Sustainability Reporting & ESG

EUDR: POTENTIAL POSTPONEMENT

The European Commission is considering a postponement of the entry into application of the EU Deforestation Regulation (EUDR) by one year, citing capacity issues with the IT systems used to process due diligence statements. If approved, this delay would push the implementation date to 30 December 2026.

This would be the second postponement of the EUDR, which was originally due to take effect from 30 December 2024 but was delayed by 12 months last year.

The EUDR aims to tackle deforestation and forest degradation by regulating the placement and export of certain products within the EU market. It imposes supply chain due diligence obligations on operators and traders of relevant commodities (cattle, cocoa, coffee, oil palm, rubber, soya and wood) and specified derived products.

OMNIBUS AMENDMENTS TO CSRD AND CSDDD

The European Parliament is expected to adopt its negotiating position on the Omnibus proposals amending the CSRD and CSDDD later this month, with the position likely to include an increase in the employee threshold for the purposes of CSRD scope. Trilogue negotiations between the Council and Parliament are anticipated to begin in November, and there remains strong political will to reach agreement on the final text by the end of this year.

EFRAG’s public consultation on exposure drafts of the revised ESRS closed on 29 September. Feedback on the exposure drafts will form part of EFRAG’s technical advice to the European Commission on revision of the ESRS, which is due to be delivered by 30 November 2025.

CBAM: SIMPLIFICATION AND IMPLEMENTATION

The Carbon Border Adjustment Mechanism (CBAM) applies to certain goods being imported into the EU (in the categories of cement, iron and steel, aluminium, fertilisers, electricity and hydrogen) and is designed to apply the same carbon costs to those goods as would have been incurred had they been produced in the EU.

The Council has formally adopted a regulation amending the CBAM as part of the Sustainability Omnibus package. A key change is the introduction of a de minimis exemption for importers of less than 50 tonnes of CBAM goods per year, alongside streamlined compliance obligations, as outlined in our update: Carbon Border Adjustment Mechanism.

CBAM will take full effect from 1 January 2026, and the European Commission is currently finalising Implementing Regulations to support its effective operation from this date. For more see our recent update: CBAM: Consultation on Implementing Regulations.