlier edition of the newsletter here].
Simplification of disclosures. The proposed amendments include the deletion of entity-level disclosure requirements for financial market participants regarding principal adverse impacts indicators. The Commission noted that this was aimed at addressing current overlaps between the CSRD and the SFDR, in line with the Omnibus I simplification package.
The proposal also sets forward a significant reduction in product-level disclosures. These disclosures will now focus on data that is “available, comparable and meaningful”, but also aligned with the three new product categories proposed.
Clear categorization system. Products would be assigned to one of three categories, with a high portion of investments (70% of the portfolio) needing to support the chosen strategy and exclude from all their portfolio investments in harmful industries and activities. These are:
- The “sustainable category”, i.e., products contributing to sustainability goals (climate, environment or social goals), such as investments in companies or projects that are already meeting high sustainability standards;
- The “transition category”, i.e., products channeling investments towards companies and/or projects that are not yet sustainable, but that are on a credible transition path, or investments that contribute toward improvements in ESG areas.
- The “ESG basics category”, i.e., other products that integrate a variety of ESG investment approaches but do not meet the criteria of the above-mentioned sustainable or transition investment categories.
The Commission has also published a Q&A on the review of the SFDR, explaining the proposal and describing proposed amendments [full Q&A available here]. In particular, the Q&A details the criteria that need to be met by financial products under each of the categories, and the corresponding required exclusions or thresholds for inclusion.
France
13 November 2025 [France] – French banking and markets regulators publish joint supervisory approach to help professionals take into account clients’ sustainability preferences
The French Autorité de Contrôle Prudentiel et de Résolution (ACPR) and Autorité des Marchés Financiers (AMF), i.e., the French banking and markets regulators, published a joint supervisory approach regarding the integration of clients’ sustainability preferences in investment advisory processes [full guidance available here, in French only].
The French regulators introduce the guidance by acknowledging that most advisory processes do not comply with the Markets in Financial Instruments Directive (MiFID II) and Insurance Distribution Directive (IDD) requirement that financial investment advisers and life insurance professionals assess clients’ sustainability preferences.
The Guidance acknowledges that regulatory concepts defining investment sustainability remain complex for both advisers and clients, specifically due to the “absence of classification of financial products based on clear and objective sustainability criteria”. In that context, the Guidance aims at providing a set of practical solutions for professionals.
Where an investor has expressed interest in sustainable investment but does not wish to specify preferences based on regulatory criteria, the French regulators advise professionals to offer a simplified questionnaire with different sustainability preference criteria choices. This should include clear explanation of the predefined preferences offered, incorporating at least one of the regulatory sustainability criteria. If no product matches the client’s initially expressed sustainability preferences and the client chooses to adapt their preferences, professionals may suggest products that most closely match the revised preferences.
Germany
16 October 2025 [Germany] – Injunction of FIFA’s advertising with climate neutrality regarding the world cup in 2022 by the Regional Court Berlin II
The Regional Court Berlin II prohibited the advertisement with climate neutrality by FIFA regarding the world cup in 2022 in Qatar and, thus, granted a motion filed by the Verbraucherzentrale, a German consumer protection association.
The Regional Court reasoned that advertising climate neutrality raises consumers’ expectations that the World Cup had no harmful impact on the climate at all, as emissions will either be avoided or compensated. Since FIFA did not provide any information about the specific measures taken to avoid or compensate the emissions, there was a risk that consumers would assume that emissions would be reduced to a greater extent than was actually the case. Therefore, according to the court, the advertising was misleading.
However, since the prohibition only applies to advertising related to the World Cup in 2022, the impact on advertising for the 2026 World Cup is likely to be minor [see further here, German only].
5 November 2025 [Germany] – Decision of the Federal Government to further refine Germany’s Sustainability Strategy
The German Federal Government decided to develop an action plan for the advancement of the German Sustainability Strategy.
The strategy forms the political framework for the implementation of sustainability goals in Germany and is generally revised and further developed every four years.
According to the Federal Government, the aim of the action plan is, on the one hand, to develop practice-oriented measures. In addition, alongside ecological sustainability, the other dimensions of sustainability, namely economic and social sustainability, shall also be taken into account [see further here, German only].
12 November 2025 [Germany] – Federal Court of Justice sets hearing date for the appeals regarding lawsuits for an injunction prohibiting the sale of cars with combustion engines as of 2030
The German Federal Court of Justice set the hearing date for the appeal regarding two lawsuits brought by Environmental Action Germany (“Deutsche Umwelthilfe”), a German NGO that campaigns for environmental protection, against two car manufactures for an injunction prohibiting the sale of cars with combustion engines for March 2, 2026.
As already discussed in the last issue of this newsletter [see here], on October 13, 2025, the Federal Court of Justice allowed an appeal against the ruling of the Higher Regional Court Stuttgart, which had dismissed the lawsuit. Besides this ruling of the Higher Regional Court Stuttgart the appeals proceedings are also dealing with a comparable ruling of the Higher Regional Court Munich [see further here, German only].
13 November 2025 [Germany] – German Parliament approves financial subsidies to German electricity network operators amounting to €6.5 billion
The German Parliament (“Bundestag”) approved a draft law proposed by the Federal Government that provides financial subsidies to the four major electricity network operators in Germany.
The subsidy amounts to €6.5 billion and is intended to reduce electricity costs for private households and businesses by up to €100. Although this reduction will initially only apply to 2026, the federal government is considering further relief in this area beyond 2026.
The bill must still be approved by the Federal Council (“Bundesrat”) before it will come into force [see further here and here, German only].
17 November 2025 [Germany] – Federal Minister for the Environment announces further contributions to the international Adaption Found at COP30
On 17 November 2025, the Federal Minister for the Environment announced at the United Nations Climate Change Conference (COP30) in Belém, Brazil, that Germany will provide EUR 60 million to the international Adaptation Fund.
The Adaptation Fund aims to provide financial support for communities internationally that are particularly affected by climate change, to support climate change adaptation measures. Since the Adaptation Fund’s establishment in 2007, it has provided a total of approximately EUR 1.4 billion for roughly 200 adaptation projects in 108 countries [see further here].
20 November 2025 [Germany] – Hamburg Regional Court orders climate activists to pay damages to German airline Lufthansa
On 20 November 2025, the Hamburg Regional Court ordered ten climate activists to pay damages of EUR 403,000 to German airline Lufthansa, following a blockade by the climate activists that took place over several hours at Hamburg Airport in July 2023. The Regional Court recognized that the blockade was carried out for a legitimate goal of climate protection, but considered the blockage to have deliberately and unlawfully interfered with business operations at the airport [see further here, German only].
3 December 2025 [Germany] – The Federal Government ratifies the BBNJ Agreement
On 3 December 2025, the Federal Government ratified the Agreement under the United Nations Convention on the Law of the Sea on the Conservation and Sustainable Use of Marine Biological Diversity of Areas beyond National Jurisdiction (the “BBNJ Agreement”).
The BBNJ Agreement establishes, for the first time, a set of uniform rules globally for the conservation and sustainable use of marine biological diversity in areas of oceans beyond national jurisdiction. The BBNJ Agreement addresses in particular the possibility of area-based management and marine protected areas in areas of oceans beyond national jurisdiction, and provides a framework for carrying out environmental impact assessments in areas beyond national jurisdiction [see further here, German only].
Italy
12 November 2025 [Italy] – Italian draft legislative decree transposing the Directive on Empowering Consumers for the Green Transition submitted to the Parliament
On 12 November 2025, the draft legislative decree transposing Directive (EU) 2024/825 as regards empowering consumers for the green transition through better protection against unfair practices and through better information has been submitted to the Italian Chamber of Deputies and assigned to the 10th Legislative Committee (Productive Activities) for its opinion [draft legislative decree available here, in Italian].
The decree governs the use of “green claims”, introducing new protections and enforcement measures against unfair commercial practices under the Italian Consumer Code (Legislative Decree No. 206/2005). In particular, the decree:
- strengthens the criteria for identifying misleading practices on a case-by-case basis, acknowledging the relevance of environmental or social characteristics or circularity aspects (e.g. durability, reparability or recyclability);
- includes certain greenwashing practices in the “black list” of misleading practices;
- strengthens pre-contractual information requirements, including information on durability, repairability and the availability of updates; and
- introduces new definitions under the Italian Consumer Code (including “environmental claims”, “durability”, “software updates”, “sustainability label”, “certification scheme”);
- implements Article 22a of Directive 2011/83/EU, on harmonized notice and label.