Policy Digest: July 2025
International
BCBS launches voluntary climate disclosure framework
The Basel Committee on Banking Supervision (BCBS) has introduced a voluntary climate risk disclosure framework. Jurisdictions may voluntarily integrate the disclosure requirements into a national framework and determine the appropriate rigour of implementation in a local context. The framework incorporates a flexible approach to ensure the enhancement of disclosure practices as the consistency and accuracy of climate-related data continues to evolve. The Committee recommends users of the framework to effectively leverage the disclosure of relevant quantitative and qualitative metrics for a holistic assessment of banks’ exposure to climate-related financial risks. Following a further review of current and forthcoming global regulatory frameworks and disclosure practices across international banks in member jurisdictions, the Committee will consider potential revisions to the framework.
ISSB proposes amendments to the SASB standards and IFRS S1 industry guidance
As part of its 2024-2026 Work Plan, the IFRS Foundation has prioritized comprehensive review of nine industries (all eight industries in the Extractives & Minerals Processing sector and one standard in the Processed Foods industry). The latest update includes targeted amendments to 41 SASB industry standards promoting consistency across disclosure on common topics including but not limited to greenhouse gas emissions, energy management, water management, workforce health & safety. The IFRS Foundation has deepened collaboration with key standard setters and regulators such as TNFD, GRI and EFRAG to ensure interoperability. Finally, the Exposure Drafts updates the Industry-based Guidance on Implementing IFRS S2 Climate-related Disclosures. It prioritizes 9 industries and 37 of the 41 industries, ensuring alignment with climate-related materials contained in the SASB standards. The Exposure Draft will be open for comment until 30th November 2025.
IFRS publishes guidance on transition plan disclosure
The guidance document addresses the fragmented disclosure of transition plans under IFRS S2 by aiming to improve the availability of high-quality, usable, and comparable climate transition information. It does this by promoting disclosure of transition strategies, plans, targets, actions, and resource allocation aligned with a lower-carbon and climate-resilient economy. While it does not change the requirements of IFRS S2, it supports jurisdictions in applying the standard and allows them to introduce additional disclosures to meet local needs, with any future changes subject to public consultation.
GRI releases Exposure Drafts on Non-discrimination and Equal Opportunity exposure draft/Diversity and Inclusion exposure draft
GRI has invited feedback on the two labor-related Exposure Drafts until 15th September 2025. The proposals will apply to entity employees and ‘worker representatives’ that are indirectly tied to or controlled by the entity. The Non-discrimination and Equal Opportunity Exposure Draft will replace GRI 206: Non-discrimination 2016, while the Diversity and Inclusion Exposure Draft will replace GRI 405: Diversity and Equal Opportunity 2016. Under the labor project, the GRI is revising its existing labor-related standards. GRI will initiate the rollout of the updated standards with a webinar on 8th July 2025 at 5PM CEST.
GRI launches new Energy & Climate Change Standards
The new GRI 102: Climate Change standard emphasizes greenhouse gas (GHG) emissions reduction as a key climate mitigation measure. Its reporting requirements are anchored in science-based targets and global climate commitments. The standard also addresses the concept of a ‘just transition,’ requiring companies to assess the broader social impacts of their climate strategies, particularly on workers, local communities, and Indigenous peoples. GRI 103: Energy enables organizations to comprehensively assess their energy-related impacts. It includes disclosures on decarbonization efforts, covering both renewable and non-renewable energy use, as well as opportunities to reduce overall energy consumption—another core mitigation measure. Both standards are fully aligned with the GHG Protocol, ensuring streamlined, decision-useful reporting for stakeholders, including investors. To enhance interoperability, GRI allows the use of equivalent disclosures from IFRS S2—specifically on Scope 1, 2, and 3 GHG emissions—to meet GRI requirements, provided the disclosures use the GHG Protocol and clearly reference their location. This approach reduces duplication, lowers compliance burden, and promotes consistency across reporting frameworks.
GRI finalizes Sustainability Taxonomy
The GRI Sustainability Taxonomy uses XBRL format, language, and digital tagging. This helps investors, regulators, and others easily access sustainability data. It supports both automatic and manual webform reporting. The system allows for consistent and comparable data across organizations. It aligns with standards like ESRS, ISSB, and the full GRI Standards (Universal, Topic, and Sector). Reported data is verified in real time to ensure it is complete. Outputs are available in XBRL, iXBRL, Excel, and PDF formats.
Europe
European Commission adopts ‘quick fix” amendments delaying CSRD reporting for large companies
The ‘Stop the Clock’ Directive, part of the Omnibus package, aims to streamline and simplify reporting requirements and ensure proportionality of burden. The European Sustainability Reporting Standards ‘quick-fix’ delegated act postpones reporting requirements for wave one companies by two years. It also introduces phase in provisions for wave one companies extending disclosures on topics relating to biodiversity (ESRS E4), workers in the value chain (ESRS S2), own workforce (ESRS S1), affected communities (ESRS S3), consumers and end-users (ESRS S4). Wave one companies with up to 750 employees may also omit Scope 3 emissions reporting until 2027. The ‘quick fix’ delegated act includes a safeguard provision, which provides that companies using temporary exemptions must summarize information on disclosure topics that are deemed material. Meanwhile, Omnibus discussions are ongoing to raise the employee threshold for wave one companies to 1,000, potentially narrowing the scope of entities subject to the CSRD. As part of the legislative procedure, the European Parliament and Council may object within the next two months. If there is no objection, the ‘quick fix’ amendments will become effective. In parallel, the European Financial Reporting Advisory Group (EFRAG) has published proposed amendments to ESRS 1, aiming to reduce reporting requirements by approximately two-thirds in order to significantly ease the compliance burden.
European Commission to launch call for evidence on an Environmental Omnibus
The new environmental omnibus is part of a simplification package expected to include the EU Deforestation Regulation (EUDR) and laws related to Extended Producer Responsibility (EPR) obligations. In May, the Commission published a single market strategy indicating its intention to ‘facilitate compliance’ with environmental legislation, in particular EPR obligations while ensuring that the changes do not create new obstacles or barriers to trade within the EU market.
European Supervisory Authorities (ESA) release Joint Guidelines on ESG integration in Supervisory Stress Testing
On 27June 2025, the European Banking Authority (EBA), European Insurance and Occupational Pensions Authority (EIOPA), and European Securities and Markets Authority (ESMA) published Guidelines for EU competent authorities overseeing banking, pension, and insurance institutions to integrate ESG risks into supervisory stress testing. The Guidelines may be incorporated into the broader supervisory stress testing framework or used ad hoc during adverse scenarios to measure the impact of ESG risks, where applicable under sectoral legislation. Competent authorities are encouraged to define a clear objective and scope for stress testing—by portfolio, geography, and sector. The two types of stress testing outlined are:
1. Short-term horizon (<5 years): Focus on capital and liquidity risks and financial entities’ loss-absorbing capacity under ESG-linked shocks.
2. Medium to long-term horizon: Assessment of business model resilience against a range of ESG-related scenarios.
A materiality assessment is central to both approaches. Authorities should evaluate exposure to transition and physical risks and consider ESG impacts across traditional risk categories (e.g. credit, market, operational, reputational, strategic). Methodologies should include quantitative and qualitative thresholds aligned with key regulations and standards. The Guidelines propose a phased ESG risk integration—starting with climate and environmental risks, followed by social and governance risks, depending on data maturity and model sophistication. While not covering the entire financial sector, the Guidelines emphasize interconnections and spillover effects, highlighting the role of stress testing in identifying sector-wide vulnerabilities, facilitating data sharing, and mitigating blind spots. Competent authorities are expected to ensure adequate capacity—resources, data, IT infrastructure, and expertise—for effective supervisory stress testing. Comments on the Joint Guidelines may be submitted via the EU Survey link by 19th September 2025.
EU adopts Taxonomy Simplification Measures to cut red tape for reporting companies
The updated Taxonomy framework introduces a materiality threshold which would exempt both financial and non-financial entities from assessing activities accounting for less than 10% of revenue, Capex or Opex. Additionally, non-financial entities are exempt from disclosing Opex alignment metrics if non-material. In line with the proposed changes to the EBA Pillar 3, the Taxonomy Simplification Report outlines a simplified Green Asset Ratio (GAR), making it optional to disclose detailed KPIs for up to 2 years. Overall, the reporting templates have been downsized by 64% for non-financial entities and 89% for financial entities. The Simplification Measures also include Simplified pollution prevention DNSH criteria for the chemicals sector. The Simplification Measures were adopted as part of ‘Omnibus I’ Delegated Act in July 2025. The set of measures will start applying from 1 January 2026 (for FY 2025). Firms are also given the option to defer applying the measures to FY 2026.
EU Green Claims Directive legal status unclear
The fate of the Green Claims Directive remains hanging in the balance as an earlier proposal to withdraw the Directive was dropped following the cancellation of a final round of parliamentary negotiations. Members of the European Parliament (MEPs) expressed concerns about the compliance burden on micro-enterprises, even though the European Commission has already agreed to exclude these companies from the regulation scope. The European Commission later issued a statement clarifying that the Green Claims Directive was not withdrawn, standing firm in its commitment to prevent greenwashing and advance consumer protection practices. However, the future scope of the regulation may be open to discussion during future negotiations at the European Parliament.
Swiss Climate Ordinance Paused
The Federal Council has paused revisions to its climate reporting law amid Omnibus changes and clarifications. The Swiss Climate Ordinance, which came into effect in 2024, requires TCFD-aligned reporting from 2025. In December 2024, the Swiss Federal Council proposed mandatory net-zero aligned roadmaps for disclosing entities, including financial institutions, reinforcing Switzerland’s commitment to achieve net zero by 2050, also cemented by the Swiss Climate and Innovation Act. The revisions additionally emphasize regulatory alignment with the EU’s CSRD and the global ISSB sustainability reporting regimes to minimize compliance burden and enable fair trading for Swiss companies. The Federal Council will pause implementation of the climate disclosure bills until it has greater clarity on the Omnibus simplifications, with expected amendments to the bill to be finalized by 1 January 2027.
United Kingdom
UK publishes Exposure Drafts of ISSB-aligned reporting standards
On 25 June 2025, the UK Government launched a consultation on draft UK Sustainability Reporting Standards (UK SRS). The UK SRS S1 and SRS S2 incorporate the IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosure Standards, respectively, with six targeted amendments to reflect UK-specific considerations.
1. Amendment 1 removes transition relief which would allow entities to defer reporting sustainability information relative to financial statements by one year. Since UK companies are already accustomed to TCFD-aligned reporting, companies face proportionate burden to report under the new standards. The amendment also ensures connectivity between financial and sustainability disclosures.
2. Amendment 2 recommends extending the transition relief period defined in the ISSB’s “climate first approach” from one to two years. This means that although entities may voluntarily disclose all climate and sustainability-related information under UK SRS 1 and UK SRS 2, they would only be formally required to report limited climate information in year 1, including GHG emissions (except scope 3). In year 2, the Standards would require mandatory reporting of Scope 1, 2 & 3 emissions, followed by reporting of climate and wider sustainability and climate-related risks in year 3.
3. Amendment 3 removes the requirement to use the Global Industry Classification System (GICS) – offering flexibility to the standard users.
4. Amendment 4 removes the “effective date” with actual application dates to be set by in accordance with future legislation or the UK Financial Conduct Authority (FCA) rules. The SRS will be voluntarily adopted first with effective dates to be confirmed later.
Other amendments include technical considerations (e.g., references to SASB within the reporting framework) and the treatment of transition reliefs once reporting requirements are mandatory. In addition, there remains ongoing debate on the requirement to disclose financed emissions. The UK Government is seeking feedback on the proposed standards until 17 September 2025.
UK Green Taxonomy plans scrapped
The UK Green Taxonomy was originally proposed as a central component of the country’s sustainable finance framework. Like other taxonomies developed globally, its goal is to serve as a classification system to identify environmentally sustainable economic activities and guide capital towards the transition to a greener economy. However, during the public consultation, only 45% of respondents saw clear value in the Taxonomy. The remaining 55% raised concerns about its practical implementation, high costs, and alignment with existing global taxonomies. Many also questioned whether the Taxonomy would conflict with or distract from other key UK initiatives, such as the UK SRS, transition plans, and net zero targets.
Asia-Pacific
Malaysia launches consultation on national sustainability assurance framework
The Advisory Committee on Sustainability Reporting (ACSR), chaired by the Securities Commission Malaysia (SC), is tasked with – the adoption and use of the ISSB standards and development of a sustainability assurance framework for Malaysia. The consultation has proposed the adoption of the ISSA 5000 to enhance the credibility, reliability and usability of sustainability disclosures, in turn strengthening investor confidence. The proposed Framework seeks to establish oversight over sustainability assurance providers, introduce competency requirements for the sustainability assurance engagement leader and a timeframe for external reasonable assurance of sustainability information (Scope 1, 2 & 3 GHG emissions and core IFRS S1 contents). The ACSR has invited feedback from listed and large non-listed companies with annual revenue of RM2 billion and above in scope. Stakeholders, including sustainability assurance providers and the investor community is encouraged to contribute insights to further enhance framework development.
Japanese FSA publishes Action Programme for Corporate Governance Reform 2025
The Action Programme highlights the importance of management awareness and board oversight of sustainability-related issues, particularly in connection with reporting obligations under Japan’s ISSB-aligned Sustainability Standards (SSBJ). The connectivity between financial and non-financial information is considered essential. Reporting requirements under SSBJ will be phased-in with Primate Market companies (market cap of 3 trillion yen or more) to report first by 2026. The FSA is additionally considering mandatory assurance of sustainability statements wand a fully-fledged system for oversight of assurance providers. To support effective sustainability disclosures, discussions are ongoing around harmonization with global standards, addressing legal liability concerns, and potentially introducing safe harbour provisions to encourage transparent, material non-financial reporting, including in areas like human capital where the ISSB is launching new research.
Other News & Resources
TNFD releases additional guidance for the Water utilities & Services sector. Read more
GRI publishes proposed disclosure standards for the fashion industry. Read more
California Air Resources Board releases FAQs on corporate climate reporting laws. Read more
