The Sillion Briefing 17.01.2025
In this Briefing...
UK SAF mandate – CCC report
EU Bank fears – SBTi's new CEO
Tesco low-carbon farms – Batteries on coal
Policy and regulation
UK SAF Mandate comes into force
The UK’s Sustainable Aviation Fuel (SAF) Mandate officially took effect on January 1st, requiring airlines to ensure that at least 2% of jet fuel used for flights departing the UK comes from sustainable, low-carbon sources by 2025, 10% by 2030, and 22% by 2040. To qualify as a SAF under UK regulations, the fuel must achieve a minimum 40% reduction in lifecycle carbon intensity compared to traditional kerosene. Despite its potential, scaling SAF production remains challenging. To support industry growth, the government also plans to introduce a revenue certainty mechanism to guarantee minimum income for SAF producers and attract investment in new UK-based production facilities. A consultation on this mechanism is anticipated early this year. Complementing these efforts, Heathrow Airport has expanded its SAF incentive program, committing £86 million to assist airlines in adopting sustainable fuel solutions.
Tune in!
This week on The Responsible Edge Podcast, Lucy Smaill, Head of Communications at Sillion, joins Charlie Martin to discuss what comes after companies pledge bold net-zero or ESG targets. Tune in here to hear why Lucy believes actionable transition plans are the key to turning lofty commitments into measurable progress.
Government
UK Government responds to CCC progress report
Last July, the Climate Change Committee (CCC) – the UK government’s independent advisory body on climate change – released a damning report on the UK’s climate progress, highlighting harmful delays and policy rollbacks under then-Prime Minister Rishi Sunak. In response, the government has released a detailed 104-page document, outlining how it plans to address the CCC’s 35 recommendations. The response states that the government is fully or partially implementing all of the proposals. Notably, it confirmed that a national Public Participation Strategy — designed to strengthen public engagement in the UK’s net-zero transition — will be introduced next year, with a goal to "bring businesses and civil society along with us." The government’s response also outlines plans to decarbonise home heating, including a three-month consultation on new minimum energy efficiency standards for heat pumps and heaters aimed at reducing carbon emissions and lowering consumer bills. Additionally, it confirmed that a review of hydrogen’s potential role in home heating is underway, with a consultation set for 2025.
Finance
European Investment Bank memo shows EU taxonomy fears
A internal memo at the European Investment Bank (EIB) saw head of operations Jean-Christophe Laloux warning of a “major reputational risk” that could result from new EU-wide metrics. His concerns specifically were with the Green Asset Ratio (GAR), a metric showing what percentage of a bank’s assets are considered climate-positive in alignment with the EU Taxonomy. EIB’s own “Climate Action ratio”, an internally defined metric, stands at around 50%, in contrast with the GAR which the memo claims would stand at around only 1%. The story highlights the disparities which will likely occur as EU Taxonomy disclosures are introduced, as in-house methods for assessing the sustainability of investments – which are typically well-intentioned, if inconsistent – come into conflict with a new standard. EIB will likely not be the only EU financial institution currently grappling with the requirement.
Disclosures
SBTi appoints new CEO
David Kennedy is set to join the Science Based Targets initiative, the world’s leading standard setter for emissions targets, bringing experience from EY, DEFRA and the UK Climate Change Committee (CCC). The appointment comes as the SBTi undergoes something of an internal reassessment, with V2.0 its flagship net zero standard currently in development. We can expect to see a first look at V2.0 early this year. One of the key areas of focus for this major revision is a reconsideration of the initiative’s position on ‘neutralization’, i.e. the extent to which carbon offsets and related instruments can be used to remove residual emissions – a topic on which the organisation had historically been very strict. Controversy around this position last year led to then-CEO Luiz Amaral stepping down.
Corporate
Tesco launching low-carbon farms
Following a report on UK farming – which saw 67% of farmers surveyed saying they were already seeing the impacts of climate change on their farms – the supermarket chain has announced two low-carbon “test farms”. These are set to trial initiatives including incentives for carbon accounting, and innovations like low-carbon fertilisers.
Energy
Major new battery farm to be built on former coalmine
Described as ‘Europe’s largest’ battery storage project, the c.1GW facility is to be constructed at Coalburn in South Lanarkshire, Scotland. It’s due to be operational later this year.
Calendar
2025
CSRD: Undertakings previously subject to the EU's NFRD must report ESRS in their Annual Report this year (i.e. FY24 reporting) – 1st January 2025
UK SRS: UK Sustainability Reporting Standards (SRS) published – Q1 2025
UK SDR: UK Sustainability Disclosure Requirements (SDR) rules on labelling of sustainability-focused funds to come into force – April 2025
ESMA: ESMA Guidelines on fund names using ESG or sustainability-related terms to apply to funds which existed before the rule change – 21st May 2024
London Climate Action Week 2025 – 21st-29th June 2025
COP: COP30, Belém, Brazil – November 2025
SBTi: Corporate Net-Zero Standard (CNZS) V2.0 to come into force – by end of 2025
2026
CSRD: All large undertakings must report ESRS in their Annual Report this year (i.e. FY25 reporting). In CSRD parlance, a 'large undertaking' is a company exceeding two of the three following thresholds: Balance sheet total €25 million, net turnover €50 million, 250 employees – 1st January 2026
UK SRS: UK listed companies need to begin work on their IFRS Sustainability Standards (ISSB Standards) and transition plan reporting, in order to be ready for next year
2027
UK CBAM: UK Carbon Border Adjustment Mechanism (CBAM) comes into force, initially addressing aluminium, cement, fertiliser, hydrogen, iron and steel. 1st January 2027
UK SRS: UK Sustainability Reporting Standards (SRS) to become mandatory for FY26 reporting, making the IFRS Sustainability Standards S1 and S2 (the ISSB Standards) and transition plan reporting mandatory – FY26 reporting
CSRD: Listed SMEs must report ESRS in their Annual Report this year (i.e. FY26 reporting). In CSRD parlance, an SME is a company which exceeds only one (or none) of the following thresholds: Balance sheet total €25 million, net turnover €50 million, 250 employees – 1st January 2027
CSDDD: The EU Corporate Sustainability Due Diligence Directive (CSDDD) will start applying to very large companies (over 5,000 employees and over €1.5 billion turnover) – 26th July 2027
2028
CSDDD: The EU Corporate Sustainability Due Diligence Directive (CSDDD) will start applying to large companies (over 3,000 employees and over €900 million turnover) – 26th July 2028
2029
CSRD: Non-EU undertakings with EU branches / subsidiaries must report ESRS for the previous business year. This applies if the non-EU undertaking has a net turnover generated within the EU above €150 million, and if it has either subsidiaries that are large undertakings or SMEs (CSRD definitions of these are given in the calendar above) with securities traded on an EU market; or if it has branches with net turnover generated in the EU above €40 million – 1st Jan 2029
CSDDD: The EU Corporate Sustainability Due Diligence Directive (CSDDD) will start applying to all remaining companies within its scope (over 1,000 employees and over €450 million turnover) – 26th July 2029
Questions on the above? Contact hello@sillion.co.uk with any queries, comments or feedback.