Climate and Energy: EU Policy and Regulation Update for 4 March 2026

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 / Simplification measures

• Omnibus I Directive published in Official Journal of the EU
• ECB, EBA, ESMA and EIOPA publish respective Opinions on draft revised ESRS
• EFRAG publishes conference report on draft simplified ESRS
• European Commission publishes speech by President von der Leyen, on simplification and urgent actions to revive EU competitiveness
• European Scientific Advisory Board on Climate Change publishes recommendations, noting weakening of climate risk management due to the Omnibus I package
• European Commission responds to Ombudswoman inquiry regarding maladministration concerns in the context of the Omnibus I package

European Union/International

• EIOPA launches public consultation on adaptation measures in NatCat insurance under Solvency II
• European Commission launches consultations on the post-2030 EU Climate policy framework
• European Parliament formally adopts first reading position on amendments to the European Climate Law
• EBA publishes ESG risk dashboard, showing stable climate risk indicators

Germany

• Federal Administrative Court confirms standing of environmental organizations to enforce the Federal Climate Action Act
• Deutsche Umwelthilfe files complaints against German energy companies, alleging breaches to the German Supply Chain Act
• Federal Council adopts amendments transposing the Directive on Empowering Consumers for the Green Transition
• Shein signs commitment to no longer advertise unsubstantiated net-zero targets, following legal challenges in Germany
• Deutsche Umwelthilfe lodges complaint before Higher Administrative Court of North Rhine-Westphalia against the German Ministry of Agriculture

Sustainability Omnibus Package / Simplification measures

26 February 2026 [EU] – Omnibus I Directive published in Official Journal of the EU

The Omnibus I Directive simplifying sustainability reporting and due diligence requirements introduced by the CSRD and the CSDDD was published in the Official Journal of the European Union [see final text here].

The initial proposal for the Omnibus I Directive was adopted by the European Commission on 26 February 2025. The final text was then adopted at first reading by the European Parliament on 16 December 2025 and by the Council of the EU on 24 February 2026 [see further details in our previous editions, here and here].

The CSRD will now apply only (i) on the one hand, to EU companies with over 1,000 employees on average, and over €450 million net turnover, (ii) on the other hand, to non-EU companies with over €450 million net turnover in the EU, and to their subsidiaries and branches with over €200 million turnover in the EU.

The CSDDD will now apply to 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.

The Directive will enter into force on the twentieth day following its publication in the Official Journal. Member states must then transpose the Directive into national law within 12 months. For Article 4, which amends the sustainability due diligence obligations in the CSDDD, the transposition deadline is set to 26 July 2028.

1-18 February 2026 [EU] – ECB, EBA, ESMA and EIOPA publish respective Opinions on draft revised ESRS

The European Central Bank (ECB), European Banking Authority (EBA), European Securities and Markets Authority (ESMA) and European Insurance and Occupational Pensions Authority (EIOPA) have each published opinions on the revised European Sustainability Reporting Standards (ESRS).

All four authorities welcomed the simplification efforts undertaken and broadly supported the substantial reduction of mandatory ESRS datapoints. However, each raised concerns regarding data availability, interoperability, and the overall comprehensiveness of the ESRS framework.

The ECB, whose Opinion was published on 1 February 2026 [available here], cautioned that the number of relief measures and removal of critical datapoints risk undermining data availability and the comparability of disclosures. It further noted that reliefs going beyond those published by the International Financial Reporting Standards / International Sustainability Standards Board (IFRS/ISSB) may give rise to interoperability issues.

The EIOPA, in its Opinion published on 16 February 2026 [available here], expressed concern that the cumulative effect of the proposed reliefs, if not used appropriately by undertakings, might impair sustainability reporting improvements.

The EBA, in its Opinion published on 17 February 2026 [available here], questioned the rationale behind certain reliefs and warned that their cumulative impact “might compromise the integrity, consistency, and global reliability of the ESRS framework and its role in supporting the sustainable transition.”

ESMA, in its Opinion published on 18 February 2026 [available here], found that the draft revised ESRS only “partly meet” the objective of supporting investor protection and financial stability. Its recommendations include (i) introducing time limits on certain permanent reliefs, (ii) refining requirements on transition plans and (iii) adjusting the exemption from reporting sustainability risks and opportunities for subsidiaries excluded from consolidated financial statements due to immateriality.

5 February 2025 [EU] – EFRAG publishes conference report on draft simplified ESRS

The European Financial Reporting Advisory Group (EFRAG) published a summary report of its conference on the Draft Simplified European Sustainability Reporting Standards, which took place in Brussels on 4 December 2025 [full report available here].

The new ESRS have led to a 61% reduction in mandatory datapoints (subject to materiality), and all voluntary datapoints have been removed. With 12 standards to revise, EFRAG applied six levers of simplification, primarily impacting the cross-cutting standards but also affecting the topical standards.

The presentation included keynote speeches from the SRB Chair, Patrick de Cambourg, as well as from European Commissioner Maria Luís Albuquerque. Both emphasized the importance of quality sustainability-related information and of a streamlined, standardized framework.

11 February 2026 [EU] – European Commission publishes speech by President von der Leyen, on simplification and urgent actions to revive EU competitiveness

The European Commission published a speech delivered by President Ursula von der Leyen at the European Parliament plenary, on “urgent actions to revive EU competitiveness, deepen the EU Single Market and reduce the cost of living – from the Draghi report to reality” [full transcript available here].

President von der Leyen emphasized that competitiveness was at the center of the Commission’s priorities, reviewing actions taken since the Draghi and Letta reports, including the “Ten simplification omnibuses”. She identified three key areas for the path ahead, i.e., trade, single market and simplification.

On simplification, President von der Leyen noted that the various Omnibus proposals had allowed for a EUR 15 billion reduction in bureaucratic costs for companies, and called for the next step to be tackling gold-plating at the national level. She cited examples of regulatory divergences between Member States, carrying barriers in the Single Market, and stated “It is time for a deep regulatory housecleaning – at all levels.”

17 February 2026 [EU] – European Scientific Advisory Board on Climate Change publishes recommendations, noting weakening of climate risk management due to the Omnibus I package

The European Scientific Advisory Board on Climate Change (ESABCC) published a report on “Strengthening resilience to climate change – Recommendations for an effective EU adaptation policy framework” [available here].

The Report outlines that Europe faces increasingly severe climate impacts, including rising loss of life, economic damages and ecosystem harm – and that current adaptation efforts remain insufficient. It sets five recommendations to guide ongoing EU policy processes, calling on the EU to (i) mandate and harmonize climate risk assessments, (ii) adopt a common reference for adaptation planning, (iii) set a clear vision for a climate-resilient EU by 2050, (iv) embed fair and just climate resilience by design across EU policies, and (v) mobilize public and private adaptation investment.

In particular, the ESABCC remarks that – while EU legislation and financial supervisors have significantly strengthened requirements for climate risk assessments and disclosures, particularly in the financial sector – changes introduced in the recent Omnibus I package “may weaken the oversight and management of climate risks in the wider EU economy.” The Report expresses concerns with respect to the scale of the changes, citing the ECB’s position on data availability challenges [see previous edition here, for further details].

18-20 February 2026 [EU] – European Commission responds to Ombudswoman inquiry regarding maladministration concerns in the context of the Omnibus I package

EU Ombudswoman Teresa Anjinho published the European Commission’s Opinion on the procedural shortcomings identified in the preparation of the Omnibus I package [available here].

On 25 November 2025, following a complaint lodged in May 2025, Anjinho’s office had published findings and recommendations, identifying several shortcomings, amounting to “maladministration” on the part of the Commission [see previous edition here, for further details].

On 18 February 2026, the Commission issued its opinion in response, arguing that the better regulation procedures are not legally binding, and that there were objective reasons to act urgently in the Omnibus I case. In particular, the Commission considered that setting aside the public consultation requirement was justified given the upcoming entry into force of CSRD and CSDDD requirements. The Commission also acknowledged that “urgency-related” derogations should be properly recorded, and committed to reflecting on ways to improve transparency in its assessments of urgency.

On 20 February 2026, Anjinho welcomed the European Commission’s constructive reply to her findings, and indicated that her office would now analyze the Commission’s reply in detail before drawing final conclusions [press release available here].

This follows Anjinho’s speech in late January on “Ensuring consistency and predictability in EU decision making” [available here], in which she highlighted the “renewed push for regulatory simplification” and the “serious procedural shortcomings” identified in this context, noting that “speed must not come at the expense of minimum procedural standards”.

European Union/International

4 February 2026 [EU] – EIOPA launches public consultation on adaptation measures in NatCat insurance under Solvency II

The European Insurance and Occupational Pensions Authority (EIOPA) has launched a public consultation regarding the prudential treatment of adaptation measures within the Solvency II framework [available here].

Open until 17 April 2026, the consultation aims to assess the interplay between risk mitigation and capital requirements for natural catastrophe (NatCat) insurance. More specifically, it seeks to determine whether dedicated prudential treatment under Solvency II is necessary to better reflect adaptation measures, such as flood barriers or earthquake-resilient building codes, within the NatCat Standard Formula (SF) module, beyond regular SF parameter calibration.

Implementing these measures before a loss event can reduce policyholders’ physical risk exposure and insured losses. Therefore, they are considered a vital tool for stabilizing risk-based premium levels and ensuring the continued availability and affordability of insurance coverage against climate-related hazards.

The consultation paper outlines several options for dedicated prudential treatment, such as introducing undertaking-specific parameters, adding new adaptation factors to the SF, and improving the recognition of adaptation measures in internal models.

9 February 2026 [EU] – European Commission launches consultations on the post-2030 EU Climate policy framework

The Commission has launched two public consultations open until 4 May 2026 to prepare the EU post-2030 climate policy framework. This initiative follows the provisional agreement reached by EU co-legislators in December 2025 on an amendment to the European Climate Law (Regulation (EU) 2021/1119 – see below for further information on this proposed amendment).

• The first consultation [see here] focuses on the role of national climate targets and flexibilities after 2030, assessing their scope, design, allocation, and governance, and how they would complement existing market-based instruments, including the EU Emissions Trading System, as well as EU regulatory tools. It also examines the future development of the renewable energy and energy efficiency frameworks for the post-2030 decade and how national climate targets could incentivize public spending at national level and under the proposed EU long-term budget for 2028–2034. In addition, the initiative evaluates the need for EU-level enabling measures, including voluntary market-based approaches, to support the cost-effective achievement of national targets, particularly in the agriculture and forest sectors where incentives for climate action are currently more limited.
• The second consultation [see here] focuses on the possible use of international credits to contribute to achieving the 2040 climate target. Specifically, the European Commission is seeking input on the most effective way to use these credits and how to design them to ensure ambition and cost efficiency while remaining fully aligned with the objectives and rules of the Paris Agreement.

10 February 2026 [EU] – European Parliament formally adopts first reading position on amendments to the European Climate Law

The European Parliament plenary session adopted at first reading the final text of the regulation amending the European Climate Law (Regulation (EU) 2021/1119), after reaching an informal trialogue agreement on 10 December 2025 [final text available here].

The proposal sets an intermediate and binding EU climate target of reducing GHG emissions by 90% compared to 1990 levels by 2040. In particular, the amendments would (i) introduce new flexibility for Member States in meeting the 2040 target, (ii) postpone the implementation of the emissions trading system for buildings, road transport, and additional sectors outlined in Chapter IVa of Directive 2003/87 (EU ETS2), until 2028, and (iii) require the Commission to evaluate progress toward the 2040 target every two years, after which it may propose an amendment to the European Climate Law, as necessary.

18 February 2026 [EU] – EBA publishes ESG risk dashboard, showing stable climate risk indicators

The European Banking Authority (EBA) published the latest edition of its ESG risk dashboard, tracking changes in banks’ exposures to climate risks [available here]. The dashboard draws on Pillar 3 ESG disclosure requirements from 120 large EU/EEA banks.

Based on data through Q2 2025, the new release confirms continued stability across major climate-related risk indicators and ongoing improvement in environmental data quality. The dashboard indicates that banks’ exposures to sectors significantly contributing to climate change remained at around 62%, reflecting the importance of climate-sensitive industries in banks’ non-financial corporate portfolios [see press release here].

The dashboard is now available in the Data Access Portal (EDAP), the EBA’s central hub for supervisory data in the EU/EEA.   

Germany

29 January 2026 [Germany] – Federal Administrative Court confirms standing of environmental organizations to enforce the Federal Climate Action Act

Germany’s Federal Administrative Court (Bundesverwaltungsgericht, BVerwG) has ruled that environmental organizations may bring legal action to enforce the climate protection targets set out in the Federal Climate Action Act (Klimaschutzgesetz – KSG).

The case was brought by Deutsche Umwelthilfe (DUH) against the Federal Government, seeking an adjustment to its climate protection program to meet the statutory target of a 65% reduction in greenhouse gas emissions by 2030. The lower court found that the existing program was insufficient to achieve that target and ordered the Government to revise it. The BVerwG upheld that ruling, noting that the relevant KSG provisions constitute environment-related legal norms, which may be used for enforcement by environmental organizations [see further here, German only].

21 January 2026 [Germany] – Deutsche Umwelthilfe files complaints against German energy companies, alleging breaches to the German Supply Chain Act

Deutsche Umwelthilfe (DUH), a German-based environmental NGO, has filed complaints with the Federal Office for Economic Affairs and Export Control (Bundesamt für Wirtschaft und Ausfuhrkontrolle, BAFA) against German energy companies Securing Energy for Europe GmbH (SEFE) and Energie Baden-Württemberg AG (EnBW), alleging violations of the German Supply Chain Act (Lieferkettensorgfaltspflichtengesetz, LkSG).

The complaints allege that some of the companies’ direct and indirect suppliers of Liquefied Natural Gas (LNG) were in breach of their obligations under the LkSG, causing a significant amount of environmental damage and endangering workers and residents, both in the extraction of the gas using fracking methods and at LNG terminals in the United States.

DUH considers that neither SEFE nor EnBW took sufficient measures to prevent these violations, and thus failed to comply with their due diligence obligations under the LkSG [see further here, German only].

30 January 2026 [Germany] – Federal Council adopts amendments transposing the Directive on Empowering Consumers for the Green Transition

The German Federal Council (Bundesrat) formally passed an amendment to the Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG), implementing Directive (EU) 2024/825 on Empowering Consumers for the Green Transition [see further here, German only].

Under the revised UWG, companies using terms such as “climate neutral” on packaging or in advertising must be able to substantiate those claims. Additionally, sustainability labels may only be used where they are backed by a recognized certification system or approved by a government agency. The amendment enters into force on 27 September 2026.

30 January 2026 [Germany] – Shein signs commitment to no longer advertise unsubstantiated net-zero targets, following legal challenges in Germany

Deutsche Umwelthilfe (DUH) reported that Chinese online retailer Shein signed a commitment to refrain from advertising its goal of becoming climate neutral by 2050 on its website, where no specific information on how that goal would be achieved had been provided.

This follows a complaint filed by DUH, which argued that Shein’s net-zero claims risked misleading consumers, given that the company’s own disclosures showed its emissions had increased by approximately 23% in 2024. In response, Shein submitted a binding cease-and-desist declaration, enforceable through financial penalties in the event of future breaches [see further here, German only].

13 February 2026 [Germany] – Deutsche Umwelthilfe lodges complaint before Higher Administrative Court of North Rhine-Westphalia against the German Ministry of Agriculture

Deutsche Umwelthilfe (DUH) has applied to the Higher Administrative Court of North Rhine-Westphalia (Oberverwaltungsgericht NRW) for a fine to be imposed on the Federal Ministry of Agriculture, Food and Regional Identity (Bundesministerium für Landwirtschaft, Ernährung und Heimat, BMLEH), for non-compliance with a prior court ruling [see further here, German only].

On 8 October 2025, the Federal Administrative Court (Bundesverwaltungsgericht, BVerwG) upheld a lawsuit brought by DUH, ordering the BMLEH to establish a program to protect groundwater from nitrate pollution [see previous edition here, for further details]. DUH now alleges that the BMLEH has taken no steps to comply with that order, and is accordingly seeking a fine for failure to implement a binding ruling.