ESG Knowledge Update | April 2025

Legal and regulatory news

European Union

The "stop the clock" directive which forms part of the European Commission's proposed EU omnibus package was published in EU’s Official Journal and entered into force on 17 April. Member states must transpose this directive into their national legislation by 31 December. The directive postpones by two years the application of the Corporate Sustainability Reporting Directive for large companies that have not yet started reporting, and by one year the transposition deadline and first phase of application (covering the largest companies) of the Corporate Sustainability Due Diligence Directive.

The European Commission has adopted its 2025-30 working plan for the Ecodesign for Sustainable Products Regulation and Energy Labelling Regulation. This plan prioritises introducing ecodesign requirements and energy labelling for various products over the next five years. The focus is on final products like textiles, furniture, tyres, and mattresses, intermediate products – such as iron, steel and aluminium – and horizontal requirements including repairability and recycled content. Additionally, the plan includes a digital product passport for traceability and promotes sustainable trade, along with potential future bans on the destruction of unsold goods.

On 15 April, the European Commission published updated guidance and FAQs for the EU Deforestation Regulation, introducing measures to simplify and reduce administrative burdens for companies. Changes include allowing large companies to reuse existing due diligence statement for re-imported products, allowing an authorised representative to submit a due diligence statement on behalf of members of a group, allowing statements to be submitted annually instead of for every shipment and clarification that "ascertaining" that due diligence has been carried out in the supply chain refers to collecting reference numbers of due diligence statements from suppliers. These updates are complemented by a draft Delegated Act of further clarifications and simplifications, which is open for consultation until 13 May.

The European Parliament and Council have reached a provisional agreement on the new EU Toy Safety Regulation, which includes a significant ban on harmful chemicals. The ban now covers endocrine disruptors, the most dangerous types of bisphenols and per- and polyfluoroalkyl substances (PFAS), with exemptions for toy components necessary for electronic or electric functions where the substance is fully inaccessible to children. Other measures include the introduction of a digital product passport for all toys sold in the EU and mandatory safety assessments by manufacturers before market placement. The agreement requires formal approval by both bodies and includes a  four-and-a-half-year transition period for industry compliance.

The European Commission has launched a call for evidence and public consultation on its proposed EU Industrial Decarbonisation Accelerator Act. The regulation aims to assist energy-intensive industries to decarbonise while maintaining their international competitiveness. The initiative includes creating lead markets for decarbonised products. Feedback is being sought from stakeholders through both a call for evidence ending on 8 July and public consultation which ends on 9 July. The act, which will be a regulation, is expected to be adopted in Q4 2025.

The European Parliament and Council have reached a provisional agreement on new measures aimed at preventing plastic pellets losses throughout the supply chain. Entities handling over 5 tonnes of plastic pellets in the EU, including transport carriers and maritime operators, must implement measures to avoid losses. Economic operators must establish risk management plans and obtain compliance certification for installations handling over 1,500 tonnes annually. Labels and packaging must include a specific pictogram and warning statement. The regulation will apply two years after its entry into force, pending formal approval. 

United Kingdom

The government's Corry review, which was published on 2 April, addresses criticisms that the UK's environmental regulatory regime is overly complex and hampers growth and investment. Measures include appointing a single lead regulator for major infrastructure projects, creating a Defra infrastructure board to accelerate project delivery and reviewing environmental guidance to eliminate duplication and inconsistency. The review also proposes streamlining permits and guidance, establishing a single planning portal for all agencies and granting more autonomy to trusted nature groups for conservation work. The government aims to enhance regulatory consistency, unlock private sector green finance, and foster digital innovation among regulators.

As part of its ongoing employment law reforms, the government has published a call for evidence on reforms to equality laws. The call for evidence encompasses both evidence and views about areas of the existing legal framework to help better understand how the law is working in practice, as well as evidence and views on areas of possible equality law reform that the government is considering, including seeking evidence to support the implementation of the socio-economic duty in England.

On 31 March, new regulations for workplace recycling and waste management came into effect across England. These changes aim to simplify the recycling process, boost recycling rates, and reduce waste sent to landfills or incineration. Workplaces with 10 or more employees must separate dry recyclables food waste and residual waste, with flexibility in container size and collection frequency. Future measures include standardised recyclable waste collection by local authorities by 2026 and kerbside plastic film collections by 2027.

The Health and Safety Executive (HSE) has published its UK REACH Work Programme 2024/25, confirming it will be continuing work into PFAS used in firefighting foam and gathering evidence on wider PFAS use. The paper outlines that a restriction on PFAS in consumer products is aimed for the work year 2026/27. However, given the slow progress in this area and the fact that the HSE has not yet initiated any consultation on PFAS restrictions in consumer products, we consider it unlikely that the restriction will be implemented as early as 2026.

The UK parliament has also launched an inquiry into PFAS, assessing current measures, research capabilities, and comparing UK regulations with other jurisdictions. Evidence can be submitted until 26 May 2025.

The UK government has launched a consultation  on implementing six principles to ensure the integrity of voluntary carbon and nature markets. These principles focus on using high-integrity credits, ambitious actions, accurate claims, disclosure, planning, and cooperation to support market growth, with the consultation closing on 10 July.

The regulatory spotlight has recently intensified on forced labour in supply chains in both the EU and the UK. Our Insight, co-written with Jamas Hodivala KC, on the EU's Forced Labour Regulation and the UK's increasing focus on the issue, will be of interest to those seeking to mitigate their supply chain risk. For example, the UK government will be making an amendment to the Great British Energy Bill currently going through parliament that will require GB Energy, the new state-owned company set up to invest in the generation and supply of clean energy, to ensure that slavery and human trafficking are not taking place in its supply chains.

International

The IFRS Foundation and the Taskforce on Nature-related Financial Disclosures (TNFD) have signed a memorandum of understanding to collaborate on incorporating TNFD recommendations into the work of the International Sustainability Standards Board (ISSB). This partnership aims to facilitate nature-related financial disclosures for capital markets. The ISSB will evaluate the TNFD recommendations to ensure they meet the requirements of global capital markets.

On 8 April, President Trump signed an executive order, "Protecting American Energy from State Overreach", which forms part of the "unleashing American energy" initiative. The order requires the US attorney general to identify all state and local laws, regulations, causes of action, policies and practices "burdening the identification, development, siting, production, or use of domestic energy resources that are or may be unconstitutional" and to take action to stop the enforcement of these laws.

The New York State Department of Environmental Conservation (DEC) has published draft regulations to collect greenhouse gas emissions data. It would require reporting from certain significant greenhouse gas emissions sources, such as owners and operators of facilities in New York that emit 10,000 metric tons or more of carbon dioxide equivalent per emissions year.  Comments can be made on the proposal until 1 July.

The Australian Securities and Investments Commission (ASIC) has released Regulatory Guide 280 (RG 280). This sets out how in scope businesses prepare a sustainability report under Australia’s new mandatory climate reporting law.

Market news

B Lab has published new standards for B Corp certification which replace the current scoring system with a set of minimum requirements across seven key areas…The Securities and Exchange Commission has approved the first US sustainable stock exchange, the Green Impact Exchange…DWS, the German asset manager, has been fined €27 million by the Frankfurt Public Prosecutor's office for ESG failings…New York City public pension fund comptroller, Brad Lander, custodian and trustee for five major retirement funds collectively managing about $284bn, puts pressure on asset managers to provide actionable climate plans by 30 June 2025.

Recent ESG Insights from Osborne Clarke

• What is the current state of the European hydrogen investment landscape?
• The Energy Transition | Shortlist released for second round of UK green hydrogen funding
• UK's approach to heat networks set for change under new regulatory regime
• The Energy Transition | NESO given the go-ahead for regional energy strategic planning in GB
• UK companies need to be aware of the incoming EU Forced Labour Regulation