News

ESG Focus: UK/EU/International ESG Regulation Monthly Round-Up – November 2025

03 December 2025

This month’s ESG Regulation Monthly Round-Up provides a number of updates from the UK, EU and the US. In the UK, we have seen updates from the Transition Finance Council and ESG ratings regulation. In the EU, we have seen significant movement on the omnibus simplification package and developments on the EU Deforestation Regulation and EU Sustainable Finance Disclosure Regulation. Further afield, California climate-related financial risk disclosures are no longer due on 1 January and we have seen various updates from the Taskforce on Nature-related Financial Disclosures (“TNFD”) and ICMA Climate Transition Bond Principles.

In this issue:

Chapter 1: EU omnibus simplification package

Chapter 2: UK developments

Chapter 3: EU Developments

Chapter 4: International developments

Chapter 1: EU omnibus simplification package

The EU omnibus simplification package for sustainability reporting and due diligence is still very much in the news with a number of twists and turns and changes of direction evident in negotiating positions. Below we set out what has happened this month. We are expecting the final position to be agreed before the end of the year.

a. EU Omnibus I simplification package enters trilogue stage with resolution expected before the end of the year

On 13 November 2025, the European Parliament adopted its negotiating position on the EU Omnibus I simplification package and on 18 November 2025, the trilogue negotiation stage began. We set out the negotiating positions of the Commission, Parliament and Council on the amendments to the Corporate Sustainability Reporting Directive (“CSRD”) and the Corporate Sustainability Due Diligence Directive (“CSDDD”) in the summary tables included here as well as provide a more detailed explanation of what has happened so far and what to expect next here.

b. EU Ombudsman publishes recommendations on European Commission procedure including compliance with ‘Better Regulation' rules

Following complaint from a number of parties about the application of the ‘Better Regulation rules to the omnibus simplification amendments which are currently being negotiated in the EU, on 24 November 2025 the EU Ombudsman published a recommendation.

The EU Ombudsman “found a number of procedural shortcomings in how the Commission prepared the [omnibus] legislative proposals that, taken together, amount to maladministration”. In particular she found that the Commission adopted a ‘broad interpretation of ‘urgency’’ to enable derogation from the application of the Better Regulation rules and had failed to sufficiently justify and document its derogations.

She made two recommendations, including defining ‘urgent situations’ that justify a derogation from the Better Regulation rules and establishing ‘a procedure to ensure that the urgent preparation of legislative proposals still complies with the principles of a transparent, evidence-based and inclusive law-making process’.

c. “Quick fix” for Wave One companies reporting under CSRD becomes effective

In other news, the “quick fix” delegated act was published in the Official Journal on 10 November 2025 and was effective from 13 November 2025 for financial years beginning on or after 1 January 2025. Read more about the “quick fix” here and here.

d. Call for evidence on EU Taxonomy

On 7 November 2025, the European Commission opened two calls for evidence for the review of the EU Taxonomy Climate and Environmental Delegated Acts. The purpose of the calls for evidence is to inform the Commission’s review of the EU Taxonomy's technical screening criteria, which it committed to as part of the Omnibus simplification package. The deadline for feedback is 5 December 2025.

Chapter 2: UK Developments

Whilst we await the UK regulatory initiatives grid and the expected deluge of publications which are traditional at the end of the year, there have not been many publications from the UK government this November. However, the FCA has published a proposal for bringing ESG ratings inside the UK Financial Conduct Authority’s (“FCA”) regulatory perimeter and the opening of a second consultation from the Transition Finance Council.

ESG ratings regulation

On 1 December 2025, the FCA published a consultation paper on ESG ratings: proposed approach to regulation. The consultation follows the decision by the UK Government to bring ESG ratings within the FCA regulatory perimeter. Regulation of ESG ratings aims to increase transparency, improve governance, identify and mange conflicts of interest as well as setting clear expectations for stakeholder engagement and complaints handling. There are also proposals to apply existing rules to new firms coming into the FCA’s remit. The consultation is open under 31 March 2025. The anticipated timetable sees the final rules becoming available in Q4 2026 with the regime coming into effect from June 2028.
Transition Finance
1. UK Financial Conduct Authority (“FCA”) published speech on raising standards in transition finance: The FCA has published a speech made by Alicia Kedzierski, Head of Department, Sustainable Finance Division of the FCA at the Loan Market Association's Sustainable Finance Conference on 5 November 2025 regarding the need for clarity, coherence and collaboration in transition finance.
2. Transition Finance Council (“TFC”) opens second consultation: On 3 November 2025, the TFC launched its second consultation on its draft entity-level Transition Finance Guidelines. The consultation runs for 12 weeks and closes on 30 January 2026. Final publication of the Transition Finance Guidelines is planned for Spring 2026. This second consultation offers another opportunity for international input.

Chapter 3: EU Developments

In parallel with the omnibus simplification package work continuing in the EU, we have also since developments on the review of the Sustainable Finance Disclosure Regulation (“SFDR”) and EU Deforestation Regulation (“EUDR”) this month.

Sustainable Finance Disclosure Regulation (“SRDR”) review
On 20 November 2025, the Commission published its much anticipated proposal to amend the SFDR.

The key elements of the proposal include removal of entity-level disclosures, significant reduction in product-level disclosures and the introduction of a categorisation system (Sustainable, Transition and ESG basics) and deleting the definition of “sustainable investment” under the SFDR. The proposed SFDR will not become law until negotiated by the co-legislators and implemented in law. Read more here.

In addition, on 4 November 2025, the European Supervisory Authorities (the ESAs) published an updated version of their questions and answers. The updated version can be found here.
EU Deforestation Regulation (“EUDR”) – Key Updates
1. Council adopts its negotiating position: On 19 November 2025, the Council of the European Union adopted its negotiating position on the delay of the EUDR. It proposes a 12 month postponement (18 months for micro and small operators) and a review by 30 April 2026 to evaluate the impact and administrative burden of the EUDR. Read here for more detail.
2. Parliament adopts its negotiating position: On 26 November 2025, the Parliament voted in favour of a one year postponement and simplification of the EUDR. Read here for more detail.
EU greenwashing update
There have been a couple of key greenwashing updates this month which we highlight below.
1. Paris Judicial Court’s judgment gives guidance on what constitutes misleading environmental claims: In a judgment dated 23 October 2025, the Paris Judicial Court ruled on whether an energy companies’ publication of communications on its Group’s website constituted misleading commercial practices likely to deceive consumers on the scope of the company’s environmental commitments. Read more here.
2. Twenty-one European airlines agree to modify their practices regarding environmental claims following dialogue with the Commission and national consumer protection authorities: In a press release published on 6 November 2025, the European Commission announced that twenty-one airlines have committed to change their practices regarding environmental claims that were considered misleading by the Consumer Protection Cooperation Network. National consumer protection authorities will monitor, and enforce where necessary, the correct and timely implementation of these commitments as agreed with each airline.The press release sets out the types of commitments which were discussed with the airlines.

Chapter 4: International developments

California’s mandatory climate-related financial risk reporting law (SB 261) stayed

California's mandated climate-related financial risk disclosures are no longer due on 1 January 2026, due to court order. On 18 November 2025, the Ninth Circuit Court of Appeals issued an order staying California's climate-related financial risk reporting law (SB 261) pending a hearing on the merits of an appeal challenging the lower court’s denial of a preliminary injunction related to the law.

That hearing is scheduled for 9 January 2026. The order does not halt SB 261's companion greenhouse gas emissions reporting law, SB 253, which is also being challenged before the Ninth Circuit. Read more here.
TNFD updates
1. TNFD supports ISSB work on nature-related disclosures: On 7 November 2025, the International Sustainability Standards Board (“ISSB”) signalled that it will introduce new or modified disclosure requirements to meet common investor information needs following the findings of its biodiversity, ecosystems and ecosystem services (BEES) research on nature-related risks and opportunities.
  On this basis, the Taskforce on Nature-related Financial Disclosures (“TNFD”) has announced that it will not commence any further technical guidance and will focus technical expertise on supporting ISSB’s work programme. Subject to the outcome of ISSB’s work, TNFD will likely conclude its technical work on nature-related issues in 2027.
2. TNFD publishes Guidance on nature in transition plans: On 5 November 2025, the TNFD published Guidance on nature in transition plans. The guidance is intended to break “down the process of aligning with the goals and targets of the Kunming-Montreal Global Biodiversity Framework (“GBF”) into a coherent set of forward-looking strategies, actions and accountability mechanisms, built into the organisation’s main business strategy”.
The International Capital Market Association (“ICMA”) publishes guidance for Climate Transition Bonds

On 6 November 2025, ICMA announced issuance-level guidance that supplements entity-level practices, actions and disclosures recommended by the Climate Transition Finance Handbook for issuers of sustainable bonds raising funds for their Climate Transition Bonds. The new guidelines (the “Climate Transition Bond Guidelines”) introduce a new standalone Climate Transition Bond label ‘designed to help (re)finance critical projects for achieving the goals of the Paris Agreement, especially from those in high-emitting sectors and/or with high-emitting activities’.

The Climate Transition Bond Guidelines can be found here and the newly issued Climate Transition Finance Handbook can be found here.

Our global Sustainable Finance & Investment group brings together a multidisciplinary global team that provides clients with best-in-market support. We are following developments relating to ESG regulation, so please get in touch if you would like to discuss.

Stay ahead with timely curated developments, insights and thought leadership on ESG regulation with our ESG Regulatory Alerts tool.

This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.

Authored by Rita Hunter, Emily Julier and Teofisto Consistente VI.