Policy Digest: May 2025

INTERNATIONAL

IFRS Foundation launches Roadmap Tool to support jurisdictional adoption of standards

The new tool builds on the concepts introduced in the Inaugural Jurisdictional Guide, providing regulators with practical support to navigate the adoption and implementation of the ISSB Standards. It is designed to help them develop a clear roadmap tailored to their national or local context. The ISSB has released a series of educational materials and tools aimed at promoting the adoption of consistent and comparable sustainability disclosure standards across jurisdictions. The Roadmap Tool encompasses further detail on the following:  

1. Regulatory process for adoption or otherwise use of the IFRS S1 and S2 standards.  

2. Reporting entities within scope, and therefore subject to reporting requirements.

3. Content, format and presentation of disclosed sustainability-related information.

4. Applicability and enforcement dates, as well as the case for scaling in and phasing in the requirements.  

Alongside the new Roadmap Tool, the IFRS Foundation has also published templates illustrating the jurisdictional approaches outlined in the Inaugural Jurisdictional Guide. These templates serve as a reference for jurisdictions and implementation partners, helping them understand how their decisions—and the resulting outcomes—may be interpreted by stakeholders and represented by the IFRS Foundation. Read more

EUROPE

EU approves ‘stop the clock’, delaying CSRD and CSDDD implementation by two years

MEPs have voted to delay key elements of the EU’s sustainable finance agenda—specifically, the CSRD and CSDDD—as part of the broader Omnibus package introduced by the European Commission in February 2025. The so-called “stop-the-clock” move aims to ease compliance burdens, with the Commission estimating over €6 billion in reduced administrative costs through the following next steps:  

• CSRD: A two-year postponement for the second and third waves of in-scope companies. Large companies (250+ employees) will now report in 2028, while listed SMEs will begin in 2029.

• CSDDD: A one-year delay in transposition, with large companies (5,000+ employees and €1.5bn+ turnover) and mid-sized companies (3,000+ employees and €900m+ turnover) now applying the rules from 2028.

• Member States must transpose the final directive into national law by 31^st December 2025, once the legal text is agreed.

• Broader Omnibus amendments which are still under negotiation.

Despite the delay, the Commission has reaffirmed its sustainability ambitions. Many companies originally within scope of the CSRD are continuing voluntary alignment with ESRS, raising the question: Will CSRD be stopped dead in its tracks by the proposed legislative timeline?  Read more  

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EFRAG issues public call for input on ESRS Set 1 Revision

The consultation follows the release of the Omnibus Package, which mandates EFRAG to provide technical advice for the adoption of a delegated act aimed at simplifying the current version of the ESRS to reduce the reporting burden. EFRAG estimates the new standards will be released by 31^st October 2025.  

The public consultation, which closed on 6th May 2025, seeks feedback on the simplification of the ESRS standards covered in the Omnibus proposal—primarily to identify challenges and pain points related to mandatory ESRS datapoints, the need for further clarification and guidance, interoperability with related EU and global regulations, and the content and presentation of sustainability disclosures.  

More recently, EFRAG’s Sustainability Reporting Board (SRB) voted to reject its internal work plan for ESRS simplification, delaying alignment with the European Commission’s timeline and reflecting deeper reservations among SRB members about the necessity and direction of the proposed changes under the Omnibus Directive. Read more

Platform on Sustainable Finance refines technical criteria for new activities, Climate Delegated Act

The report recommends amendments to the technical screening criteria of economic activities covered under the Climate Delegated Act, focusing on transitional activities for which Taxonomy Regulation mandates a review once in three years. Additionally, it clarifies eligibility criteria for an expanded list of economic activities relating to climate change mitigation and adaptation objectives. There is a new Do No Significant Harm (DNSH) criterion for activities included in Annex II of the Climate Delegated Act, labelled ‘adapted activities’.  Read more

European Commission simplifies implementation of the EU Deforestation Regulation

On April 18^th 2025, the European Commission published a Guidance document and a set of FAQs clarifying the scope of the regulation with the aim of minimising the compliance burden for SMEs and small-scale farmers. Key simplifications include an annual due diligence statement rather than for each shipment of batch and a six-month grace period, with compliance beginning in mid-2026 for SMEs. SMEs will also be exempt from the external reporting requirements on due diligence systems, which applies to large companies, and from submitting duplicate due diligence statements if an upstream operator has already done so. Geolocation requirements also remain, but parcels smaller than 4 hectares can be geolocated simply via a Google Maps pin.  

The EUDR is a key legislative reform to address nature-related risks in the supply chain. The law bans the sale of deforestation-linked products in the EU, imposing due diligence obligations on companies and suppliers dealing with commodities such as palm oil, cattle, soy, coffee, cocoa, timber and rubber, along with by-products. Despite political pushback, the regulation will apply to large companies in scope (EU and non-EU supply chains) from December 30^th 2025. Read more

ESMA recommends simplification of EU Benchmark Regulation disclosure requirements

This report summarises the findings of the Common Supervisory Action (CSA) on the regulatory burden associated with the EU Benchmarks Regulation (BMR). In response, ESMA is proposing amendments to the BMR Level 2 measures to enhance clarity and improve the comparability of ESG disclosures for benchmark users. The aim is to create more standardised and streamlined reporting requirements that align with key sustainable finance frameworks, particularly the European Sustainability Reporting Standards (ESRS).  

Specifically, the report recommends the following amendments to the ESG disclosure obligations in Annex II:  

1. Environmental: clarification on the calculation and disclosure of the share of Scope 1, 2 & 4 GHG intensity to improve comparability.

2. Social: changes and clarifications to controversies, gender and employee well-being reporting metrics to align with the ESRS framework.

3. Governance: replacing existing gender metrics with a single ‘Board gender diversity’ factor, aligned with ESRS and with a clear calculation method.

Given ESMA's role in providing technical advice and the potential need for amendments to Level 2 measures under the BMR, the process will likely include a public consultation and multiple rounds of stakeholder feedback. Any formal changes would then be adopted through delegated acts by the Commission, meaning implementation is unlikely before late 2025 or 2026. The timeline also depends on how quickly ESMA finalises its assessment and the Commission initiates the legislative process for ESRS simplification. Read more  

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Germany to abolish national supply chain legislation

Following a coalition agreement reached after the German federal elections, plans were made to eliminate the reporting provisions under the Lieferkettensorgfaltspflichtengesetz (LkSG).The German Supply Chain Act, which has been in effect since January 1st, 2023, mandates large German companies and foreign companies with a branch in Germany to ensure their suppliers comply with due diligence obligations.  

The Act will soon be replaced by a new law aligned with the EU Corporate Sustainability Due Diligence Directive (CSDDD) to streamline reporting requirements and minimise the administrative burden on large companies in scope. The exact timeline for the revocation of the LkSG is still uncertain. Read more

UNITED KINGDOM

UK backpedals on D&I rulemaking for financial sector

UK regulators – the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) – recently backtracked on a joint commitment to reinforce Diversity & Inclusion (DEI) in the financial services sector. The plans were dropped following a 2023 consultation on a proposed framework that would have required firms to establish an actionable D&I strategy and a board with oversight functions to ensure measurable goals and targets were met. While the FCA and PRA acknowledged the benefits of D&I as a mechanism for improving internal governance and risk management, several industry respondents pointed out duplicative efforts on enforcing D&I strategy, implying undue compliance costs. This comes against the backdrop of DEI being under attack across U.S. institutions—with the Supreme Court striking down Harvard’s affirmative action policy in college admissions, and President Trump issuing an executive order declaring DEI an ‘illegal’ practice in federal contracting.  Read more  

NORTH AMERICA

US SEC Climate Rule ceases defense of climate-risk disclosure rule

The SEC announced it will stop defending its climate-risk disclosure rule in court. Approved in March 2023 after nearly two years of revisions, the final rule dropped the proposed Scope 3 emissions disclosure and limited Scope 1 and 2 disclosures to fewer companies. The SEC stayed the rule in April 2025 following legal challenges. Meanwhile, the House has introduced a bill targeting the extraterritorial reach of the EU’s Corporate Sustainability Due Diligence Directive (CSDDD). Read more

NY introduces mandatory GHG emissions reporting for high emitting entities

The bill would require entities emitting 10,000 metric tons or more of CO₂e to report their emissions to the Department of Environmental Conservation (DEC) starting in 2027, covering 2026 data. A similar initiative—the Climate Superfund Act—was signed into law by Governor Kathy Hochul in December 2024, allowing New York State to recover financial damages from fossil fuel companies for climate-related impacts. With the SEC’s climate reporting rule indefinitely halted, states are stepping in to fill the policy vacuum and establish rules-based systems for climate risk disclosure. Read more

Canada releases guidance to support alignment with the Canadian Sustainability Disclosure Standards (CSDS)

In March 2025, the Office of the Superintendent of Financial Institutions (OSFI) announced updates to its climate-related financial disclosure expectations for federally regulated financial institutions (FRFIs) through Guideline B-15. These updates align OSFI's expectations with the CSDS released by the Canadian Sustainability Standards Board (CSSB) in December 2024. Key changes include revised implementation dates for disclosing Scope 3 greenhouse gas emissions—set for fiscal years 2028 and 2029 for on- and off-balance sheet assets under management, respectively—and clarifications on disclosure expectations for assets under management. The updated Guideline B-15 is scheduled for release in late March 2025. Read more

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ASIA-PACIFIC

Australia regulator releases new guide for companies beginning mandatory sustainability reporting

Australia’s financial regulator has released a new implementation guide to support companies as they prepare for the country’s incoming mandatory climate-related financial disclosure regime. Adopted in January 2025, the new requirements align with the International Sustainability Standards Board (ISSB) framework and are part of Australia’s broader effort to position itself as a global leader in sustainability reporting.  

The regime will be introduced in phases, with Group 1 entities—comprising the largest and most economically significant companies—required to begin reporting for financial years starting on or after 1^st January 2025. The guidance is designed to help these entities understand key expectations, timelines, and disclosure obligations under the new standards. It emphasises governance, strategy, risk management, and metrics and targets related to climate risks in line with ISSB’s IFRS S2 climate disclosure standard. The phased approach aims to ensure a smooth transition, with future groups being brought into scope over time. Regulators note that early planning and capacity building will be critical to compliance, particularly as assurance requirements are expected to increase in later phases. Read more

SEBI expands ESG disclosure norms to key value chain partners, introduces voluntary green credit reporting

The Securities and Exchange Board of India (SEBI) has issued a circular to revise ESG disclosure rules for listed companies, notably expanding the scope of reporting to include key value chain partners—defined as suppliers and customers contributing 2% or more to a company’s purchases or sales. While reporting may be limited to 75% of total transactions, the new rules mark a significant step toward aligning India’s ESG framework with global standards. The updated norms will apply voluntarily to the top 250 listed entities starting FY 2025-26, with assessments beginning in 2026-27. SEBI also introduced green credit disclosures to support the national Green Credit Programme and has allowed a phased rollout to ease the burden on smaller supply chain actors. Read more  

Thailand SEC proposes Sustainable and Responsible Investing Fund Disclosure Regime

The Securities and Exchange Commission (SEC) of Thailand is inviting public comments on a proposed regulation introducing disclosure obligations for a sustainable fund labelling regime—the Sustainable and Responsible Investing Fund (SRI Fund). The initiative aims to enhance transparency in ESG integration for both retail and institutional investors, helping meet their evolving investment needs. The proposed disclosure requirements are designed to align with regional and international frameworks, such as the Hong Kong Securities and Futures Commission’s Circular to management companies of SFC-authorised unit trust and mutual funds (ESG funds).  

Under the draft regulation, SRI Funds would be required to include in their prospectus and factsheet details such as the fund name, investment policy, investment strategies, and alignment with internationally recognised sustainability frameworks, including the UN Global Compact Principles and the UN Sustainable Development Goals.  

The regulation also mandates semi-annual and annual reporting, which must include a description of how the fund has pursued its stated sustainability objectives during the reporting period, and the asset manager’s tangible measures to achieve achieving the fund’s sustainability goals, including, but not limited to, shareholder engagement, proxy voting records, and other stewardship activities. Read more

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MIDDLE EAST & AFRICA

Kenya launches green finance taxonomy and climate risk disclosure framework

On 4^th April 2025, the Central Bank of Kenya (CBK) released two landmark resources to support sustainable finance in the country: the Kenya Green Finance Taxonomy and the Climate Risk Disclosure Framework. These finalised documents follow a public consultation process on earlier draft versions and mark a significant step forward in aligning Kenya’s financial system with climate goals and global best practices. The Green Finance Taxonomy provides a classification system to guide investment towards environmentally sustainable activities, while the Climate Risk Disclosure Framework offers guidance to financial institutions on identifying, assessing, and disclosing climate-related risks. Together, these tools aim to enhance transparency, support risk-informed decision-making, and channel capital toward Kenya’s green transition. Read more

Other News & Resources:

• EFRAG publishes CDP to ESRS mapping. Read more  

• International Association of Insurance Supervisors releases Application Paper on the supervision of climate-related risks in the insurance sector. Read more

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