Environment, social and governance | UK Regulatory Outlook April 2025

EU Omnibus Package – 'Stop-the-clock' directive published in Official Journal

Both the European Parliament and Council have formally approved one of the Commission’s proposals to simplify EU sustainability reporting rules introduced under the Omnibus package. This proposal, known as the "Stop-the-clock" directive, postpones the dates of application of both the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). The delays being made are as follows:

• by two years the entry into application of the CSRD requirements for large companies that have not yet started reporting, as well as listed SMEs; and
• by one year the transposition deadline and the first phase of the application (covering the largest companies) of the CSDDD. Member States will have until 26 July 2027 to transpose the rules into national legislation, meaning the first wave of companies have to apply the rules from 2028.

The directive was published in EU’s Official Journal and entered into force on 17 April 2025. Member States must transpose this directive into their national legislation by 31 December 2025.

Other changes introduced by the Omnibus package, including changes to the scope of the CSRD and substantive changes to the technical content of the CSDDD (see more in our Insight) are similarly being adopted under the ordinary legislative procedure and therefore require the text to be formally adopted by both the European Parliament and Council. However, these proposals are in the early stages of the legislative process. 

Commission announces simplification measures to the EUDR

On 15 April, the European Commission published updated guidance and FAQs which provides some helpful clarification to the EU Deforestation Regulation (EUDR). These updates introduce simplification measures which aim to reduce the administrative burden for companies.

The substantive changes have mainly been made to the FAQs where a number of new questions and updates have been introduced. Some of the important changes are below:

• Question 2.5 – clarification around packaging exemptions including that user manuals, information leaflets, catalogues, marketing materials as well as labels accompanying other products do not fall within scope of the EUDR, unless they are placed or made available on the market or exported in their own right. This is reflected in the draft delegated act (see below).
• Question 2.14 – sets out an exemption for samples under the EUDR. This is reflected in the draft delegated act (see below).
• Question 3.1.1 – for changing / manufacturing products this clarifies that a change in the Commodity Code (HS, CN or TARIC) of a product already placed on the market results in a company placing a derived product on the market being an operator only if the change affects the digits that are listed in Annex I.
• Question 3.4 – obligations of downstream operators – this confirms that downstream operators need to ascertain that due diligence was exercised upstream by obtaining the information required under the EUDR, and are not required to collect any information required for this due diligence.
• Question 5.4 – with regard to re-imported products, it outlines that the same due diligence statement (DDS) can be reused for re-imported products that were previously exported from the EU market.
• Question 9.2 – for products falling within the transitional period (that is, between 29 June 2023 and 30 December 2025), no DDS needs to be submitted. In case of export or re-import of a product which was initially placed on the EU market during the transitional period, a “conventional DDS reference number” (meaning a universal reference number that can be entered in the customs declaration in cases of products falling in the transitional period) will be communicated by the Commission that can be used in the customs declaration submitted for export or re-import.

These simplifications are to be complemented by a draft Delegated Act which is subject to consultation that is currently running and is open until 13 May 2025. This is looking to formalise the removal of samples, products for R&D purposes, waste/used /second hand products, and bamboo/rattan/woody nature products from the scope of the EUDR.

Consultation launched on EU Industrial Decarbonisation Accelerator Act

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 2025. The Act, which will be a regulation, is expected to be adopted in Q4 2025.

Consultation launched on draft UK CBAM legislation

HMRC has launched a consultation on the draft legislation that will implement the carbon border adjustment mechanism (CBAM) from 1 January 2027. This will impose a carbon price on certain imported goods from sectors vulnerable to carbon leakage, including aluminium, cement, fertilisers, hydrogen, and iron and steel. The legislation outlines the scope, the calculation of CBAM liability, and key administrative components.

In addition to the draft legislation, the government has also released a CBAM policy update to provide businesses affected by CBAM with an overview of its scope and design. See also this factsheet that has been published alongside the consultation.

This consultation will be of interest to importers and downstream producers using goods from the specified sectors. The legislation will be included in a Finance Bill after this consultation, which closes on 3 July 2025.

UK companies need to be aware of the incoming EU Forced Labour Regulation

Please see Modern Slavery.