Global Sustainability & ESG Insights - February 2025

In February, we published our Global Sustainability and ESG Themes for 2025. This publication outlines the evolving landscape of sustainability and ESG across critical themes, including regulatory challenges, supply chain due diligence, reporting requirements, worker protection, and more.

Please view our publication here.

Global

UN biodiversity conference secures deal on biodiversity and nature conservation

On February 28, the UN biodiversity conference, COP16 concluded with a landmark agreement to mobilize resources for biodiversity and nature conservation. Key points include global collaboration to raise finance for the Kunming-Montreal Global Biodiversity Framework, a finalized monitoring framework for transparency and accountability, and the launch of the Cali Fund to support Indigenous Peoples and local communities through voluntary contributions from companies using genetic resources.

Asia

Hong Kong: 2025 priorities of sustainable finance published

On February 6, the Cross-Agency Steering Group published its 2025 priorities to support sustainable finance growth. Key initiatives include implementing ISSB Standards, developing a sustainability assurance framework, and expanding the Hong Kong Taxonomy for Sustainable Finance. They will also establish a Transition Finance Knowledge Hub and publish the Hong Kong Green Fintech Map. These efforts aim to enhance sustainability disclosure, transition finance, and data technology for a robust sustainable finance ecosystem.

Europe

EU: Sustainability Omnibus Regulation

On February 26, the EU published the long-awaited Sustainability Omnibus proposal, aimed at reducing redundant reporting requirements and boosting competitiveness within the EU market. This proposal includes amendments to the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), Carbon Border Adjustment Mechanism (CBAM) Regulation, and the Taxonomy. Key amendments, which are all subject to further debate and renegotiations between the European Institutions, include:

• CSRD: Limiting scope to large companies (over 1000 employees), simplifying reporting, postponing deadlines to 2028, and retaining double materiality reporting
• CSDDD: Extending preparation time to July 2027, requiring due diligence beyond direct partners only with plausible adverse impact, and reducing assessment frequency
• CBAM: Introducing a 50-tonne annual threshold per importer
• Taxonomy: Seeking views on refining the framework through consultations on delegated acts

For more information, see our flash update.

EU: Clean Industrial Deal

On February 26, the EU published its Clean Industrial Deal, a comprehensive strategy aimed at boosting the competitiveness of European industries through a commitment to decarbonization and reindustrialization. This Deal aims to provide a roadmap to a decarbonized EU economy by 2050.

In particular, the Deal will focus on energy-intensive industries and the clean-tech sector, implementing changes through several pillars: lower energy costs, boosting demand for clean products, financing the clean transition, circularity and access to materials, acting on a global scale, and ensuring access to a skilled workforce.

For more information, see our flash update.

EU: Energy Taxation Directive

On February 19, the Committee on Industry, Research and Energy published an opinion document on the Energy Taxation Directive. The proposed Directive aims to align energy taxation with EU climate policies by promoting clean technologies and removing outdated exemptions. The proposal introduces tax rates based on energy content and environmental performance, groups energy products by type broadens the taxable base, and sets different minimum tax levels for fuels and electricity.

EU: Waste Framework Directive

On February 19, The European Council and European Parliament reached a provisional agreement on the Waste Framework Directive.  The Directive sets targets to reduce food waste by 2030 and introducing new rules for waste textiles. The agreement includes ambitious food waste reduction targets and extended producer responsibility for textile producers. The proposal aims to enhance sustainability, transparency, and competitiveness within the EU market, pending formal adoption by both institutions. 

EU: Packaging and Packaging Waste Regulation

On February 11, the Packaging and Packaging Waste Regulation entered into force. The Regulation aims to ensure environmental sustainability by making all packaging recyclable by 2030, setting minimum recycled content requirements, and mandating compostable packaging. It emphasizes extended producer responsibility, reuse and refill systems, and harmonized labelling for consumer sorting. The regulation also requires packaging minimization and establishes penalties for non-compliance, aiming to transition to a circular economy and achieve climate neutrality by 2050.

For more information, view our briefing.

EU: 2025 Commission work programme

On February 11, the 2025 Commission work program was published. This document will act as the Commission's roadmap for the coming year, detailing new strategies, legislative initiatives and action plans as well as legislative proposals. Key upcoming developments relating to ESG include:

• First omnibus package on sustainability (Published)
• Clean Industrial Deal (Published)
• Water Resilience Strategy (Consultation published)
• Sustainable Transport Investment Plan (non-legislative, Q3 2025)
• Revision of the Sustainable Finance Disclosure Regulation (legislative, Q4 2025)
• Industrial Decarbonisation Accelerator Act (legislative, Q4 2025)
• Targeted revision of the REACH Regulation (legislative, Q4 2025)
• European Climate Law amendment (legislative, Q1 2025)

EU: Consultation launched on future Directive on environmental data

On February 5, the European Commission launched a public consultation on a future Directive laying down updated rules on environmental spatial data and access to environmental information (Greendata4All).  The public consultation is seeking stakeholder views to address challenges in the European data landscape and support the European Green Deal objectives, including climate change, circular economy, zero pollution, and biodiversity. The consultation closes April 30, 2025.

EU: PSF outlines recommendations to simplify taxonomy

On February 5, the EU Platform on Sustainable Finance (PSF) published a report setting out recommendations to the European Commission to simplify and improve the effectiveness of taxonomy reporting. The report makes five core proposals to simplify taxonomy reporting:

• refine the “do no significant harm" assessment by distinguishing between users, uses, and geographies
• introduce materiality principles and thresholds for key performance indicators
• define guidelines for estimates and establish safe harbors for financial reporting
• allow proxies and estimates for green asset ratio and green investment ratio
• develop simplified, voluntary approaches for SMEs, banks, and investors

EU: Consultation on EU Water Resilience Strategy

On February 4, the European Commission launched a call for evidence seeking input into the design of a Water Resilience Strategy. The consultation is setting out to assess whether a cross-sector plan on water resilience and water efficiency should be developed with objectives to:

• restore and protect the water cycle
• ensure clean and affordable water and sanitation for all
• promote a competitive EU water industry as part of a clean, water-wise circular economy

EU: Flight Emissions Label established

On February 1, the European Commission published an Implementing Regulation, allowing airlines operating within or departing from the EU to opt-in to a Flight Emissions Label by submitting required data to the European Union Aviation Safety Agency. This Implementing Regulation was implemented through the ReFuelEU Aviation Regulation. The first labels will be assigned by July 1, 2025, applying to flights scheduled during the 2025 winter season.

Middle East

Oman: Financial Services Authority Decision mandating the adoption of IFRS

On February 17, the Financial Services Authority issued  an Oman Financial Services Authority Decision mandating the adoption of International Financial Reporting Standards (IFRS) in Oman, effective immediately. This move aims to enhance transparency and consistency in financial reporting. Small and medium-sized enterprises can opt for a simplified IFRS model. All accounting practitioners must comply with these standards.

Qatar: Environmental permit process streamlined

On February 14, Qatar streamlined the process for issuing environmental permits for industrial facilities. The Ministry of Commerce and Industry will directly issue permits for 861 activities based on predefined criteria, while 257 activities are exempt from permits. Only 182 activities require prior environmental approval. This initiative aims to bring Qatar closer aligned to international best practices.

UAE: DFSA publishes Business Plan for 2025-2026

On February 4, the Dubai Financial Services Authority (DFSA) published its Business Plan for 2025-2026, focusing on advancing regulatory excellence, driving innovation, and fostering sustainable growth within the Dubai International Financial Centre. Here are the key points:

• Delivery: Ensuring an effective and responsive regulatory framework.
• Engagement: Strengthening relationships with stakeholders.
• Innovation: Embracing technological advancements.
• Sustainability: Supporting long-term economic, environmental, and social sustainability.

UK

UK: National Biodiversity Strategy and Action Plan for 2030

On February 26, the Government published the National Biodiversity Strategy and Action Plan for 2030, which outlines the country’s commitment to halting and reversing biodiversity loss. Key points include:

• Global Framework: Aligns with the Kunming-Montreal Global Biodiversity Framework to halt biodiversity loss by 2030.
• National Targets: Sets 23 ambitious UK targets aligned with the GBF.
• Collaborative Efforts: Emphasizes collaboration across the four UK countries and with international partners.
• Implementation Plans: Details specific actions and strategies for each UK country and the UK Overseas Territories.
• Monitoring and Reporting: Establishes robust mechanisms for tracking progress and updating plans as needed.

UK: FCA confirms delay on SDR requirements

On February 14, the Financial Conduct Authority (FCA) confirmed that it will no longer publish their policy statement extending its Sustainability Disclosure Requirements (SDR) and investment labels to portfolio managers in Q2 2025. It is not yet clear when the FCA will publish their policy statement.

UK: Consultation on extending the Emissions Trading Scheme beyond Phase I

On February 12, the Department for Energy Security and Net Zero opened a consultation on extending the UK Emissions Trading Scheme beyond 2030. It seeks views on:

• extending the UK ETS into a second phase from 1 January 2031 onward
• the length of a post-2030 Phase II
• whether to allow banking of emissions allowances between Phase I and a post-2030 Phase II of the Scheme

UK: Mandatory digital waste tracking confirmed

On February 6, the Government confirmed mandatory digital waste tracking will come into force from April 2026. This initiative aims to provide a comprehensive system for tracking waste production, handling, and disposal, supporting effective regulation and reducing waste crime. It will help businesses comply with waste management regulations, promote a circular economy, and replace outdated systems. The service is being developed in partnership with UK and devolved administrations, focusing on user needs and leveraging flexible, scalable technology

UK: Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025

On February 5, the Greenhouse Gas Emissions Trading Scheme (Amendment) (No. 2) Order 2025 was published. It enters into force March 31, 2025.

The Amendment introduces three technical and operational amendments to the scheme regarding data publication, data sharing, and ultra-small emitter (USE) eligibility criteria for the period 2026-30. The response includes three key proposals:

1. Publication of Registry Transaction Data: Annual publication of all UK ETS transactions, three years in arrears, starting May 2025, to increase transparency.
2. Disclosure of UK ETS Information: Allowing national authorities to disclose information for policy development and to the Climate Change Committee for statutory functions.
3. USE Status: Extending eligibility for USE status to operators who began activities between January 2021 and January 2024 for the 2026-30 period.

UK: Net Zero Council relaunched

On February 5, the Net Zero Council was relaunched, aiming to drive the clean energy transition and support economic growth. The Council aims to provide expert input on government strategies, support sector roadmaps, help SMEs decarbonize, and engage the public. This initiative aligns with the Plan for Growth to create jobs and economic opportunities.

UK: PRA Climate Change Adaptation Report 2025

On January 30, the Prudential Regulation Authority (PRA) published its Climate Change Adaptation Report 2025. The report ensures UK banks and insurers manage climate risks and support the net-zero transition. Key actions include updated supervisory expectations, emphasis on climate scenario analysis, and international collaboration. Future plans involve releasing a consultation paper in 2025 and continuing to support firms in enhancing climate risk management.

For more information, see our flash update.

US

US: SEC climate disclosure rule

On February 11, The US Securities and Exchange Commission (SEC) confirmed in a written statement that it would freeze its climate disclosure rule. The SEC statement said the rule was  deeply flawed and could lead to significant harm on the capital markets and economy. The SEC will notify the court that is hearing the appeal of the rule of these concerns and request a delay in litigation proceedings.

US: “Unleash Golden Era of American Energy Dominance” Plan published

On February 5, the Department of Energy published its “Unleashing the Golden Era of American Energy Dominance” plan. The stated goals of the plan are to expand energy production, reduce costs, and lead in innovation and technology. The key actions include:

• Advance Energy Addition: Focus on increasing energy production and not net-zero carbon policies.
• Unleash Innovation: Prioritize R&D in fossil fuels, nuclear, geothermal, and hydropower.
• LNG Exports: Resume consideration of LNG export applications to non-free trade agreement countries.
• Commercial Nuclear Power: Enable rapid deployment and export of next-generation nuclear technology.
• Streamline Permitting: Expedite approval and construction of energy infrastructure.

US: EPA  “Powering the Great American Comeback” Initiative

On February 4, the Environmental Protection Agency (EPA) announced the “Powering the Great American Comeback” Initiative. The initiative outlines the agency’s policy priorities under President Trump. The initiative cites the following as its  main pillars:

• Clean Air, Land, and Water for Every American: Ensuring access to clean air, land, and water while protecting human health and the environment.
• Restore American Energy Dominance: Pursuing energy independence to cut costs and reduce reliance on foreign energy sources.
• Permitting Reform, Cooperative Federalism, and Cross-Agency Partnership: Streamlining permitting processes to encourage investment and job creation.
• Make the United States the Artificial Intelligence Capital of the World: Leading in AI development and ensuring clean energy for data centers.
• Protecting and Bringing Back American Auto Jobs: Revitalizing the auto industry through smart regulations and domestic manufacturing investment.

Co-authored by Nathan Handoll (ESG Researcher in Knowledge).