The Sillion Briefing 31.01.2025
In this Briefing...
EU Omnibus – Trump climate policies
UK Deposit Return Scheme – Sector-specific TNFD
Shanghai ESG Guidelines – Scope 3 chemical industry
Policy and regulation
Rumblings of the Omnibus: EU regulations targeted for reductions
Not a frequently used EU instrument – or a frequently used word, for that matter – the ‘Omnibus’ is a device which allows lawmakers to consolidate and revise multiple laws in one fell swoop. In November, we covered Commission President von der Leyen’s plans for an Omnibus that would encompass three laws familiar to regular readers: the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D) and the EU Taxonomy. President von der Leyen has played an instrumental role in these pieces of legislation, and her aim now turns to reducing ‘data point’ burden, overlap and complexity. In short, to maintain the spirit of the laws, while meeting the EU’s goal of slashing regulation to boost industry.
There are those who want to see deeper cuts to these frameworks. French government authorities have jumped on the reconsideration to suggest a postponement of CS3D. Meanwhile, the European People’s Party is asking that the Omnibus delay each of these laws by around two years, and for them to be limited to the largest companies.
With many companies – including in the UK – currently working on CSRD alignments for upcoming reporting years, it’s Sillion’s view that a delay for an already-active regulation would only complicate the situation further, while prolonging the inevitable. However, there’s no question that the scale of the EU-mandated disclosures poses a challenge, particularly for mid-sized companies in scope. We’re keeping a close eye on what might happen to the necessary assurance process for these regulations in particular, as this represents a significant portion of the cost for companies.
We will know more in late February, when we are likely to see the first proposal.
Sillion are assisting companies on their journeys with EU regulation and are experts on these frameworks. Be in touch with us if you want to talk them through.
Government
“Drill, baby, drill”: President Trump rolls back U.S. climate policies
New President Donald Trump has moved swiftly to dismantle a number of environmental regulations enacted under Joe Biden, vowing to “end Biden’s policies of climate extremism.” In his first week back in office, Trump announced the U.S. would once again withdraw from the Paris Climate Agreement—a largely symbolic move given the accord’s non-binding nature and scientists' warnings that its targets are already slipping out of reach. More significantly, he has paused federal funding for green energy initiatives tied to Biden’s Inflation Reduction Act, though pre-approved contracts may limit the impact. Perhaps the most consequential is the declaration of a national energy emergency, granting the government new authority to expand oil and gas production, with a focus on the Arctic, a move driven in part by concern for the electricity consumption of artificial intelligence. While Trump’s actions signal a sharp shift in attitudes towards climate policies from the previous administration, ongoing legal battles, pre-existing clean energy investments, and market forces favoring renewables may ultimately curb the extent of his rollback.
UK Deposit Return Scheme launching October 2027
The UK government has confirmed plans to launch the long-awaited Deposit Return Scheme (DRS) in October 2027, aiming to improve recycling rates by offering consumers a financial incentive to return empty plastic and metal drinks containers to collection points. Already used in over 50 countries with an average return rate of 90% in Europe, the scheme is seen as a vital step toward reducing waste and encouraging sustainable habits among consumers. However, major UK supermarkets in the British Retail Consortium (BRC), have written to environment secretary Steve Reed, criticising the timeline as "not feasible," given the threat to food inflation and high infrastructure costs needed to establish the scheme.
Disclosures
TNFD issues sector-specific guidance
The recommendations of the Taskforce on Nature-related Financial Disclosures are currently the leading frameworks for disclosures on nature. They’ve now released sector-specific guidance for four sectors: Apparel, textiles & footwear, beverages, construction materials, and engineering, construction & real estate. At the same time, they released draft guidance for three additional sectors – fishing, marine transport and water utilities. If you’re considering your nature-related impacts in greater detail and belong to one of these sectors, or are considering full TNFD alignment, the guidance will be worth a look. Be in touch with us if you’d like us to help take you through them.
Shanghai Stock Exchange boosts ESG reporting with IFRS-aligned guidelines
The Shanghai Stock Exchange (SSE) has introduced sustainability reporting guidelines aligned with ISSB standards, as part of its three-year strategy to improve the disclosure of ESG data by listed companies. The new voluntary guidance includes general and climate-specific requirements, with more updates planned.
Scope 3 guidance for chemicals industry
Together for Sustainability, a chemicals industry initiative, has published an update to its Product Carbon Footprint (PCF) guidelines. These are designed to help chemicals companies with their scope 3 emissions challenges.
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 2025
London Climate Action Week 2025 – 21st-29th June 2025
New York Climate Action Week 2025 – 21st-28th September 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.