Companies involved in carbon farming projects, industrial carbon removal technologies and binding carbon in long-lasting products and materials will be able to have their products or services certified under the first EU-wide voluntary framework for the certification of high-quality carbon removals.

Companies are making encouraging progress with initial climate and sustainability disclosures, especially in sectors like utilities and real estate, demonstrating how capital expenditures associated with the EU Taxonomy can facilitate the transition of key industrial activity.

Companies that develop net-zero technology manufacturing projects identified as having a greater potential for decarbonisation will benefit from fast-track permit procedures for construction or expansion and guidance in accessing finance, under new legislation set to be passed at EU level.

The implementation of sustainability reporting standards for certain sectors and for third-country companies in the EU will be delayed by two years following concerns by industry that there is not enough time to embrace them.

Financial institutions will be required to adhere to minimum standards and reference methodologies for the identification, measurement, management, and monitoring of ESG risks under guidelines for ESG risk management released by the European Banking Authority (EBA).

The body tasked with developing EU financial reporting standards, including sustainability reporting, has developed a set of reporting guidelines for small to medium businesses (SMEs) to help facilitate their access to finance and to standardise sustainability data requests.

The use of generic environmental and climate claims which are not based on fact and supported by evidence will be banned in the EU by 2026 and added to the list of unfair commercial practice, under new legislation agreed by EU legislators.

The EU has released a methodology for calculating carbon emissions embedded in products to be imported into the EU as part of Carbon Border Adjustment Mechanism (CBAM) that came into effect in October 2023. Since October, importers of goods in certain sectors have needed to calculate the amount of carbon emitted during the production of goods being imported into the EU and the newly released methodology will enable them to make the necessary calculations.

EU legislators have agreed on a new piece of draft legislation that imposes a due diligence obligation on company directors to assess, identify, and evaluate risks, and implement mitigation strategies in respect to human rights and environmental supply chain issues. Negotiators of the EU Parliament and European Council, two key legislative bodies of the EU, reached agreement of the text, making it almost certain that the requirements will become law throughout the EU.

EU member states have reached agreement that will pave the way for ESG rating providers to be authorised and supervised by the European Securities and Markets Authority (ESMA) and comply with transparency requirements, notably in regard to their methodology and sources of information.

Negotiators at the European Council, the EU institution which represents EU member state heads of state, reached agreement in late December for negotiations on the final text of the legislation to begin with other EU institutions, notably the European Parliament.

The European taskforce that developed standards for use in the EU’s new Corporate Sustainability Reporting Directive (CSRD) and the Global Reporting Initiative (GRI), one of the most commonly used set of sustainability reporting principles, have formed an agreement to work toward interoperability of the two sets of standards.