Climate and Energy: EU Policy and Regulation Update for 1 April 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

• European Commission requests feedback on Environmental Omnibus proposal.
• European Commission launches public consultation on revising Taxonomy Delegated Regulations.
• EU Platform on Sustainable Finance publishes recommendation on the revised ESRS.
• Omnibus Directive enters into force.

European Union/International

• European Parliament publishes briefing on SFDR 2.0 impact assessment.
• EESC publishes opinion on the review of SFDR.
• European Commission launches public consultation on revisions to Energy Efficiency Directive and Renewable Energy Directive.
• EU Platform on Sustainable Finance publishes report on streamlining sustainable finance for SMEs.
• General Court dismisses claim against Taxonomy Climate Delegated Act.
• ISSB publishes exposure draft on proposed amendments to SASB standards.

Germany

• German Federal Court of Justice dismisses EU Car Emissions Regulation claim.

Italy

• Italian Parliament delegates the Government to align Italian law with the EU ESG Ratings Regulation.

Sustainability Omnibus Package/ Simplification measures

12 March 2026 [EU] – European Commission requests feedback on Environmental Omnibus proposal

The European Commission invited feedback on the Environmental Omnibus, a package of legislative proposals to simplify EU environmental legislation relating to industrial emissions, the circular economy, environmental assessments and geospatial data [full initial package available here, see further in our previous edition, here].

The Environmental Omnibus includes proposals for legislation to simplify and reduce requirements under the regimes for sustainable batteries, the Industrial Emissions Portal, waste, industrial emissions and medium combustion plants. It also proposes to postpone, until 1 January 2035, the obligation to appoint an authorized representative for extended producer responsibility (EPR) under the regimes for batteries, packaging, textiles waste, single use plastic, and waste electrical and electronic equipment (WEEE).

The European Commission’s feedback period [call for feedback available here] on the three regulations and three directives composing the Environmental Omnibus package closes on 7 May 2026.

17 March 2026 [EU] – European Commission launches public consultation on revising Taxonomy Delegated Regulations

The European Commission launched a public consultation on revising Delegated Regulation (EU) 2021/2139 (Taxonomy Climate Delegated Regulation) and Delegated Regulation (EU) 2023/2486 (Taxonomy Environmental Delegated Act), seeking feedback on possible revisions to the technical screening criteria (TSC) under Regulation 2020/852/EU (the Taxonomy Regulation) [press release available here].

The draft Delegated Regulations on enhancing the usability of the TSC [available here and here] cover, among other changes, forestry and environmental protection, manufacturing, energy, transport and construction. In particular, the European Commission proposes to reorganize the “do no significant harm” (DNSH) criteria for the Taxonomy objective climate change adaptation into four consecutive steps, i.e.:

• Screening of activities to identify which pre-defined climate-related hazards may significantly impact the activity’s performance during the expected lifetime.
• Assessment of climate risks identified as having a potential significant impact under step 1, through the use of climatic weather data or projections aligned with the expected lifespan.
• Adoption of an adaptation plan for climate risks assessed under step 2.
• Implementation of the adaptation measures before the start of operations, with existing activities and assets benefiting from less stringent implementation requirements.

The consultation follows a prior call for evidence, which closed in December 2025, and will run until 14 April 2026. The Commission intends to adopt the delegated regulations in Q2 2026.

18 March 2026 [EU] – EU Platform on Sustainable Finance publishes recommendation on the revised ESRS

The EU Platform on Sustainable Finance (the Platform), an advisory body to the European Commission, published its opinion on the revised European Sustainability Reporting Standards (ESRS) [available here].

The Platform was consulted by the European Commission on the technical advice provided by the European Financial Reporting Advisory Group (EFRAG) regarding amended ESRS [see further in our previous edition, here]. In response to the consultation, the Platform outlined five key principles, i.e.: 

Precautionary principle: Disclosure requirements should neither overestimate positive, nor underestimate negative information.

• Relevance principle: Indicators should be meaningful and methodologies accurate.
• Consistency principle: ESRS indicators should be consistent with the wider sustainable finance framework, and in particular with the EU Taxonomy.
• Proportionality principle: Reporting burden should be fairly and evenly distributed among the different stakeholders in the reporting value chain.
• Applicability principle: Requested information should be practical and actionable, measurable and/or easily estimated, and aligned with internal standards where possible.

The Commission is preparing the Delegated Act revising the first set of ESRS based on the EFRAG’s technical advice and consultation of other stakeholders. It plans to adopt its Delegated Act on the revised ESRS before Q4 2026, for the revised standards to apply from financial year 2027.

18 March 2026 [EU] – Omnibus Directive enters into force

The Omnibus Directive 2026/470 amending Directive 2006/43/EC, Directive 2013/34/EU, Directive (EU) 2022/2464 and Directive (EU) 2024/1760 as regards certain corporate sustainability reporting requirements and certain corporate sustainability due diligence requirements was published in the Official Journal of the European Union and entered into force on 18 March 2026 [final text available here].

• The Corporate Sustainability Reporting Directive ((EU) 2022/2464) (CSRD) now applies (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 (for the last two consecutive financial years), if they have one EU subsidiary or branch with over €200 million turnover in the EU.
• The Corporate Sustainability Due Diligence Directive ((EU) 2024/1760) (CSDDD) now applies to EU companies with more than 5,000 employees and a net worldwide turnover of more than €1.5 billion, and to non-EU companies having a net EU turnover of more than €1.5 billion.
• The Accounting Directive (2013/34/EU) was amended so that reporting under Article 8 of the Taxonomy Regulation will no longer be mandatory for in-scope undertakings with a net turnover of €450 million or less, if they do not claim taxonomy alignment.
• The Statutory Audit Directive (2006/43/EC) was amended to push the deadline for the European Commission to adopt limited assurance standards until 1 July 2027 (from 1 October 2026 initially), and to remove all reference to a future uplift to a “reasonable assurance” requirement.

Member States are required to transpose changes to the CSRD, Accounting Directive and Statutory Audit Directive by 19 March 2027, and to CSDDD by 26 July 2028.

European Union/International

17 March 2026 [EU] – European Parliament publishes briefing on SFDR 2.0 impact assessment

The European Parliament published an initial analysis of the European Commission’s impact assessment accompanying the proposal to amend Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR) [briefing available here].

The SFDR has applied since 10 March 2021, and constitutes the EU transparency framework, setting out rules on how financial market participants (FMPs) have to disclose sustainability information. On 20 November 2025, the European Commission had published a set of amendments to the SFDR (i.e., “SFDR 2.0”) [see further in our previous edition, here]. The proposal was accompanied by an impact assessment.

The European Parliament’s briefing notes that the impact assessment sufficiently explains the need for the revision of the SFDR, drawing on different data sources such as the evaluation and stakeholder consultation and also transparently recognizes and describes weaknesses in the analysis.

18 March 2026 [EU] – EESC publishes opinion on the review of SFDR

The European Economic and Social Committee (EESC) adopted an Opinion, at its March plenary [available here], regarding the review of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial services sector (SFDR 2.0).

The Opinion highlighted the EESC’s support for simplification measures, and for introducing clear product categories. However, the EESC also warned that the revision must preserve transparency, prevent greenwashing, and keep capital flowing towards the green and social transition.

The EESC set forth several recommendations. First, that engagement strategies and escalation plans should become mandatory criteria – rather than voluntary features – for financial products marketed as transition investments. Second, that transition plans should be credible, aligned with international climate objectives (including the Paris Agreement) and should address both environmental and social objectives. Third, that the revised SFDR should remain fully aligned with other elements of the EU sustainable finance framework, including the CSRD and the EU taxonomy for sustainable activities.

20 March 2025 [EU] – European Commission launches public consultation on revisions to Energy Efficiency Directive and Renewable Energy Directive

The European Commission adopted calls for evidence and launched public consultations on initiatives to revise Directive (EU) 2018/2001 (the Renewable Energy Directive) [available here] and Directive (EU) 2023/1791 (the Energy Efficiency Directive) [here]. The initiatives aim to ensure that energy efficiency contributes to the EU’s climate target of a 90% reduction in greenhouse gas emissions by 2040.

These consultations follow the publication of Regulation (EU) 2026/667 to the Official Journal of the EU on 18 March 2026 [final text available here]. This Regulation amended Regulation (EU) 2021/1119 (the EU Climate Law) to set a 2040 EU climate target of 90% reduction in GHG emissions compared to 1990 levels, and to require the European Commission to review the two Energy directives.

The Commission’s proposals for legislation should reflect, in particular, the contribution of carbon removals to the overall emission reduction effort. It also requires the Commission to review the EU Climate Law every two years, and postpones the operation of emissions trading for buildings, road transport and additional sectors until 2028.

21 March 2026 [EU] – EU Platform on Sustainable Finance publishes report on streamlining sustainable finance for SMEs

The EU Platform on Sustainable Finance (the Platform) published a report on streamlining sustainable finance for small and medium-sized enterprises (SMEs) [report available here].

The report proposes a streamlined approach to the use of the EU Taxonomy and to sustainability performance and reporting that is fit for SMEs, the so-called “SME sustainable finance standard”. The proposed standard aims to ease SMEs’ access to external financing for their climate-related sustainability efforts. It focuses on climate change mitigation and adaptation objectives.

The Platform intends for the standard to be used by credit institutions and other finance providers to classify loans or other financing they provide to SMEs as sustainable finance and to help the financial sector in assessing and voluntarily reporting on that financing.

23 March 2026 [EU] – General Court dismisses claim against Taxonomy Climate Delegated Act

The European General Court has dismissed an action challenging Commission Delegated Regulation (EU) 2021/2139 (the Taxonomy Climate Delegated Act) [see judgment here].

The claim, lodged by several NGOs, aimed at challenging the classification of biomass energy as a sustainable investment under the Taxonomy Climate Delegated Act. The applicants had asked for an internal review of the Act. The General Court rejected this request, noting the Commission’s broad discretion to develop technical screening criteria under the EU Taxonomy Regulation, and its ability to set qualitative criteria, as long as its choice is based on objective criteria appropriate to the aims pursued by the underlying legislation.

The ruling follows a judgment of 10 September 2025 [see further in our previous edition, here] in which the General Court had rejected a request for an internal review of the Taxonomy Climate Delegated Act by ClientEarth.

26 March 2026 [International] – ISSB publishes exposure draft on proposed amendments to SASB standards

The International Sustainability Standards Board (ISSB) published an exposure draft of proposed amendments to three Sustainability Accounting Standards Board (SASB) Standards and consequential amendments to the Industry-based Guidance on Implementing IFRS S2 [exposure draft available here].

The exposure draft proposes amendments that are intended to (i) align the language and concepts in the SASB Standards with ISSB Standards, (ii) improve the international applicability and decision-usefulness of the disclosures, (iii) support interoperability with other standards while remaining focused on the information needs of investors, and (iv) maintain alignment between climate-related content in the SASB Standards and the ISSB’s Industry-based Guidance on Implementing IFRS S2. The three priority industries concerned are agricultural products, meat, poultry and dairy, as well as electric utilities and power generators.

The ISSB consultation closes on 24 July 2026. 

Germany

23 March 2026 [Germany] – German Federal Court of Justice dismisses EU Car Emissions Regulation claim

The Federal Court of Justice (Bundesgerichtshof, BGH) has dismissed a lawsuit filed by NGO Deutsche Umwelthilfe (DUH) seeking an injunction to prevent two car manufacturers from placing combustion engine vehicles on the market, ahead of the phase-out deadlines established by the EU Car Emissions Regulation.

DUH relied on the Federal Constitutional Court’s (Bundesverfassungsgericht, BVerfG) Decision of 24 March 2021 [here], arguing that the manufacturers’ CO2 emissions encroached upon the general rights of the claimants. In particular, DUH argued that rapid consumption of the remaining CO2 budget would necessitate future restrictive climate legislation, thus curtailing individual freedoms.

The BGH rejected the claims on two main grounds. First, it held that neither the Paris Agreement nor the Federal Climate Protection Act (Bundes-Klimaschutzgesetz – KSG) allowed for the derivation of a specific CO2 emission budget for individual actors, as opposed to a Member State as a whole, thereby distinguishing this case from the Federal Constitutional Court’s Climate Decision. Second, the BGH emphasized that responsibility for any future climate legislation lies with the legislature, not the courts, and that the car manufacturers were not subject to obligations beyond those established by existing legislation.

Italy

25 March 2026 [Italy] – Italian Parliament delegates the Government to align Italian law with the EU ESG Ratings Regulation

On 25 March 2026, the 2025 EU Delegation Law (Law No. 36 of 17 March 2026), which mandates, among others, that Italian laws are aligned with the provisions of Regulation (EU) 2024/3005 on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities, was published in the Italian Official Journal [available here, in Italian].

In particular, according to this Law, the Government is required to adopt one or more decrees to bring Italian law in line with the ESG Ratings Regulation within twelve months, in accordance with the guiding principles and criteria set out in the Law (e.g. gold-plating prohibition). To this end, the Government has a mandate to:

1. amend or supplement the provisions of the Italian Financial Act (Legislative Decree No. 58 of 24 February 1998) to ensure the full and correct application of the ESG Ratings Regulation and its coordination with the existing sector-specific framework; and
2. designate the Italian Financial Market Authority (CONSOB) as the competent national authority pursuant to Article 30 of the ESG Ratings Regulation.