Climate and Energy: EU Policy and Regulation Update for 17 June 2026
June 17, 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
- EFRAG publishes materials and updates on the N-ESRS
- European Commission consults on CSDDD supporting guidelines
- UNEP FI and European Banking Federation publish brief on policy levers to support viability and increase sustainable finance in the aviation and shipping sectors
- EIOPA Chair delivers speech on “NatCat Reality Check”
- EBA launches early consultation on simplified EU-wide stress test, with climate risk integration
- Provisional agreement reached on market stability reserve for ETS 2
- SBTi releases updated Corporate Net-Zero Standard
- UNEP FI publishes Just Transition Finance case studies in the banking and insurance sectors
- European Central Bank publishes fourth set of climate-related disclosures
- Constitutive meeting of the Federal Government’s Advisory Council on Sustainable Finance
Sustainability Omnibus Package/ Simplification measures
3 June 2026 [EU] – EFRAG publishes materials and updates on the N-ESRS
The European Financial Reporting Advisory Group (EFRAG) published materials relating to its ongoing work on the Non-EU Sustainability Reporting Standard (N-ESRS), following its 3 June 2026 Sustainability Reporting Board (SRB) meeting [all materials available here]. The materials confirmed an 88% reduction in scope of non-EU undertakings and groups.
Under article 40(a) of the Accounting Directive, as amended by the Corporate Sustainability Reporting Directive (CSRD), non-EU undertakings and groups which have significant EU operations shall prepare non-financial reports on a group level. The deadline for the Commission to adopt sectoral ESRS and ESRS for reporting sustainability information on third-country companies was initially set to 30 June 2024, but was postponed to 30 June 2026. The European Commission confirmed in a “De-prioritization Letter” that Delegated Acts on the N-ESRS would not be adopted before October 2027 at the earliest, with in-scope non-EU undertakings and groups to report in 2029, on financial year 2028.
EFRAG is tasked by the Commission with developing sustainability reporting standards under the CSRD, including ESRS for Non-EU undertakings and groups. The SRB agenda was dedicated to the strategic approach regarding N-ESRS developments, and included the following:
- Presentation on the impact of the Omnibus simplification measures on the standards. Under the Omnibus revision, the threshold was raised to non-EU undertakings with revenues greater than EUR 450 million in the EU for two consecutive years (up from EUR 150 million) and an EU subsidiary with revenues greater than EU 200 million (up from EUR 40 million). EFRAG confirmed that this represents an 88% reduction in scope, from c. 10,000 undertakings to c. 1,200 undertakings.
- Launch of Field Test Call for Interest on the N-ESRS. EFRAG announced that it had resumed work on the N-ESRS, with a 100-day public consultation expected in the second half of July 2026. Feedback gathered during the field test will support EFRAG’s technical work and help ensure that the future standard is practical and fit for purpose. The registration form is available here. EFRAG currently plans to deliver its technical advice to the European Commission in January 2027.
12 June 2026 [EU] – European Commission consults on CSDDD supporting guidelines
The European Commission launched a consultation on the development of guidelines to support the implementation of the Corporate Sustainability Due Diligence Directive (CSDDD). The consultation [available here] will run until 24 July 2026.
Under Article 19 of the CSDDD, the guidelines should include, in particular (i) guidance and best practices on how to conduct due diligence, (ii) sector-specific guidance, (iii) guidance on the assessment of various risk factors, and (iv) references to data and information sources available for the compliance with the requirements. It should also cover appropriate measures to adapt purchasing practices and responsibly disengage with suppliers as part of preventing and bringing an end to adverse impacts.
The CSDDD entered into force on 25 July 2024, with Article 19 mandating the Commission to adopt guidelines on the above topics by 26 July 2027 (with other guidelines required by 26 July 2028). The deadline for member state transposition of the CSDDD is 26 July 2028 and compliance is required by 26 July 2029.
European Union/International
3 June 2026 [EU] – UNEP FI and European Banking Federation publish brief on policy levers to support viability and increase sustainable finance in the aviation and shipping sectors
The United Nations Environment Programme – Finance Initiative (UNEP FI) and the European Banking Federation (EBF) have published a policy brief on financing the EU aviation and shipping transition [available here].
The brief notes that aviation and shipping subsectors face structural challenges: high capital intensity, long asset lifetimes, fragmented value chains, and uncertainty around technology pathways and future demand. These factors complicate investment decisions and limit the pipeline of bankable projects. Building on exchanges with industry and financial stakeholders, the brief identifies a set of policy levers aimed at improving the investment environment and mobilizing private capital.
In parallel to policy development, the brief outlines action pathways for banks to support the transition of the aviation and shipping subsectors in the EU. These include developing innovative financing structures tailored to sector-specific needs and supporting clients in developing credible transition strategies.
This brief follows the publication by UNEP FI of two separate reports “Supporting policy engagement for banks” in aviation [available here] and in automotive and road transport [available here]. The reports provide guidance for banks on engaging with policymakers and industry stakeholders to accelerate the decarbonization of industries characterized as “hard-to-abate”.
10 June 2026 [EU] – EIOPA Chair delivers speech on “NatCat Reality Check”
Petra Hielkema, EIOPA Chairperson, spoke at the NatCat Summit on 10 June 2026 on the insurance protection gap linked with climate-related natural catastrophes [full speech available here].
Ms. Hielkema warned that climate-related natural catastrophes are becoming more frequent and severe across Europe, while the insurance protection gap remains significant, with only around 25% of losses insured across the EU and less than 5% in Greece. She stressed that insurers are a critical first line of defence but face growing challenges from rising losses, increasing premiums, and potential un-insurability in high-risk areas.
The EIOPA advocates strengthening insurance coverage through greater consumer awareness, improved risk assessment tools, and incentives for risk-reduction measures. A key recommendation is the development of European risk-pooling mechanisms, including a public-private EU reinsurance scheme and an EU disaster fund, which could reduce capital requirements by up to 67% compared with separate national solutions.
The speech also highlights the importance of innovation, data analytics, climate modelling, satellite monitoring, and artificial intelligence to improve underwriting, pricing, and claims management. Insurers are encouraged to promote adaptation through “impact underwriting,” rewarding policyholders that invest in resilience measures.
11 June 2026 [EU] – EBA launches early consultation on simplified EU-wide stress test, with climate risk integration
The European Banking Authority (EBA) published the draft methodology, templates, and template guidance for the 2027 EU-wide stress test [all materials are available here]. Key changes include a substantial reduction in data requirements, the alignment of information with harmonised supervisory reporting, and the integration of climate risks into the EU-wide stress test.
The EU-wide stress test is coordinated by the EBA, in cooperation with the European Systemic Risk Board (ESRB), and competent authorities, including the Single Supervisory Mechanism (SSM), and the European Central Bank (ECB). It provides a common analytical framework to assess the resilience of EU banks and the wider banking system under a common adverse macro-financial scenario, testing their capital adequacy under stress.
The 2027 EU-wide stress test introduces climate risk for the first time, with transition and physical risks incorporated alongside macro-financial shocks. The dedicated climate risk module focuses on institutions’ exposures to non-financial corporations and to real estate, reflecting the materiality of these portfolios with respect to transition and flood risk transmission channels. At this stage, climate risks will be assessed through a dedicated module and will not affect the core stress test results.
11 June 2026 [EU] – Provisional agreement reached on market stability reserve for ETS 2
The Council of the EU, European Parliament and European Commission reached a provisional agreement on the proposal for a Decision amending Decision (EU) 2015/1814 as regards the market stability reserve for the buildings, road transport and additional sectors (ETS 2) [press releases available here (for the Council) here (for the Parliament) and here (for the Commission)].
ETS 2 regulates greenhouse gas emissions from fuel used in heating buildings, road transport and additional sectors (energy, manufacturing and construction). The market stability reserve rebalances supply and demand, providing a long-term solution to surpluses of allowances on the EU carbon market.
The proposed amendments will add 20 million allowances to each release, doubling the volume per trigger from 20 to 40 million, and the mechanism can now be triggered twice a year. As a result, up to 80 million allowances can be injected into the market annually during the system’s opening years. The co-legislators also agreed a more gradual release of allowances to safeguard market stability. Finally, the Commission’s review of the MSR must include the future validity of the remaining allowances taking into consideration both environmental integrity and social fairness.
The provisional agreement remains subject to formal adoption by the European Parliament and the Council before entering into force 20 days after it has been published in the EU Official Journal.
11 June 2026 [EU] – SBTi releases updated Corporate Net-Zero Standard
The Science Based Targets initiative (SBTi) published Version 2.0 of its Corporate Net-Zero Standard, intended to support the integration of science-based climate targets into companies’ operational, strategic and capital allocation decisions [full standard and FAQs available here].
The updated standard is available both to companies setting science-based targets for the first time and to companies seeking to renew or update targets previously validated under Version 1.3.
Key features include (i) an increased focus on implementation and accountability, with greater emphasis placed on demonstrating progress, enhancing transparency regarding implementation efforts, and encouraging companies to strengthen their climate ambition over time, (ii) a clearer implementation hierarchy, under which companies are expected to prioritize direct emissions reductions across their operations and value chains, (iii) a voluntary recognition mechanism for companies that take action to address the impact of their ongoing emissions prior to achieving net-zero.
Departing from previous approaches, climate targets are now assessed on a “best efforts” basis, with transparency over key assumptions and dependencies. Companies are expected to use all available levers to reduce emissions, address any implementation barriers and transparently report on them.
12 June 2026 [EU] – UNEP FI publishes Just Transition Finance case studies in the banking and insurance sectors
The United Nations Environment Programme – Finance Initiative (UNEP FI) published its findings under the Just Transition Pilot Programme, complete with a set of case studies illustrating how participating institutions are embedding just transition in their strategies, processes, products, and partnerships [all materials are available here].
The report draws on a yearlong initiative that convened over a dozen banks and insurers for peer exchange and expert input to document how just transition considerations are being integrated across banking and insurance. The report concludes with ten recommendations for financial institutions, including embedding social considerations into transition planning, adopting place-based and sector-specific approaches, aligning practices with international human rights standards, strengthening stakeholder engagement, enhancing governance and internal capabilities, and developing methodologies to measure and report on Just Transition outcomes.
The case studies relate to twelve financial institutions, and illustrate a broad range of initiatives, including the integration of Just Transition principles into corporate transition plans, the development of financing solutions for SMEs and vulnerable communities and the deployment of innovative products such as energy-efficiency-linked mortgages, affordable electric vehicle financing, climate resilience tools and parametric insurance solutions.
15 June 2026 [EU] – European Central Bank publishes fourth set of climate-related disclosures
The European Central Bank (ECB) has published an updated set of climate-related financial disclosures [available here], providing an overview of the carbon footprint and climate-related risks of the Eurosystem’s monetary policy portfolios, the ECB’s foreign reserves and the ECB’s non-monetary policy portfolios.
The disclosures highlight that emissions associated with the Eurosystem’s monetary policy portfolios and the ECB’s foreign reserves continued to decline in 2025. The Eurosystem remained on track to meet its interim emissions reduction targets for the corporate bonds it holds for monetary policy purposes.
The ongoing run-off of these portfolios declined by 13%. The ECB noted that this meant it could not keep tilting reinvestments towards issuers with better climate performance, and that further emissions reductions would depend on issuers themselves taking action to reduce their emissions.
For the first time, the ECB (i) reported on a set of inflation-adjusted emissions metrics, and (ii) disclosed relative metrics for scope 3 emissions of non-sovereign holdings, which include all indirect emissions that occur in a company’s value chain.
Germany
10 June 2026 [Germany] – Constitutive meeting of the Federal Government’s Advisory Council on Sustainable Finance
The Federal Government’s Advisory Council on Sustainable Finance (Praxisbeirat für Sustainable Finance), established jointly by the Federal Ministry of Finance (Bundesfinanzministerium) and the Federal Ministry for the Environment (Bundesumweltministerium), held its constitutive meeting. The Advisory Council comprises 20 members, drawn from the economy, the financial sector, civil society, and academia, and will advise the Federal Government with practice-oriented recommendations. Its work centers on the question of how sustainable finance can contribute to the modernization of the German and European economies and to strengthening their competitiveness. In particular, the Advisory Council aims to develop proposals for simplifying sustainable finance regulation and for mobilizing private capital for the economic transition [see further here and – for a list of all members – here, German only].