Climate and Energy: EU Policy and Regulation Update for 6 May 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

• Joint Committee of the ESAs publish 2025 Annual Report, highlighting sustainable finance and burden reduction as key priorities
• EFRAG submits 2026 Sustainability Reporting Work Programme to the European Commission
• European Commission adopts communication on Better Regulation, aimed at simpler, clearer and better enforced EU rules

European Union/International

• ISSB announces it will not develop mandatory reporting on nature-related disclosures
• European Commission launches consultation on Regulation implementing digital product passport registry under Ecodesign Regulation
• EFRAG publishes first Sustainability Report
• ESMA launches consultation on Guidelines on endorsement under the ESG Ratings Regulation
• EFRAG publishes Draft Comment Letter to the ISSB Exposure Draft on SASB enhancements 

Sustainability Omnibus Package/ Simplification measures

24 April 2026 [EU] – Joint Committee of the ESAs publish 2025 Annual Report, highlighting sustainable finance and burden reduction as key priorities

The Joint Committee of the European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published its Annual Report for 2025, setting out the main priorities and achievements of its cross-sectoral work over the year [full report available here].

In 2025, the Joint Committee focused in particular on protecting consumers in increasingly digital financial markets, improving the effectiveness of sustainable finance disclosures, and enhancing cross-sectoral risk monitoring. With respect to sustainable finance, the ESAs continued to monitor progress under the Sustainable Finance Disclosure Regulation (SFDR). The fourth Joint Report on Principal Adverse Impact (PAI) disclosures documented steady improvements in the quality and completeness of disclosures by financial market participants, at entity and product level.

To support the EU’s goal of reducing administrative and regulatory burden, the ESAs have developed several targeted measures and initiatives within their respective sectoral mandates. In 2025, they have started working on proposals to simplify Key Information Documents for packaged retail and insurance-based investment products (PRIIPs) and have deprioritized an annual report on principal adverse impact disclosures under SFDR. This work is expected to continue in 2026.

24 April 2026 [EU] – EFRAG submits 2026 Sustainability Reporting Work Programme to the European Commission

The European Financial Reporting Advisory Group (EFRAG) submitted its 2026 Sustainability Reporting Work Programme to the European Commission, setting out its strategic priorities and planned activities [full programme available here]. The EFRAG listed the following as key priorities:

• Developing N-ESRS for non-EU groups, with technical advice expected by early 2027, after the publication of an Exposure Draft for public consultation from July 2026 (and lasting 100 days).
• Developing the SME ecosystem, to ensure SMEs have a voluntary, simple and standardised methodology to report on ESG issues, despite not being subject to the CSRD. A new Voluntary Standard (VS) delegated act could be issued by June 2026 under the Omnibus I Directive.
• Developing the implementation support mechanisms for ESRS. This is expected to focus primarily on process design rather than the immediate issuance of new guidance. It includes reviewing the approach and design of future implementation activities for the VS and for ESRS.
• Advancing interoperability with international standards (ISSB, GRI, GHG Protocol) given their applicability to ESRS reporters and given the importance of avoiding double reporting when European companies will also have to report under international standards.
• Accelerating digitalization, notably through XBRL taxonomy updates and the ESRS Knowledge Hub. Key deliverables are expected to include: the preparation of the XLS-based list of requirements based on ESRS and the development of an updated ESRS XBRL taxonomy, supporting machine-readability and integration into the European Single Electronic Format (ESEF) by December 2026.

Under the Corporate Sustainability Reporting Directive (CSRD) the Commission is required to consult with the Member States Experts and the European Parliament on this Work Programme.

28 April 2026 [EU] – European Commission adopts communication on Better Regulation, aimed at simpler, clearer and better enforced EU rules

The European Commission adopted a communication [available here], making targeted amendments to its Better Regulation framework, which aims to improve the quality and transparency of EU laws by using tools such as impact assessments and public consultations, at predictable stages in an EU law’s lifecycle.

The Commission will act in five areas:

• Simplicity by design: The Commission aims to embed ‘simplicity by design’ into every proposal, ensuring clarity on who must act, how to comply, and the consequences of non-compliance.
• Strengthening the better regulation framework: The better regulation system sets out the principles that the Commission follows when preparing new initiatives. It will be further improved to enhance transparency, stakeholder engagement and efficiency.
• Regulatory deep cleaning: An Action Plan will tackle inconsistencies, overlapping and overly complex provisions in 12 priority areas (i.e., free movement of goods and services, financial services and banking, customs, taxation, health and food safety, agriculture, transport, energy, climate, environment, digital, and housing and permitting). These areas will be examined as a matter of priority in 2026 and 2027.
• Tackling regulatory gold-plating: The Commission will help Member States identify and tackle unnecessary complexity and barriers to the Single Market where they apply stricter or more extensive requirements than those set out in EU law.
• Faster, robust enforcement: The Commission will strengthen enforcement of the Single Market rulebook in selected policy areas. A focus will also be placed on reducing the number of long-standing infringement cases.

European Union/International

22 April 2026 [International] – ISSB announces it will not develop mandatory reporting on nature-related disclosures

The International Sustainability Standards Board (ISSB) announced that it will not develop a standalone nature standard or amend the existing IFRS S1 or S2 to include nature-related provisions [press release available here]. Instead, the ISSB will propose requirements for nature-related disclosures in the form of an IFRS Practice Statement, setting out application guidance, related definitions and disclosure datapoints that companies can use when they need to provide information about nature-related risks and opportunities in accordance with IFRS S1.

In addition to the form of standard-setting, the ISSB announced it had reviewed aspects of the content of the nature-related disclosures. In particular, it will discuss the extent to which these disclosures would draw upon the Taskforce on Nature-related Financial Disclosure (TNFD) framework.

The ISSB aims to publish an exposure draft for public comment in October 2026, giving stakeholders the opportunity to provide feedback on the proposed requirements, including on whether an IFRS Practice Statement is the right form of standard-setting for nature-related disclosures.

27 April 2026 [EU] – European Commission launches consultation on Regulation implementing digital product passport registry under Ecodesign Regulation

The European Commission has published a consultation [available here] on its draft Implementing Regulation regarding the operation of the digital product passport registry under Regulation (EU) 2024/1781 (Ecodesign Regulation). The digital product passport was initially introduced by the Ecodesign Regulation to provide easy access to digital information related to a product’s sustainability, circularity and legal compliance.

The draft Implementing Regulation requires verified economic operators and other verified value-chain actors to register product passports through a secure interface or application programming interface (API). It provides for automatic checks on mandatory data, granularity and qualified electronic signatures or seals.

The registry would apply across all products and include a semantic repository, log system and proof-of-registration function. The consultation closes on 27 May 2026.

27 April 2025 [EU] – EFRAG publishes first Sustainability Report

EFRAG published its first Sustainability Report [available here], covering 2025 and prepared under the Voluntary Standard for SMEs (VSME).

The report presents EFRAG’s environmental, social, and governance performance, and highlights how sustainability considerations are embedded across EFRAG’s core activities, as well as within its internal environment, including staff and organisational practices.

The EFRAG’s press release [available here] notes challenges in preparing the report – highlighting that these insights would inform EFRAG’s future implementation support.

29 April 2026 [EU] – ESMA launches consultation on Guidelines on endorsement under the ESG Ratings Regulation

The European Securities and Markets Authority (ESMA) has launched a public consultation [available here] on draft guidelines on endorsement under Regulation 2024/3005 (the ESG Ratings Regulation). The consultation paper [available here] sets out ESMA’s proposed approach to the endorsement of non-EU ESG ratings under the regulatory framework.

The ESG Ratings Regulation establishes a regulatory framework for providers of ESG ratings in the EU, and includes provisions which set out how these providers can endorse ratings from outside the Union. ESMA has developed draft guidelines to support the consistent application of the endorsement regime, in particular, by providing guidance on the information to be submitted as part of an ESG Rating Provider’s application to endorse ESG ratings.

The consultation is open until 29 May 2026. ESMA will assess the responses and decide on the final form of the guidelines, in line with its mandate under the ESG Ratings Regulation. Further information on the outcome of the consultation and the adoption of the guidelines is expected before the end of July 2026.

29 April 2026 [EU] – EFRAG publishes Draft Comment Letter to the ISSB Exposure Draft on SASB enhancements

EFRAG has published a Draft Comment Letter [available here] responding to the ISSB’s proposed amendments to three SASB Standards – Electric Utilities & Power Generators, Agricultural Products, and Meat, Poultry & Dairy – and the related IFRS S2 Industry-based Guidance.

EFRAG broadly supports the ISSB initiative. However, it questions whether the proposed changes sufficiently reduce complexity and ambiguity, and calls for stronger interoperability with ESRS, consistent terminology, and a uniform approach across industries. EFRAG also flags risks associated with embedding sector-agnostic content into industry-specific standards without adequate justification.

The Letter welcomes improved alignment with IFRS concepts but outlines inconsistencies in the treatment of greenhouse gas emissions, energy management, and climate-related risks across the three standards.

EFRAG is consulting on this Letter until 28 June 2026, with the ISSB consultation closing on 24 July 2026.