Environmental, social and governance | UK Regulatory Outlook July 2026

UK 

HMRC publishes CBAM guidance collection 

HMRC has published a collection of guidance on the UK Carbon Border Adjustment Mechanism (CBAM), which applies 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. 

UK Immigration and Asylum Bill introduced to strengthen modern slavery reporting framework 

See modern slavery section. 

EU 

Commission updates EU Deforestation Regulation product scope and digital tools  

The European Commission has adopted two measures to support implementation of the EU Deforestation Regulation (EUDR) ahead of its application from 30 December for large and medium-sized operators. 

A delegated regulation updates the list of covered products, removing cattle hides, skins and leather, re-treaded tyres, soybeans for sowing, articles of vulcanised rubber, conveyor and transmission belts, and aircraft and motor vehicle seats. It adds soluble coffee, certain palm oil derivatives and frozen cattle tongues from 30 December 2027.  

The changes relate to products derived from the seven EUDR commodities and do not alter the commodity list itself. The delegated regulation also clarifies that samples used for analysis, examination and testing fall outside the regulation's scope and introduces exemptions for waste, used and second-hand products, packing material, and products used in the manufacture of medicinal products. 

An implementing regulation sets out the functioning of the information system for submitting due diligence statements and simplified declarations, including a simplified declaration form for micro and small primary operators, updated specifications for automated application interfaces, and a contingency plan for unplanned unavailability. The Commission has also updated its main guidance on the EUDR to reflect all changes. 

The Department for Environment, Food and Rural Affairs (Defra) has separately published guidance for businesses on their obligations under the EU Regulation on deforestation-free products, which applies in Northern Ireland by virtue of the Windsor Framework. The government has confirmed it will consult businesses, civil society and international partners on proposed deforestation regulations for Great Britain, aiming to align aspects of the scope and information requirements with the EUDR to reduce regulatory divergence and support trade with the EU. 

Commission adopts delegated regulations to simplify the CSRD 

Following its consultation on Corporate Sustainability Reporting Directive (CSRD) reporting standards, the European Commission has adopted two delegated regulations simplifying the sustainability reporting framework. Both are subject to a two-month scrutiny period by the European Parliament and the Council. 

The first revises and simplifies the European Sustainability Reporting Standards (ESRS). It introduces a simplified materiality assessment and additional targeted flexibilities. The revised ESRS will apply for financial years starting on 1 January 2027, with an early adoption option for companies whose CSRD obligations begin in 2026. 

The second establishes voluntary standards for companies with fewer than 1,000 employees on average. These sit outside the mandatory CSRD regime but are drawn into sustainability reporting through the value-chain cap, under which large in-scope companies may request sustainability data from supply chain partners. The voluntary standards provide a structured, proportionate basis for responding to those requests. They will apply to in-scope entities undertaking value chain reporting from financial years starting in 2027 and to out-of-scope companies wishing to report voluntarily from the date of entry into force. 

European Commission publishes guidelines on Forced Labour Products Regulation 

See modern slavery section 

European Parliament calls for suspension of Urban Wastewater Treatment Directive EPR obligations

See products section