Other Notable Developments

Green Climate Fund: On July 4, 2025, the Board of the Green Climate Fund, established under the Paris Climate Agreement, approved USD 1.225 billion in funding for 17 climate projects around the world, including in Mauritania, Saint Lucia and Papua New Guinea.

Solar Power in the EU: Energy think tank Ember reported that in June 2025, solar power provided roughly 22.1% of the EU’s electricity supply, becoming the EU’s largest source of electricity.

EU: Regulators Propose New Guidelines on ESG Risk Stress-Testing for Banks and Insurers 

On June 27, 2025, the European Banking Authority, the European Securities and Markets Authority, and the European Insurance and Occupational Pensions Authority (together, the European Supervisory Authorities, or the “ESAs”), published a consultation paper on draft guidelines for integrating ESG risks into stress-testing for the banking and insurance sectors. The objective of the guidelines is to ensure that national regulators take a consistent approach and have common standards when stress-testing for ESG risks.

The draft guidelines propose that, when stress-testing for ESG risks, the competent authorities:

• define their objectives precisely, testing (i) the resilience of the financial entity’s capital and liquidity position and loss-absorption capacity in response to shocks caused by short- and medium-term ESG-related risks, and (ii) the resilience of the financial entity’s strategy for various medium- and long-term ESG-related scenarios;

• identify material ESG risks by reference to the financial entities’ business model, portfolio, geographic exposure and other criteria. The draft also recommends considering the entities’ exposure to both transition and physical risks, as well as the potential impact of ESG factors on traditional financial risks;

• adopt a gradual approach to the implementation of ESG stress testing by initially prioritizing both physical and transitional environmental risks and then gradually integrating potential social and governance factors; and

• ensure, where possible, that a consistent approach to ESG risk assessment is carried out across the entire financial sector.

The consultation is open until September 19, 2025. The ESAs plan to publish the final guidelines by January 10, 2026.

Link:

Consultation Paper


EU: CSRD Sustainability Reporting Requirements Postponed by Two Years (Until 2027) for Large Companies

On July 11, 2025, the European Commission introduced temporary “quick fix” amendments to the European Sustainability Reporting Standards (the “ESRS”). The amendments effectively postpone key sustainability disclosure requirements for companies not provided relief by the previous Stop-the-Clock Directive, which delayed the application of CSRD requirements for large private companies and listed SMEs for two years (for more on the Stop-the-Clock Directive, see our previous Update here).

The amendments impact companies currently required to report on 2024 data under the Corporate Sustainability Reporting Directive (“CSRD”) by requiring additional reporting on 2027 data instead of 2025 data. These companies may now delay reporting on a number of data points, including those relating to biodiversity and ecosystems, workers in the value chain, and consumers and end-users. Companies currently required to report on 2024 data with fewer than 750 employees may also omit Scope 3 greenhouse gas emissions from their disclosures. Effectively, the amendments mean that companies already required to report under the CSRD will not need to report any additional information compared to 2024.

These new amendments are part of the EU’s Omnibus package, which substantially reduces the number of companies falling within the scope of CSRD and is part of the Commission’s goal to reduce overall administrative burdens for EU companies by 25% and by 35% for SMEs (for more on the Omnibus, see our Debevoise In Depth on the topic here). 

Links:
Commission Press Release

Delegated Act


U.S.: California Issues Climate Disclosure FAQ Ahead of 2026 Deadlines

On July 9, 2025, the California Air Resources Board (“CARB”) issued an FAQ related to reporting greenhouse gas (“GHG”) emissions under the Climate Corporate Data Accountability Act (SB 253) and Climate-Related Financial Risk Act (SB 261). CARB indicated that the FAQ was designed to help companies plan for their initial climate-related risk reports, which are due by January 1, 2026. On December 1, 2025, CARB intends to launch a public docket for companies to post their initial climate-related risk reports under SB 261.

CARB’s FAQ addressed several topics, including which companies are in scope of the reporting requirements, the timelines to be included in the disclosures, and considerations related to certain definitions under the laws. Responding to prior public feedback, CARB indicated that initial climate-related financial risk reports submitted by January 1, 2026 may cover fiscal years ending in 2024 or 2025, depending on the company. CARB indicated that it is seeking further public input before finalizing the regulation, including on the definition of “doing business in California,” the calculation of revenues and the timing of GHG emissions reporting. Additionally, CARB asked for input with respect to whether it should consider exemptions in certain circumstances.

These laws will require thousands of companies “doing business in California” to publicly disclose their GHG emissions and climate-related financial risks. Under SB 261, climate-related financial risk data will be due on January 1, 2026. Under SB 253, reporting for Scopes 1 and 2 emissions will be required in 2026, and Scope 3 emissions will follow in 2027. (For more on California’s Climate Disclosure Laws, see our Debevoise Update on the topic here.)

Companies interested in providing input to CARB can submit feedback directly to CARB or through their respective trade associations. Further guidance from CARB is expected over the coming months.

Link:

FAQs

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