From the launch of consultations on UK Sustainability Reporting Standards, to ongoing political battles over key regulations in the EU, to the International Court of Justice's landmark advisory opinion on States’ climate change obligations, it's been a busy summer for ESG-related developments. So, here's a rundown of key highlights you may have missed. If you have queries about anything that follows, please don't hesitate to get in touch.
UK regulatory developments
Sustainability disclosure
On 25 June 2025, the UK Government launched three interconnected consultations on proposed UK Sustainability Reporting Standards (UK SRS), transition planning, and assurance of sustainability reporting. For more information, see our article: UK Government consults on new sustainability reporting standards, transition planning, and sustainability assurance):
UK SRS
Exposure drafts of new UK reporting standards (UK SRS S1 and UK SRS S2) follow the equivalent global standards published by the International Sustainability Standards Board (ISSB) in 2023.
The consultation seeks views on six proposed amendments to ISSB standards, deemed necessary for the UK to endorse them, as well as expected costs and benefits of adopting the standards, and any need for additional guidance.
Results will inform the Government's decision to endorse the draft standards and make them available for voluntary use. A separate decision will be made regarding mandatory reporting against the UK SRS.
Transition planning
The Government is also consulting on how to implement its manifesto commitment to require UK-regulated financial institutions and large companies to develop and implement credible transition plans, aligned with the 1.5°C goal of the Paris Agreement.
Under one option, companies would be not required to produce distinct transition plan documents, separate from annual reporting, but would be free to do so on a voluntary basis. Those that have not published a transition plan, or disclosed related information in accordance with UK SRS S2, would be compelled to explain why that is the case.
Under another option, the Government would require entities to develop a transition plan and disclose related information as part of its annual reporting. In line with Transition Plan Taskforce recommendations, it could also require entities to publish a separate transition plan document, enabling provision of greater detail versus what might be possible in annual reporting.
Sustainability assurance
In a third parallel consultation, the Government is seeking views on proposals for a new registration regime for "sustainability assurance providers". Open to both audit and non-audit professionals, providers would be overseen by the Audit, Reporting and Governance Authority (ARGA), which would set eligibility criteria, monitor performance, and enforce standards. While anticipated to be voluntary in the first instance, registration would be if the Government decides to mandate assurance of company disclosures against UK SRS.
Greenwashing
New CMA enforcement powers
On 2 July 2025, consumer watchdog Which? published an analysis of green claims made by a representative sample of 1,000 products. It found that 84% failed checks against at least one of the principles of the UK Green Claims Code, with 62% failing checks against two or more.
These findings are especially relevant given the new powers granted to the Consumer Markets Authority (CMA) under the Digital Markets, Competition and Consumers Act (DMCCA). As of April 2025, the CMA can directly fine companies up to 10% of their global turnover for breaches of consumer law, including misleading environmental claims.
New failure to prevent fraud offence
To date, enforcement action for misleading sustainability claims has largely focused on regulatory intervention. However, this could change following introduction of the new failure to prevent fraud offence, which came into force on 1 September 2025.
Sustainability-related statements and claims that are found to be dishonest, or that fail to provide a full, balanced and fair picture, could constitute fraud (e.g. by false representation or the omission of information) and trigger the failure to prevent fraud offence.
By opening organisations up to corporate prosecution if they lack adequate controls, this adds further pressure on in-scope companies to ensure that appropriate policies and procedures are in place to prevent misleading or unsubstantiated claims.
Human and labour rights
On 24 July 2025, the UK Parliament's Joint Committee on Human Rights published a summary report of the results of its inquiry into forced labour in UK supply chains. Concluding that the UK has fallen behind in its approach to addressing forced labour, and that reliance on voluntary due diligence has failed to prevent goods linked to forced labour from entering the UK market, the Committee recommends the introduction of new legislation within one year.
This new legislation, it says, should establish new mandatory human rights due diligence duties for businesses, and a right for those who have suffered forced labour to bring a claim for civil liability against those responsible.
EU Regulatory developments
EU Omnibus I
On 26 February 2025, the European Commission published its first omnibus simplification package, with proposals for streamlining obligations under the Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD) and EU Taxonomy. For a fuller analysis of the proposals, as published, see our article: Have the CSRD and CSDDD been thrown under the EU omnibus?
However, in June, the Council of the EU and JURI (the European Parliament's lead committee) both called for more dramatic revisions to existing requirements – e.g. in JURI's case, increasing employee thresholds for CSRD and CSDDD to 3,000 (versus the proposed 1,000). In contrast, on 2 September, a coalition of 475 organisations, including more than 200 investors and major businesses, published an open letter urging the EU to preserve core elements of the regulations.
With opinion clearly divided between those who think Omnibus proposals go too far and those who think they don't go far enough, it remains to be seen what will eventually be passed into law.
European Sustainability Reporting Standards (ESRS) revision and consultation
As part of Omnibus reforms, the European Financial Reporting Advisory Group (EFRAG) published revised and simplified ESRS exposure drafts on 31 July 2025.
Key changes include streamlining of double materiality assessment, reduction of overlaps across general requirements and topical standards, and the removal of all voluntary disclosures. New relief mechanisms have also been introduced, such as exemptions where reporting would cause undue cost or effort. In total, mandatory datapoints (to be reported if material) have been cut by 57%, and the full set of disclosures reduced by 68%.
Public consultation on the revisions runs until 29 September 2025, with EFRAG scheduled to deliver its final technical advice to the European Commission by 30 November 2025.
Greenwashing
Events over the summer have thrown into doubt the future of the EU Green Claims Directive (GCD), which proposes to set minimum requirements for the substantiation, communication and verification of explicit environmental claims.
Having indicated in June that it would abandon the proposals, in response to pressure from right-wing lawmakers, the Commission recanted just days later. However, Commissioners' teams have since been asked to produce a list of draft legislation stuck in negotiations, with a view to revising or axing proposals that do not have sufficient support to become law, and it seems likely that the GCD will be on it.
In any event, this does not affect the provisions of the related EU Empowering Consumers for the Green Transition Directive (ECGT), which adds 12 new banned and automatically unfair practices to the Unfair Commercial Practices Directive. These include the use of unsubstantiated generic environmental claims (e.g. "green", "eco-friendly", "biodegradable"), claims based on greenhouse gas offsetting, and sustainability labels that are not based on a certification scheme or established by public authorities.
Deforestation
The EU Deforestation-Free Products Regulation (EUDR) imposes mandatory due diligence obligations on companies that wish to place, or make available on the EU market, or export from the EU products that consist of, are fed by, or are made using relevant forest risk commodities. For more information on scope and obligations, see our article: Are you ready for the EU Deforestation Free Products Regulation (EUDR)?
Originally intended to take effect from 30 December 2024, application of the EUDR has already been postponed until 30 December 2025 for large businesses, and 30 June 2026 for smaller and microenterprises, to allow companies an extra year to prepare. Now, it looks like they will get a further year's grace.
On 7 July 2025, 18 EU member states wrote to the Commission calling for "simplification" of the regulation. Two days later, the European Parliament voted down the proposed benchmarking system for categorising countries by level of deforestation risk.
On 23 September, EU Environment Commissioner Jessika Roswall wrote to the European Parliament’s Environment Committee chair and the Danish Presidency, signalling plans to further delay application of the rules until the end of 2026.
International litigation developments
ICJ advisory opinion on States' climate change obligations
In its landmark advisory opinion, published on 23 July 2025, the ICJ declared unanimously that States have binding legal obligations to protect the climate – and that they can be held legally accountable when they fail to take appropriate action to protect the climate system from GHG emissions.
Production and consumption of fossil fuels, granting of fossil fuel exploration licences, provision of fossil fuel subsidies, and failure to regulate effectively to limit the emissions of private actors under their jurisdiction were all highlighted as potential internationally wrongful acts attributable to States.
The opinion also roundly rejects arguments that climate change is too diffuse to establish causation and attribution of harms. Rather, it holds that "the standard of 'a sufficiently direct and certain causal nexus' between an alleged wrongful action or omission and the alleged damage is flexible enough to address the challenges arising in respect of the phenomenon of climate change."
This will undoubtedly embolden litigants building strategic claims seeking damages from large GHG emitters, and may also act as an important counterweight to the deregulatory pressures exemplified by the EU Omnibus proposals.
For more detailed analysis of the opinion and its implications, see our article: What are the ramifications of the ICJ's advisory opinion on States' obligations to address climate change?