ESG Knowledge Update | September 2026
Published on 23 September 2026
Welcome to Osborne Clarke's ESG Knowledge Update from our multi-disciplinary ESG team
At a glance:
EU 'right to repair' rules are now in force, with new obligations for manufacturers selling goods in the EU
New guidance sets out how biodiversity net gain will apply to nationally significant infrastructure projects ahead of the November deadline
HMRC publishes a collection of guidance on the UK Carbon Border Adjustment Mechanism ahead of its January start
Sustainability and climate reporting
EFRAG consults on sustainability reporting standards for non-EU undertakings
EFRAG, formerly known as the European Financial Reporting Advisory Group, published a consultation in late July on draft European Sustainability Reporting Standards for non-EU undertakings, known as ESRS-40a ED. The draft has been developed as technical advice to the European Commission under article 40a of the Accounting Directive (2013/34/EU).
ESRS-40a will apply to EU subsidiaries or branches whose ultimate parent is governed by the law of a non-EU country, where reporting thresholds set out in article 40a are met. The standard supports implementation of the Corporate Sustainability Reporting Directive, which aims to create a level playing field for businesses operating in the EU market and greater transparency around the effect of non-EU businesses’ EU activities on people and the environment.
The consultation runs until 31 October. EFRAG aims to deliver its technical advice to the Commission in early 2027, ahead of the Commission's own consultation and adoption of a delegated act. The first ESRS-40a sustainability reports are expected to cover the 2028 financial year for publication in 2029. Businesses with non-EU parents can respond to the consultation while also tracking the Commission's parallel simplification of the core standards.
Net-Zero Industry Act: European Commission guidance on article 25
The European Commission has published guidance on article 25 of the Net-Zero Industry Act (Regulation (EU) 2024/1735), which establishes a framework for strengthening Europe's net-zero technology manufacturing ecosystem.
The Net-Zero Industry Act entered into force on 29 June 2024, setting objectives under article 5 for the Commission and member states to reach a manufacturing capacity of at least 40% of the EU's annual deployment needs for net-zero technologies by 2030 and 15% of world production by 2040.
The guidance gives practical direction to contracting authorities and entities on assessing sustainability and resilience contributions in public procurement procedures under the procurement directives (2014/23/EU, 2014/24/EU and 2014/25/EU). Article 25 sets minimum requirements for environmental sustainability and supply chain resilience alongside other contract performance obligations.
The guidance sets out how article 25's sustainability and resilience requirements work in practice. Contracting authorities and bidders for public contracts involving net-zero technologies will need to apply them in live procurement procedures.
European Commission invites feedback on amending its emissions trading system
The European Commission is seeking feedback on three legislative proposals adopted in July 2026, aimed at modernising the EU Emissions Trading System (EU ETS). The review is intended to strengthen investment in decarbonisation, provide relief to industry while maintaining a robust carbon market aligned with the 2040 target, support solidarity across the carbon transition, and ensure decarbonisation across the whole EU economy.
The three proposals are a regulation amending monitoring, reporting and verification requirements for the maritime sector (COM(2026) 620 final), a regulation on heat and fuel benchmarks for 2026-2030 that increases free allocation under the EU ETS Directive for that period (COM(2026) 619 final), and a directive amending the EU ETS Directive and the Market Stability Reserve Decision ((EU) 2015/1814) (COM(2026) 616 final).
The Commission is accepting feedback until 30 October, a deadline of particular relevance to businesses in the maritime and industrial sectors that fall within the scope of the EU ETS.
Circular economy
EU 'right to repair' rules take effect with new onus on manufacturers
The EU Right to Repair Directive ((EU) 2024/1799) took effect on 31 July, two years after it came into force on 31 July 2024 as part of a package of measures for sustainable consumption designed to have a cumulative effect over a product's full lifecycle.
It prioritises repair over replacement, amending the Goods Directive ((EU) 2019/771) to encourage consumers to choose repair when exercising their rights against sellers. Manufacturers of goods subject to legislative repairability requirements must repair these once the seller's liability under the Goods Directive has expired and provide consumers with repair information without impeding third-party repairs.
Manufacturers established outside the EU are also affected if they sell goods subject to the bloc's repairability requirements. Their EU-authorised representative, or otherwise their importer or distributor, becomes responsible for repairs and providing repair information. A new online European repair platform is expected to be operational in 2027, helping consumers find repairers more easily in each EU country.
Batteries Regulation: 'passport' guidance and recycled content consultation
The European Commission has published updated guidance to help stakeholders prepare for its digital batteries passport under the Batteries Regulation ((EU) 2023/1542). The guidance provides a structured overview of the 71 data points relevant to electric vehicle (EV), light transport and industrial batteries covered by the passport requirement, indicating for each battery category whether they are mandatory, optional, applicable only in specific circumstances, or not yet required as of February 2027 when the passport requirements start to apply.
The guidance is aimed primarily at companies across the batteries value chain, including manufacturers and importers, but may also assist conformity assessment bodies and market surveillance authorities. From 18 February 2027, EVs, light transport and industrial batteries with a capacity greater than 2 kilowatt-hours placed on the market or put into service must have a battery passport. The guidance does not create additional legal requirements and should be read alongside the Batteries Regulation and any relevant delegated or implementing acts.
Separately, the Commission ran a consultation on recycled content in batteries from 12 August to 9 September. Its draft delegated act sets out the methodology for calculating and verifying the recycled content of lithium, cobalt, nickel and lead in batteries. Under the Batteries Regulation, several categories of batteries must contain a specified percentage of recycled metals to be placed on the EU market, with two sets of targets applying from 2031 and 2036. Feedback from the consultation will inform the final methodology.
The February 2027 deadline leaves limited time to align data systems and reporting practices with the passport guidance. Battery manufacturers and importers also have a narrow window to respond to the recycled content consultation before it closes.
European Commission consults on implementing the Packaging and Packaging Waste Regulation
The European Commission has opened four consultations on measures to implement the Packaging and Packaging Waste Regulation ((EU) 2025/40). Three ran from 14 August to 16 September, with adoption planned in the fourth quarter. The measures are intended to support the shift to recycled and sustainably sourced plastic packaging across the EU market.
The first sets out sustainability criteria for plastic recycling technologies to deliver the greatest environmental benefit. The second establishes methodological rules for assessing, verifying and certifying plastic materials collected or recycled outside the EU as equivalent to the bloc's own system for use in packaging imports. The third harmonises rules for calculating and verifying recycled content in plastic packaging, aiming to reduce administrative burden and give the recycling industry legal clarity for investment.
A fourth consultation ran from 6 August to 10 September covering rules on national registers of producers with the aim of harmonising parts of extended producer responsibility schemes for packaging across EU member states by setting requirements for national registers and producers' reporting obligations.
Windsor Framework inquiries: end-of-life vehicles and food supply chain
The Northern Ireland Assembly's Windsor Framework Democratic Scrutiny Committee published two reports in late August.
The first concerns Regulation 2026/1738 on circularity requirements for vehicle design and end-of-life vehicles. The committee, which was established under schedule 6B to the Northern Ireland Act 1998, found that the replacement EU act differs in part from the instruments it amends or replaces, but concluded that it would not have a significant negative effect on everyday life in Northern Ireland.
The second report covers the replacement Regulation (EU) 2026/1739, which amends Regulations (EU) No 1308/2013, (EU) 2021/2115 and (EU) 2021/2116 on strengthening the position of farmers in the food supply chain. Several provisions in the replacement regulation apply in Northern Ireland under the Windsor Framework. Having considered its commissioned legal advice, the committee concluded that the replacement EU act does not significantly differ from the relevant parts of the instruments it amends and would not have a significant lasting effect on everyday life in Northern Ireland. The scrutiny periods for both reports run until 24 September.
Any changes to the committee's conclusions could affect businesses involved in vehicle manufacture, end-of-life vehicle management or the food supply chain that operate in or trade with Northern Ireland.
Natural capital
Government publishes guidance on biodiversity net gain in nationally significant infrastructure projects
The Department for Environment, Food and Rural Affairs (Defra) published guidance in late August on how biodiversity net gain (BNG) requirements should be met in the design and consenting of nationally significant infrastructure projects (NSIPs). BNG will apply to all new NSIP proposals in England from 2 November 2026, a year later than originally planned in November 2025.
The guidance builds on the final biodiversity gain statements published in June and covers all NSIP sectors. It introduces a streamlined framework under which BNG applies only to habitats affected by development rather than the entire site, gains can be delivered on-site or off-site, and streamlined requirements apply where developments have temporary effects. Defra has also updated its guidance on irreplaceable habitats and what developers can count towards their BNG, clarifying how those rules apply to NSIPs.
Defra is working on a second phase of BNG reforms, including exemptions for developments aimed primarily at conserving or enhancing biodiversity and for developments that enhance parks, playing fields and public gardens, alongside changes to the statutory biodiversity metric. With the new rules applying from 2 November, the industry will be looking at integrating the streamlined framework into design and consenting timelines.
UK publishes revised National Planning Policy Framework
The government published the revised National Planning Policy Framework (NPPF) on 17 August, alongside its response to the consultation that closed on 10 March. The revised NPPF came into force immediately.
Changes include the separation of plan-making and national decision-making policies, a new standalone chapter on clean energy and water covering electricity network infrastructure, heat networks, water supply, drainage and wastewater, and strengthened protected landscapes policy. Compliance with green belt "golden rules" now carries substantial weight alongside formal green belt assessments.
The framework also introduces stronger requirements on local nature recovery strategies, green infrastructure standards and sensitive water bodies, with local BNG requirements above the statutory level limited to justified specific site allocations. Substantial weight should also be given to improving energy efficiency in existing buildings and drawing energy from district heat networks, renewable and low carbon sources.
Supply chain transparency
HMRC publishes guidance on the UK Carbon Border Adjustment Mechanism
HMRC has published a collection of guidance on the UK CBAM, which will apply from 1 January 2027 to imports of goods in the aluminium, cement, fertiliser, hydrogen, and iron and steel sectors.
The guidance covers which goods are in scope, who qualifies as the importer, registration requirements, record-keeping obligations and how the CBAM charge operates, including the availability of carbon price relief where a qualifying carbon price has already been paid overseas. Importers must register once they expect to import CBAM goods worth £50,000 or more within the next 30 days, or once their imports over the previous 12 months have met that threshold. Registration opens by 1 January 2028, but importers that become liable before that date must keep records from the point of liability.
Those importing CBAM goods should use the guidance now to confirm whether they fall within scope and to establish record-keeping processes ahead of the January 2027 start date, rather than waiting for the registration window to open.
European Commission publishes guidance for non-EU operators on EU Carbon Border Adjustment Mechanism implementation
The European Commission has published 10 guidance documents to help non-EU operators, third-country installation operators, declarants and verifiers implement the EU CBAM during its definitive period, which began at the start of the year. The definitive period brings monitoring, reporting and financial obligations for importers of carbon-intensive goods into the EU, as set out in the CBAM Regulation and its secondary legislation.
The series comprises four general guides and six sector-specific ones. The general guidance covers an introduction to the mechanism's concepts, roles, responsibilities, milestones, deadlines and exemptions; a quick guide for non-EU operators on emissions monitoring; calculation of embedded emissions and related monitoring and reporting obligations; and calculation of the adjustment to CBAM certificates for free allocation under the EU ETS.
The six sector-specific documents cover cement, hydrogen, fertilisers, iron and steel, aluminium and electricity, each providing dedicated overviews of production processes, value chains and monitoring and reporting considerations, supplemented with worked examples.
Non-EU operators of installations producing CBAM goods can use the guidance to prepare for the verification of their emissions data, establish robust monitoring plans, understand the change in embedded emissions calculations compared with the transitional period and apply the free allocation adjustment correctly ahead of using actual values for 2026 imports.
Green claims
CAP publishes guidance on environmental claims in advertising
The Committee of Advertising Practice (CAP) published new guidance for marketers, intended as a practical tool to help advertisers develop clear, accurate and evidence-based environmental claims. The guidance, titled "Greenspeaking with confidence: environmental claims in advertising”, builds on the existing Green Claims Code and the industry rules administered by the Advertising Standards Authority (ASA).
The guidance is structured around five principles: consider how consumers are likely to understand your claim; hold adequate evidence before making objective claims; avoid overstating the environmental benefits of a product, service or initiative; make sure claims and any qualifications are clear; and be transparent about environmental initiatives and ambitions.
It also covers social responsibility and warns against claims that give advertisers undue credit for complying with the law or standard industry practice. Practical examples are included throughout to illustrate how the principles apply in common scenarios.
Environmental marketing materials that do not align with the guidance risk challenge from the ASA. With regulatory and consumer scrutiny of green claims increasing, the guidance offers a useful framework for reviewing advertising copy before publication.
