EU: European Banking Authority Issues Opinion on ESG Disclosure Requirements

On August 5, 2025, the European Banking Authority (the “EBA”), an EU agency supervising the banking sector, issued an opinion urging EU Member State regulators to take no action to enforce the new ESG disclosure requirements for banks set out in the recently amended Article 449a of the Capital Requirements Regulation (the “CRR”). The amendment expands the scope of the obligation to make ESG risk disclosures from large to all financial institutions. The disclosure requirements took effect on January 1, 2025, with the first round of disclosures due on December 31, 2025.

The opinion, issued in the form of a no-action letter, formalizes the EBA’s proposals set out in a May 22, 2025 Consultation Paper to streamline ESG disclosures for the banking sector, taking a “tailored” and “proportionate” approach by offering “different sets of templates” based on the institution type and size. The EBA’s proposals were prompted by the uncertainty caused by the European Commission’s ongoing Omnibus effort to simplify its sustainability reporting requirements, which directly impacts the content of the CRR disclosures.

The EBA’s proposed amendments are subject to a three-month public consultation period, which ends on August 22, 2025. The EBA’s no-action recommendation applies from June 30, 2025 through to the date when the amendments are adopted and in force.

Links:
Letter of No Action
Press Release
EBA Amendments Consultation Paper

EU: Commission Consults on Circular Economy Act

On August 1, 2025, the European Commission launched a consultation on the Circular Economy Act, scheduled for adoption in 2026. The Act seeks to reduce the EU’s dependency on raw materials by increasing the EU’s “circularity rate,” namely the proportion of materials that are recycled or reused.

The Act proposes to establish and build a single market for secondary raw materials, enhance the supply and quality of recycled materials, and boost demand for circular inputs, especially in electronic waste recycling and critical raw materials. The Act further proposes to set a new target, doubling the EU’s circularity rate to approximately 23.6 percent by 2030, up from just 11.8 percent in 2023 and 10.7 percent in 2010. The Act would align with broader EU strategies under the European Green Deal, reinforcing Europe’s ambition to achieve a fully circular economy by 2050.

The proposed legislation is open for public consultation until November 6, 2025.

Links:
Press Release
Public Consultation

EU: Commission Adopts Recommendation on Voluntary Sustainability Reporting Standards

On July 30, 2025, the European Commission adopted a recommendation on voluntary sustainability reporting standards for small- and medium-sized companies (“SMEs”). The standards target SMEs that do not fall in scope of the Corporate Sustainability Reporting Directive (the “CSRD”) but increasingly receive data requests from larger companies. Accordingly, the standards aim to enable SMEs to satisfy data requests from large companies, banks and investors in order to improve access to finance and, generally, better manage SMEs’ sustainability efforts.

The standards are divided into two modules:

• the basic module, which consists of 11 disclosures relating to environmental, social and governance metrics (such as Scope 1 and Scope 2 greenhouse gas emissions, biodiversity, workforce and anti-corruption information); and
• the comprehensive module, which consists of nine additional disclosures often requested by larger companies and financial institutions (such as transition plans and ESG practices or future initiatives).

The Commission is currently negotiating the Omnibus package, which proposes to limit the mandatory CSRD reporting to companies with more than 1,000 employees. For out-of-scope companies, the Commission proposed reporting under a set of voluntary standards which would be adopted as a delegated act. The recommendation bridges the gap until the Commission formally adopts the delegated act.

Links:
EU Commission Press Release
Recommendation

China: Financial Regulators Finalize “Green Finance Endorsed Project Catalogue”

On July 14, 2025, the People’s Bank of China, National Financial Regulatory Administration and China Securities Regulatory Commission jointly issued the 2025 edition of the Green Finance Endorsed Project Catalogue (the “Catalogue”), setting out a taxonomy for economic activities that are eligible for green finance. The Catalogue aims to boost liquidity in the green finance market, improve the efficiency of green finance asset management and reduce the costs of assessing green-finance-supported projects.

The Catalogue applies to all types of green financial products, but not, for the time being, to stock listings or issuances on the Shanghai, Shenzhen and Beijing Stock Exchanges or the National Equities Exchange and Quotations. The Catalogue builds on the 2024 Green and Low-Carbon Transition Industry Guidance Catalogue and the 2021 Green Bond Endorsed Project Catalogue. Loans and bonds approved under prior standards benefit from transitional measures. Relevant stakeholders are expected to use the Catalogue as the basis to study, formulate and implement supporting policies in light of their green development goals and status of green finance development.

The Catalogue takes effect on October 1, 2025.

Link:
Press Release