Environmental, social and governance | UK Regulatory Outlook November 2025

EU  

European Parliament adopts negotiating mandate on Omnibus I CSRD and CSDDD simplification proposal 

Following the European Parliament's rejection of the Legal Affairs Committee's negotiating mandate on simplified sustainability and due diligence rules in October, the European Parliament has now, on 13 November, adopted its negotiating mandate. 

The adopted mandate is not yet available to view. However, according to a European Parliament press release, it wants to raise the employee threshold under the Corporate Sustainability Reporting Directive (CSRD) to 1,750 employees and an annual turnover threshold of €450 million with the sustainability reporting requirements not appearing to have changed from the draft resolution. 

The main difference in relation to the Corporate Sustainability Due Diligence Directive (CSDDD) appears to be that there will be no requirement to produce a climate transition plan at all while the threshold for companies in scope of the CSDDD remains the same at over 5000 employees and net annual turnover of €1.5 billion. 

These simplified rules, once in force, will affect a range of sustainability areas including forced labour, deforestation and other forms of modern slavery across company operations and supply chains. Trilogue negotiations started on 18 November, with an aim to finalise the legislation by the end of the year. 

Council of the EU proposes a year delay to the EUDR 

Last month, the European Commission proposed a delay, including to the enforcement of the EU Deforestation Regulation  (EUDR), in order to reduce the load that the IT system of the EUDR will need to handle, and to reduce administrative burden on supply chain actors. On 13 November, the European Parliament made the decision to use the urgency procedure to fast-track this proposal.  

The Council of the EU has since adopted its official position which seeks to go further and push back the application date of the EUDR by a year. If adopted, the EUDR would apply from 30 December 2026 for medium and large enterprises, and from 30 Jun 2027 for micro and small operators.  

Micro and small primary operators would only be required to provide a one-off simplification declaration and downstream operators/traders would no longer need to file additional due diligence statements. The Council's proposal also tasks the Commission to carry out, by 30 April 2026, a simplification review to assess the EUDR's impact and administrative burden.  

The European Parliament is due to vote on its position on 26 November. As the Council goes beyond the Commission’s proposal by seeking additional delays, and it is likely that the Parliament will too, the Commission’s proposal to delay of enforcement now appears likely to be accepted as a minimum. Nonetheless, with just a month to go until the regulation is expected to come into force, businesses will hope there will be some clarity soon.  

Quick Fix Regulation postpones certain ESRS requirements for first wave companies 

On 10 November 2025, Commission Delegated Regulation (EU) 2025/1416 amending Delegated Regulation (EU) 2023/2772 (the Quick Fix Regulation) was published in the Official Journal and entered into force on 13 November 2025. 

The Quick Fix Regulation addresses sustainability reporting requirements for "first wave" companies under the Corporate Sustainability Reporting Directive ((EU) 2022/2464), which were required to start reporting in 2025 for the 2024 financial year. While the Postponement Directive (EU) 2025/794 postponed sustainability reporting requirements for "second wave" and "third wave" companies by two years, it did not provide relief for first wave companies. 

The Quick Fix Regulation defers the requirement for first wave companies to report on the anticipated financial effects of certain sustainability-related risks until the 2027 financial year. It also allows all first wave companies to benefit from the phase-in provisions relating to European Sustainability Reporting Standards (ESRS) E4 (biodiversity and ecosystems), ESRS S2 (workers in the value chain), ESRS S3 (affected communities) and ESRS S4 (consumers and end-users), which previously applied only to companies with up to 750 employees.  

Additionally, it extends to first wave companies the safeguard provision that allows a company using temporary exemptions for a complete topic standard to report certain summarised information on the topic if it is material. 

The Quick Fix Regulation applies retrospectively to financial years beginning on or after 1 January 2025. The Commission and the European Financial Reporting Advisory Group (EFRAG) are also working on separate legislation to simplify and clarify the ESRS Regulation. 

European Parliament introduces amendments to proposed EU Climate Law Regulation 

On 13 November 2025, the European Parliament adopted amendments to the European Commission's proposal for a regulation amending Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality, which would set a 2040 greenhouse gas emissions reduction target of 90% of 1990 emissions.  

While endorsing the 90% reduction target for emissions by 2040 compared with 1990 levels, the Parliament adopted several amendments. On international carbon credits, from 2036 up to 5% of net emission reductions could come from high-quality credits from partner countries (as opposed to 3% proposed by the Commission), with robust safeguards. The Parliament also backs delaying the start of the EU Emissions Trading System by one year, from 2027 to 2028. 

On the 2040 target review, the Parliament calls on the Commission to review progress every two years and, if needed, propose changes to the climate law, adjusting the 2040 target or introducing measures to reinforce the framework and safeguard competitiveness, prosperity and social cohesion. 

The Council adopted its negotiating mandate on 5 November 2025, meaning informal trilogue negotiations are now expected to start. 

UK 

Consultation on expanding climate change agreement scheme eligibility 

HM Revenue & Customs has launched a consultation which runs until 2 December 2025 on draft regulations to expand and refine the Climate Change Agreement (CCA) Scheme from January 2027. Following the government's October 2024 commitment to a new six-year CCA scheme, the consultation proposes adding three new eligible processes: 

• Mechanical recycling of plastic.
• Packaging of spirits.
• Production of batteries for electric vehicles. 

The draft regulations also introduce technical amendments to consolidate and better define eligibility conditions for existing processes within the scheme, without excluding any businesses currently carrying out eligible activities. The consultation seeks stakeholder feedback on the statutory instrument's drafting to ensure the policy intent is delivered correctly and efficiently.