Welcome to the latest edition of our monthly Global Sustainability & ESG Insights providing you with a summary of the key developments from around the world.

Global

Material on IFRS S2 Climate-related Disclosures published

On May 29, the IFRS Foundation released educational material on IFRS S2 Climate-related Disclosures, focusing on measuring and disclosing greenhouse gas (GHG) emissions. The Material covers the background of GHG requirements, the use of the GHG Protocol, and specific details of the requirements. It aims to help entities understand and implement IFRS S2 without introducing new requirements.

GRI Launches Consultation to Align Sector Standards with New Topic Standards

On May 15, the Global Reporting Initiative (GRI) opened a consultation to align the existing portfolio of GRI Sector Standards with the new and 21 revised GRI Topic Standards that are being developed under the projects for biodiversity, climate 22 change, labor, and economic impacts. Changes will affect material topics, statements, and reporting expectations but won't include broader revisions. The consultation will close July 13.

VCMI Scope 3 Action Code of Practice published

On April 30, the Voluntary Carbon Market Integrity Initiative (VCMI) published its Scope 3 Action Code of Practice. The VCMI aims to enable high-integrity voluntary carbon markets that benefit the atmosphere, protect nature, and support ambitious climate policies. The Code of Practice provides guidance to help organizations reduce Scope 3 emissions, which are indirect emissions across an organization's value chain. It includes analysis of the emissions gap, use of carbon credits as a temporary measure, and setting a 2040 deadline to address root causes and achieve net zero.

Cross-Border

EU-UK summit

On May 19, the European Commission and the UK government agreed to work towards linking their carbon markets by establishing a connection between their emissions trading systems. This agreement aims to recognize carbon allowances issued by either the EU or the UK as compliant with the other’s greenhouse gas emissions trading system. This initiative is part of a broader set of agreements reached at the first EU-UK summit, covering various areas including security, defense, migration, and energy.

UK/Norway sign Green Industrial Partnership

On May 8, the UK and Norway signed a Green Industrial Partnership to boost clean energy investments in the North Sea, focusing on green hydrogen and offshore wind. This collaboration aims to enhance energy security, create jobs, and support the green transition.

Asia

China

Opinion on enhancing Market-Oriented Allocation and Trading of Carbon, Water, and Pollutant Rights

On May 29, the General Office of the Central Committee published an opinion, focusing on improving the market-oriented allocation system of resources and environmental factors. The key measures include:

  • a transition to total quota control for carbon emissions, water rights, and pollutant discharge
  • to expand industry coverage in the carbon market, develop energy-saving service models, promote unconventional water sources trading, and broaden emission rights trading
  • to promote financial institutions to standardize the disclosure of green finance-related information

Consultation on ISSB Sustainability Disclosure Standard No. 2 Climate-related Disclosures

On May 28, the China’s Ministry of Finance consultation seeking feedback on the draft amendments to the International Sustainability Disclosure Standard No. 2 – Climate-related Disclosures closed. The rules are set to align with International Sustainability Standards Board IFRS S1 and S2 (ISSB) while addressing China-specific priorities.

Hong Kong

Memorandum reducing emission allowances for power plants published

On May 30, the Government published a technical memorandum to reduce emission allowances for power plants from 2030 onwards, aiming to improve air quality. The Memorandum sets new annual emission caps for sulphur dioxide (SO2) at 2,302 tons, nitrogen oxides (NOx) at 8,350 tons, and respirable suspended particulates (RSPs) at 317 tons. The new allowances will take effect on January 1, 2030.

Consultation on Biodiversity Strategy & Action Plan

On May 12, the Government launched a consultation seeking views on updating the national the Biodiversity Strategy & Action Plan. The proposal aims to include implementing area-based conservation measures, restoring degraded habitats, promoting biodiversity-friendly practices across all sectors, and investing in research and talent development.

Gas Safety (Amendment) Bill 2025

On May 12, the Gas Safety (Amendment) Bill 2025 underwent Bills Committee Consideration. The Bill seeks to revise the Gas Safety Ordinance (Cap. 51) to create a regulatory system for the import, production, storage, transportation, distribution, and utilization of hydrogen as a fuel.

Buildings Energy Efficiency (Amendment) Bill 2025

On May 2, the Buildings Energy Efficiency (Amendment) Bill 2025 underwent Bills Committee consideration. The Bill seeks to improve the management of building energy efficiency, introducing several measures to achieve this:

  • setting energy efficiency standards for data centers
  • mandating more buildings to perform regular energy audits
  • reducing the time between successive energy audits
  • requiring the disclosure of technical details in audit reports
  • broadening the qualifications for Registered Energy Assessors

Europe

EU: Commission seeks industry input on critical raw materials recycling

On May 31, the European Commission launched a consultation to promote industry cooperation in procuring and recycling critical raw materials, in line with EU competition rules. This initiative, part of the Clean Industrial Deal Communication, sought feedback on challenges and collaboration opportunities in sourcing, processing, recycling, and re-using critical raw materials. The focus is on 14 critical raw materials essential for sectors like renewable energy and aerospace.

EU: ESMA consultation on the European Green Bond Regulation Technical Standards

On May 30, the European Securities and Markets Authority (ESMA) consultation on the European Green Bond Regulation Technical Standards closed. This consultation requested views on the appropriateness, adequacy, and effectiveness of systems, resources, and procedures for external reviewers. The ESMA is expected to publish the Final Report in Q4 2025 and will submit the draft technical standards to the European Commission for endorsement by December 21, 2025.

EU: CO2 emission standards rules

On May 27, the European Council adopted a proposed a targeted amendment to the CO2 emission standards for new cars and vans, introducing flexibility for manufacturers to meet their targets between 2025 and 2027 by averaging their performance over the three-year period. This measure aims to support the automotive industry's clean transition while maintaining the 2025 targets and ensuring long-term investments. The proposal will now be published in the Official Journal.

EU: Consultation on the Sustainable Batteries Regulation

On May 23, the European Commission opened a consultation on a proposal to delay the due diligence requirements of the Sustainable Batteries Regulation 2023. This regulation requires companies to have policies to manage social and environmental risks related to raw materials in batteries. The proposed changes would:

  • postpone the due diligence obligations by two years, from August 18, 2025 to August 18, 2027
  • delay the deadline for the European Commission to publish guidance on the regulation from February 18, 2025 to July 26, 2026.

The consultation will end on July 23, 2025.

European Parliament votes to endorse CBAM

On May 22, the European Parliament approved the Commission's proposal to streamline the EU carbon border adjustment mechanism (CBAM). This includes a new de minimis mass threshold of 50 tons, exempting 90% of importers, mainly small and medium-sized enterprises and individuals, from strict regulations. The amendments also simplify the authorization process for declarants, the method for calculating emissions, and the management of financial liability, while strengthening anti-abuse measures.

For more information, see our flash update.

EBA Launches Consultation on Enhancing ESG Disclosure Standards

On May 22, the EBA published a consultation paper on draft implementing technical standards, amending Commission Implementing Regulation on public disclosures. These amendments aim to enhance transparency and consistency in disclosures related to ESG risks. The proposals set out to extend the scope of institutions required to disclose ESG information, simplify the reporting process, and align disclosure requirements with the Taxonomy Regulation. The consultation will close on August 22, 2025.

EU: Implementing Regulation under the Deforestation-free Products Regulation published

On May 22, the European Commission published an Implementing Regulation listing low and high risk countries under the Deforestation-free Products Regulation. This Regulation requires companies to ensure that commodities like cattle, cocoa, coffee, palm oil, rubber, soya, and wood are deforestation-free, legally produced, and covered by a due diligence statement before being placed on the EU market. The Annex identifies high risk countries including Belarus, North Korea, Myanmar, and Russia. The US, UK, and additional European Countries are listed as low risk. Countries not listed are classified as standard risk.

EU: ESMA Guidelines on funds’ names using ESG or sustainability-related terms

From May 21, existing funds marketed in the EU using ESG terms in their names must comply with European Securities and Market Authority (ESMA) Guidelines. Published in May 2024, these guidelines have applied to new funds since November 21, 2024, and aim to tackle greenwashing. Under the guidelines, funds using ESG-related terms must allocate at least 80% of investments towards relevant ESG aligned areas. Funds covering certain areas will also be required to follow exclusion criteria per Paris-aligned Benchmarks and commit to making sustainable investments under Sustainable Finance Disclosure Regulation.

For more information, see our flash update.

EU: Omnibus IV simplification package

On May 21, the European Commission published the Omnibus IV simplification package. The package aims to streamline the EU Single Market, including proposals to amend the Fluorinated Greenhouse Gases Regulation (F-gas) and the Sustainable Batteries Regulation. The package limits F-gas portal registration to certain importers and exporters, and postpones due diligence requirements under the Sustainable Batteries Regulation by two years.

EU: Directive amending corporate sustainability reporting and due diligence requirements

On May 20, the European Parliament published its draft opinion on the Directive amending corporate sustainability reporting and due diligence requirements. The proposed Directive aims to:

  • reduce the number of undertakings in scope by approximately 80%, excluding large undertakings with up to 1000 employees
  • simplify and reduce the burden on in-scope companies
  • limit the information in-scope companies can seek from value chain partners
  • avoid sector-specific standards for sustainability reporting
  • reduce obligations for risk mapping and assessment
  • allow flexible disclosure under the Taxonomy Regulation
  • reduce the frequency of periodic monitoring exercises

EU: 2026-2030 gender equality strategy

On May 19, the European Commission launched a consultation on the 2026-2030 gender equality strategy. This new strategy will outline specific actions to advance gender equality, combat gender-based discrimination, and strengthen women's rights. The consultation will close on August 11, 2025, and the final strategy is expected to be adopted in Q1 2026.

EU: Convention on the Protection of the Environment through Criminal Law adopted

On May 14, the European Council adopted the Convention on the Protection of the Environment through Criminal Law. This treaty aims to harmonize criminal justice responses to environmental crimes. It aligns with the EU's revised Environmental Crime Directive and sets minimum standards for offenses. This initiative is part of a broader strategy to address environmental crises through human rights, democratic governance, and the rule of law.

EU: Commission consults on Deforestation Regulation

On May 13, a consultation on a proposal for a delegated regulation to clarify the scope of the EU Deforestation-free Products Regulation (EUDR) ended. It sought views on targeted and limited technical fixes to the list of relevant products covered by EUDR. These suggested revisions aim to ensure a simpler application of the EUDR. The EUDR comes into force for medium and large sized companies on December 30, 2025.

EU: Consultation on sustainable finance disclosure rules

On May 2, the European Commission published a call for evidence on the revision of EU rules on sustainable finance disclosure. The initiative aims at reviewing EU rules on sustainable finance disclosure with the objective of simplifying the framework, enhancing its usability and preventing greenwashing. The feedback period lasts until 30 May 2025.

EU: ESMA consultation on ESG Rating Regulation rules

On May 2, the European Securities and Markets Authority (ESMA) has published a Consultation Paper on draft Regulatory Technical Standards (RTS) under the ESG Rating Regulation. The consultation is seeking views on:

  • details required for authorization and recognition applications
  • measures to address conflicts of interest for ESG rating providers
  • information to be disclosed to the public, rated items, issuers, and users of ESG ratings

The consultation is open until June 20, 2025. The ESMA is expected to submit the draft RTS to the European Commission for adoption by October 2025.

Middle East

United Arab Emirates

Federal Decree-Law on the Reduction of Climate Change Effects

On May 30, the Federal Decree-Law on the Reduction of Climate Change Effects took effect. This law mandates comprehensive measures for managing greenhouse gas (GHG) emissions across all sectors, including free zones. Key provisions include:

  • measuring emissions, preparing an inventory, and submitting periodic reports
  • implementing emission reduction strategies aligned with government guidelines
  • maintaining emissions data records for at least five years
  • encouraging participation in carbon offsetting initiatives

For more information, view our flash update.

Saudi Arabia

Consultation on the Personal Data Protection Law

On May 27, a consultation seeking views on revising the Personal Data Protection Law ended. The consultation sought views on a range of aspects including:

  • the requirement for privacy policies to be written in a clear and simple manner, making them easy for everyone to understand, regardless of their level of knowledge
  • the requirement to obtain consent before sending advertising or awareness materials remains. However, it removes the previous rule that allowed controllers to skip getting consent if they had already interacted with the recipient
  • greater clarity on what a Data Protection Officer (DPO) is responsible for. Additionally, a requirement for affected businesses to enter their DPO's contact information into the National Data Governance Platform

UK

Consultation on revised draft National Policy Statements for energy infrastructure

On May 29, the Department for Energy Security and Net Zero consultation on revised energy national policy statements for major infrastructure ended. The Government were seeking views on the revised energy National Policy Statements, specifically draft updates were made to:

  • EN-1: Overarching National Policy Statement for energy
  • EN-3: National Policy Statement for renewable energy infrastructure
  • EN-5: National Policy Statement for electricity networks infrastructure

The Government are yet to respond to the consultation.

UK: Consultation on the International Standard on Sustainability Assurance (ISSA) 5000

On May 29, the Financial Reporting Council released a consultation paper on a proposed UK version of the International Standard on Sustainability Assurance (ISSA) 5000. The UK version aims to ensure consistent, high-quality sustainability assurance in the UK and align with international standards. It will be voluntary and follow the International Ethics Standards Board for Accountants Code. In particular, the consultation is seeking views on prohibiting internal auditors from providing direct assistance in sustainability assurance engagements, similar to financial statement audits.

The consultation will close on July 31, 2025.

Inquiry into PFAS risks

On May 26, the Environmental Audit Committee call for evidence on the associated risks of perfluoroalkyl and polyfluoroalkyl substances (PFAS) ended. It considered whether enough is being done to address the risks of PFAS and whether institutions are equipped to detect and monitor their impact. It also explored what regulatory mechanisms are in place across the UK and how they compare to other jurisdictions, such as the EU and US.

Consultation on Greenhouse Gas Removal Strategies to Achieve UK Net Zero Goals

On May 16, the Department for Energy Security and Net Zero opened a call for evidence on how options for greenhouse gas (GHG) removals can help the UK to meet its 2050 net zero target under the Climate Change Act 2008. The call for evidence closes on June 20, 2025. It is part of a government commissioned independent review, which is due to report in October 2025.

Great British Energy Act 2025

On May 15, the Great British Energy Act 2025 was published. The Act mandates the establishment of Great British Energy, a publicly owned, operationally independent company. The company's objectives include promoting clean energy, reducing greenhouse gas emissions, improving energy efficiency, ensuring energy security, and preventing slavery and human trafficking in its operations.

Deposit Return Scheme Policy Statement

On May 7, the UK government, in collaboration with the Scottish and Northern Ireland governments published a policy statement on the upcoming Deposit Return Scheme (DRS). The DRS, set to launch in October 2027, will include a refundable deposit on single-use drinks containers made from PET plastic, steel, and aluminum, ranging from 150 milliliters to 3 liters. The scheme aims to reduce litter, increase recycling rates, and create high-quality recycled materials for reuse by drinks producers. The UK Deposit Management Organization Limited, appointed in May 2025, will manage the scheme across England, Northern Ireland, and Scotland.

Environment Act 2021 (Commencement No 10) Regulations 2025

On May 1, the Environment Act 2021 (Commencement No 10) Regulations 2025 became effective. These Commencements mandate biodiversity net gain (BNG) for Crown land development. These regulations implement Schedule 7A of the Town and Country Planning Act 1990, requiring new planning permissions to include BNG conditions. This means developers must ensure that their projects result in a measurable increase in biodiversity.

Climate Change Committee statutory report on climate change adaptation

On April 30, the UK Climate Change Committee published its 2025 report to Parliament on UK adaptation to climate change, assessing the implementation of the third National Adaptation Program. The report concludes that the UK is currently unprepared for climate impacts.

The Committee recommends improving objectives and targets, enhancing government coordination, integrating climate adaptation into policies with sufficient resources, and implementing monitoring and evaluation across all sectors to track climate impacts and adaptation efforts.

US

One Big Beautiful Bill Act

On May 22, the US House of Representatives passed the One Big Beautiful Bill Act, a bill that sets out to roll back aspects of the Inflation Reduction Act. This bill would cut back on programs for offshore wind transmission planning, grants for interstate electricity transmission lines, and tax credits for renewable energy projects. It also eliminates the $7,500 credit for purchasing an electric car.

For more information, see our briefing.

California 2025-2026 state budget

On May 14, California released a revised proposal for the 2025-2026 state budget. The budget includes plans to extend the state’s “Cap-and-Invest” program through 2045. The program will require emitters to purchase allowances for carbon emissions above a declining cap, aiming to incentivize emissions reductions and investments in clean technologies

EPA Extends Compliance Deadlines for PFAS Regulations

On May 14, the Environmental Protection Agency (EPA) announced it will maintain the current National Primary Drinking Water Regulations for PFOA and PFOS, in drinking water. The EPA plans to extend compliance deadlines for these regulations to 2031, providing additional time for water systems, especially in rural and small communities, to meet the standards. Additionally, the EPA will launch the PFAS OUTreach Initiative to enhance communication and support for water systems needing to address PFAS contamination.

New York 2025-2026 state budget

On May 12, New York published the state’s 2025-2026 budget. The budget includes over $1 billion in investments aimed at decarbonization. Key allocations include $450 million for reducing building emissions through energy-efficient retrofits and clean heating technologies, $250 million for fast-charging stations and EV charging rebates, $200 million for thermal energy networks, and $200 million for renewable energy expansion and grid modernization. Notably, the budget excludes the "cap-and-invest" program, which would have required large greenhouse gas emitters to purchase allowances for their emissions.

DOE Delays Compliance Date for New Clean Energy Provisions for Federal Buildings

On May 5, the Department of Energy (DOE) delayed the compliance date for new provisions regarding Clean Energy for New Federal Buildings and Major Renovations of Federal Buildings by one year. This delay allows federal buildings to continue using energy sources such as coal and natural gas.

DOE Withdraws Regulations on Miscellaneous Gas Products

On May 2, the U.S. Department of Energy (DOE) withdrew regulations on miscellaneous gas products, such as decorative hearths and outdoor heaters, to reduce regulatory burdens. This action aims to expand consumer choice and lower costs, aligning with the administration's goal of reducing regulatory red tape.