Climate and Energy: EU Policy and Regulation Update for 2 April 2025
April 2, 2025
Introducing Cleary’s Climate and Energy EU Policy and Regulation Update, our enhanced bi-monthly newsletter, replacing our Climate and the Financial Sector Newsletter and covering key developments in climate-related regulation, litigation, and enforcement across Europe. Read previous issues here.
As policy and regulatory landscapes evolve, this publication will provide insights to navigating emerging risks and opportunities in the energy transition.
Sustainability Omnibus Package
- ECB Vice-Chair’s speech notes that simplification efforts on sustainability reporting should not equate to lowering requirements
- Professional associations and public authorities publish responses to the European Commission consultation on proposed amendments to the Taxonomy Delegated Acts
- European Commission seeks EFRAG advice with respect to ESRS simplification mandate
- European Parliament votes to fast-track Omnibus “Stop the Clock” proposal, shortly after Council of EU agrees position
- EU Platform on Sustainable Finance publishes updated Handbook on climate benchmarks and Independent report on streamlining sustainable finance for SMEs
- LMA, APLMA and LSTA publish updated green, social and sustainability-linked loan principles and guidance
- European Commission’s Delegated Regulation on RTS on sustainability information under MiCAR published in EU Official Journal
- Climate Neutrality by 2045 in the New Article 143h of the German Basic Law
- Lufthansa’s Advertising of “Climate-neutral” or “Sustainable” Flights Found Misleading
- CONSOB analyses ESG disclosure in Business Plans
- Bank of Italy published a study on “ESG disclosure analysis of a sample of Italian and European banks”
Sustainability Omnibus Package
25 March 2025 [EU] – ECB Vice-Chair’s speech notes that simplification efforts on sustainability reporting should not equate to lowering requirements
The ECB published a 19 March 2025 speech by Frank Elderson, Member of the Executive Board of the ECB and Vice-Chair of the Supervisory Board of the ECB [available here], entitled “Resilience offers a competitive advantage, especially in uncertain times”.
Mr. Elderson noted that while there are merits in removing undue complexity from the regulatory framework, the debate on competitiveness should not be used as a pretext for watering down regulation: “Rather than reducing complexity by lowering regulatory requirements, it would be more effective to achieve simplification through European harmonisation: don’t cut rules, harmonize them.”
Mr. Elderson also insisted that attempts to simplify sustainability reporting for companies should not result in critically important data points needed by banks to adequately manage their climate and nature-related risks no longer being disclosed in a harmonized manner.
A similar stance had been taken in an ECB “Occasional Paper” published in early March [available here], aimed at outlining the effectiveness of corporate disclosure rules in limiting greenwashing. In particular, the Paper argued that the simplification and streamlining efforts initiated by the Commission should try and preserve the elements in the sustainable finance framework that prevent greenwashing.
26 March 2025 [EU] – French Asset Management Association warns against the potential impact of the Sustainability Omnibus package on data quality
Several professional associations and public authorities have published their responses to the European Commission’s consultation on the draft delegated regulation aimed at adopting amendments to the Taxonomy Delegated Acts (i.e., Taxonomy Disclosures Delegated Act, Taxonomy Climate Delegated Act and Taxonomy Environmental Delegated Act).
Responses to this consultation include that of public authorities, in particular the French financial markets authority [AMF, available here] and Banque de France [available here], the Spanish financial markets authority [CNMV, available here], the German Environment Agency [UBA, available here]. Among suggestions made:
- The AMF suggested to simplify and clarify the new “materiality” principle and criteria for non-financial undertakings, and to impose reporting only at consolidated level for groups, by deleting the detailed taxonomy KPIs on subsidiaries in the group’s report.
- The ACPR and Banque de France invited the Commission to consider whether some companies characterized by a very low share of eligible activities should be excluded from the scope irrespective of their size.
- The CNMV noted that while it appreciated the proposed adjustments, it was concerned that narrowing the scope too much may undermine the EU’s goal of harmonized reporting.
- The UBA encouraged the European Commission to reduce the financial materiality threshold to 5% and introduce an absolute threshold equal to the turnover-threshold for reporting undertakings.
Responses to this consultation also include that of professional associations, among which the Loan Market Association [LMA, available here], the French association for financial markets [Amafi, available here], the French association for asset management [the AFG, available here] and the French association of large companies [AFEP, available here]. Additionally, AFME and ISDA published a joint contribution [available here].
In particular, the LMA recommended that the so-called Green Asset Ratio (GAR) be removed entirely, or be at least subject to review, as the required data collection will entail a significant burden on financial institutions and their counterparties. AFME and ISDA’s contribution noted that they strongly believed that the GAR did not provide meaningful information.
The EU platform on sustainable finance also published a detailed analysis [available here], laying out concerns on the reduction of the scope of the taxonomy, and recommending aligning taxonomy reporting with the scope of the CSRD – while not modifying the latter.
27 March 2025 [EU] – European Commission seeks EFRAG advice with respect to ESRS simplification mandate
European Commissioner Maria Luis Albuquerque has officially asked EFRAG to deliver its technical advice on simplifying the first set of European Sustainability Reporting Standards (ESRS) by 31 October 2025 [full letter available here]. This mandate falls within EFRAG’s role as technical advisor to the European Commission under the CSRD.
The European Commission expectations are clarified in the letter. They include substantially reducing the number of mandatory ESRS datapoints, clarifying unclear provisions, and provide clearer instructions on how to apply the materiality principle. Overall, the stated aim is to improve consistency with other EU legislation and ensure a “high degree of interoperability with other global sustainability reporting standards.”
The revised ESRS are expected to be implemented through a delegated act, within six month of the Omnibus Directive’s entry into force. The European Commission noted that firms reporting for financial year 2027 should be able to use the revised standards – with an optional application from financial year 2026.
April 2025 [EU] – European Parliament votes to fast-track Omnibus “Stop the Clock” proposal, shortly after Council of EU agrees position
On 1 April 2025, the European Parliament voted to apply the fast-track procedure to the European Commission’s proposal to postpone the dates of application of certain CSRD and CS3D requirements [announcement here] . The proposal will consequently be put to a vote on 3 April 2025.
This announcement comes shortly after Council of the EU published a statement confirming that it had approved its position (i.e., its negotiating mandate) on this proposal [press release available here].
This “Stop-the-clock directive” is one of the six legislative texts forming the Sustainability Omnibus Package, adopted by the Commission on 26 February 2025, and aimed at streamlining the EU’s ESG framework through substantial simplification of existing legislation.
As concerns CSRD, the proposal seeks to implement a two-year postponement regarding the sustainability reporting requirements imposed by the CSRD on companies that were initially supposed to start reporting in 2026 or 2027 (as regards financial years 2025 or 2026). As concerns CS3D, the proposal seeks to implement a one-year postponement of the transposition deadline, bringing it to 26 July 2027. A postponement is also proposed for its first-phase application to the largest companies, which will have until 26 July 2028 to comply if the proposal is adopted.
European Union
21 March 2023 [EU] – EU Platform on Sustainable Finance publishes updated Handbook on climate benchmarks and Independent report on streamlining sustainable finance for SMEs
The EU Platform on Sustainable Finance updated its handbook on climate transition benchmarks and Paris-aligned benchmarks [available here]. On the same day, it published an independent report on Streamlining sustainable finance for SMEs [available here]. The Handbook, initially published in December 2019, consists in Q&As covering in particular the 7% reduction trajectory, terminology issues (e.g., on the benchmarks’ definition of controversial weapons vs. that of the SFDR), anti-greenwashing measures, data sources and estimation techniques, as well as classifications and ESG disclosures. The appendices provide computation and sector mapping recommendations.
The Independent report – taking note of the challenges faced by SME in securing external financing for sustainability efforts, suggests developing a voluntary, streamlined approach. This so-called “SME sustainable finance standard” is to be used by banks and investors to classify the loans or other type of financing they provide to SMEs as sustainable (green or transition) finance and simplify any related voluntary reporting.
26 March 2025 [International] – LMA, APLMA and LSTA publish updated green, social and sustainability-linked loan principles and guidance
The Loan Market Association (LMA), the Asia Pacific Loan Market Association (APLMA) and the Loan Syndications and Trading Association (LSTA) have published updated green, social and sustainability-linked loan principles [available here].
These changes concern the Green Loan Principles, the Sustainability Linked-Loan Principles and the Social Loan Principles, and their accompanying guidance.
31 March 2025 [EU] – European Commission’s Delegated Regulation on RTS on sustainability information under MiCAR published in EU Official Journal
The Commission Delegated Regulation supplementing MiCAR with regard to RTS specifying the content, methodologies and presentation of information in respect of sustainability indicators in relation to adverse impacts on the climate and other environment-related adverse impacts was published in the EU Official Journal [available here]. It had been adopted by the European Commission on 17 December 2024.
MiCAR establishes a comprehensive framework governing the issuance and servicing of crypto-assets. It seeks to foster sustainable innovation while addressing risks to consumers, financial stability, and market integrity. In line with this objective, MiCAR also requires crypto-asset issuers and service providers to disclose the principal adverse impacts on the environment, particularly those related to the consensus mechanisms used to issue or validate crypto-assets, with significant energy consumption and environmental implications.
The Delegated Regulation aims to provide investors with accurate, clear, and comparable information about the environmental effects of the technologies underpinning crypto-asset issuance. To this end, the new legal framework specifies the requirements for the presentation of environment-related information, the obligations for disclosures in white papers, the general principles for the presentation of information by crypto-asset service providers, and the obligations for disclosure on their websites.
Germany
24 March 2025 [Germany] – Climate Neutrality by 2045 in the New Article 143h of the German Basic Law
The recent amendments to the German Basic Law (Grundgesetz), now in effect, include a change with the introduction of Article 143h, which addresses climate neutrality by 2045. Article 143h establishes a special fund (Sondervermögen) with a credit authorization of up to 500 billion euros, earmarked for investments aimed at achieving climate neutrality by 2045, alongside infrastructure projects.
However, the inclusion of climate neutrality in the constitution does not impose a direct obligation on the government to take action. Instead, it outlines a binding purpose for potential investments through this special fund. The state’s obligation for climate protection remains rooted in previous legal frameworks, such as the Federal Climate Protection Act (KSG). See here, in German.
24 March 2025 [Germany] – Lufthansa’s Advertising of “Climate-neutral” or “Sustainable” Flights Found Misleading
The Cologne Regional Court (Landgericht Köln, Urt. v. 21.03.2025, Az. 84 O 29/24) ruled that Lufthansa is prohibited from advertising its flights as “climate-neutral” or “sustainable” simply by offering payments for climate protection projects. The court found the airline’s claims about CO2 offsetting and sustainable aviation fuel misleading, as they gave consumers the false impression that they could make their flight climate-neutral through additional payments.
Deutsche Umwelthilfe (DUH), the plaintiff, criticized the airline for “systematic deception,” pointing out the lack of clarity on how and to what extent CO₂ emissions are compensated. DUH welcomed the court’s decision as a victory against misleading advertising, while Lufthansa said it would review the ruling. The judgment is not yet final. See here and here, in German only.
Italy
24 March 2025 [Italy] – CONSOB analyses ESG disclosure in Business Plans for the first time
On 24 March 2025, the Italian Financial Market Authority (CONSOB) released its study “The integration of ESG factors in corporate strategy: an analysis of corporate disclosure. Initial food for thought” [available here, in Italian], in which it examined, for the first time, how Italian companies incorporate Environmental, Social and Governance (ESG) objectives into their business plans.
The study analyses ESG disclosures in the business plans of 52 Italian companies – both listed and unlisted – that published a prospectus for equity or debt securities offerings on regulated Italian markets between 2020 and 2021. The analysis was based on information from business plans, press releases, financial and non-financial reports, and prospectuses.
The findings reveal a steady increase in ESG disclosure, including risk management, within corporate planning. The percentage of issuers providing such information rose from 19% in 2021 to 29% in 2022. The study reveals that the percentage of listed companies that provide such information is still limited (although growing, from 15% of the sample in 2021 to 27% in 2022), but it is higher among larger listed companies, which are also those that provide more complete information. In addition, listed companies that include ESG objectives in their business plans mainly belong to the financial sector.
However, in many cases, ESG information is limited to listing risks related to non-compliance with environmental regulations or governance principles, without providing a detailed or measurable framework for ESG commitments.
28 March 2025 [Italy] – Bank of Italy published a study on “ESG disclosure analysis of a sample of Italian and European banks”
On 28 March 2025, the Bank of Italy released a study authored by members of its Directorate General for Financial Supervision and Regulation, addressing ESG disclosures in Pillar 3 reports and non-financial statements published in 2024 by certain Italian and European banks [available here, in English]. The analysis was based on a sample of 12 Italian and 11 European significant banks, with respect to ESG Pillar 3 disclosures, and 29 Italian banks with respect to non-financial reports. Notably, it also provides an in-depth look at the Green Asset Ratio (GAR), which banks disclosed for the first time.
The findings indicate that most banks continue to struggle with obtaining ESG-related information on their counterparties, often due to limited access to databases containing energy consumption data for companies and retail customers. However, Italian banks show a gradual improvement in collecting and processing data, particularly in assessing transition risks linked to real estate collateral. The study also highlights that banks’ exposures to non-financial companies operating in high-emission sectors remain significant. Nevertheless, evidence on the riskiness of credit exposures to these sectors remains limited.