Sustainability Reporting & ESG
EUDR: COUNTRY BENCHMARKING AND SIMPLIFICATION
The EU Deforestation Regulation (EUDR) will apply from 30 December 2025 and imposes supply chain due diligence obligations on operators and traders of relevant commodities (cattle, cocoa, coffee, oil palm, rubber, soya and wood) and certain derived products. These commodities and products are prohibited from being placed on, made available to, or exported from the EU market unless covered by a due diligence statement confirming that they are “deforestation free”.
Country Risk Classification
The European Commission has adopted an Implementing Regulation under the EUDR, which classifies countries according to their risk of deforestation when producing the relevant commodities covered by EUDR. The classification, which determines the scope of due diligence obligations and compliance checks, comprises three categories: “low risk” “standard risk” and “high risk.” All EU Member States, the UK, the US, Canada, China, Japan, Australia, and South Africa are amongst the countries designated as low risk. Belarus, Myanmar, North Korea, and Russia have each been categorised as high risk. All remaining countries are designated as standard risk.
EUDR Simplification Measures
The European Commission published updated guidance and FAQs on EUDR, introducing a number of simplification measures intended to reduce the number of due diligence statements that companies need to file.
The Commission also published a draft delegated act amending the list of in-scope products in Annex I to the EUDR, focusing on clarification and scope adjustments.
EU SUSTAINABILITY OMNIBUS
“Stop the Clock”
The “stop the clock” directive entered into force on 17 April 2025 with a transposition deadline of 31 December 2025. The directive postpones the reporting deadlines under the Corporate Sustainability Reporting Directive (CSRD) for “wave 2” and “wave 3” companies by two years and transposition and first application of the Corporate Sustainability Due Diligence Directive (CSDDD) by one year. Irish legislation transposing the “stop the clock” amendments is awaited.
For more information see our Insights: EU Stops the Clock for CSRD and CSDDD.
“Quick Fix” Proposal
The “stop the clock” directive does not postpone CSRD reporting requirements for “wave 1” companies.
The European Commission has proposed a “quick fix” delegated act which would effectively freeze ESRS reporting requirements applicable to wave 1 companies in their first year of CSRD reporting for their 2026 and 2027 reports. The Commission is expected to adopt the “quick fix” delegated act by the end of this month.
Substantive Amendments to CSRD and CSDDD
The “stop the clock” directive is intended to provide additional time for the EU co-legislators to reach agreement on the second proposed directive under the Omnibus package. This proposal sets out substantive amendments to the CSRD and CSDDD, including reducing the scope of the CSRD. The European Parliament and Council are currently in the process of agreeing their respective negotiation positions, with trilogues expected to commence later this year.
ESRS Revision
EFRAG has been tasked with developing technical advice on simplifying the ESRS as part of the Omnibus simplification process. EFRAG agreed its workplan on 25 April 2025 in which it aims to publish Exposure Drafts of the revised ESRS for public consultation by 31 July 2025, following which it will deliver its proposal for simplified ESRS to the European Commission by 31 October 2025.
Simplification of Taxonomy Reporting
Alongside the Omnibus Package, the European Commission published a call for evidence on a draft delegated act setting out proposed amendments to the Taxonomy Disclosures Delegated Act, Taxonomy Climate Delegated Act and Taxonomy Environmental Delegated Act aimed at simplifying and improving the Taxonomy reporting framework. The consultation closed on 26 March 2025. The European Commission intends to adopt the amendments by the end of this month, which are intended to apply from 1 January 2026. Once the Commission has adopted the delegated act, the European Parliament and Council will have four months (which can be extended by a further two months) to formally object.