EU
European Supervisory Authorities published their 2025 work programmes
ESMA: In 2025, ESMA will continue progressing towards its strategic priorities and thematic drivers in line with its 2023-2028 strategy [3]:
Particular areas of focus include:
- enhanced supervisory expectations and tools to combat greenwashing
- improved ESG disclosures
- The provision of targeted training
ESMA will also coordinate a range of activities with EU bodies including the Network for Greening the Financial System (NGFS) on topics such as:
- stress testing
- Financial Markets Infrastructure (FMI)
- cross-border crisis management
- ESG and climate risk
They will also continue carrying out work with the National Competent Authorities on ESG disclosures.
EBA: The European Banking Authority (EBA) has also set up its work priorities for next year. Among EBA’s key deliverables will be its continued work on prudential treatment of exposures in relation to ESG [4].
Additionally, the EBA plans to:
- Finalise its guidelines on ESG risks management (Q1)
- Incorporate ESG and greenwashing considerations into existing EBA legal instruments on retail conduct and consumer protection, such as the EBA guidelines on Product Oversight and Governance (Q3)
- Review guidelines on internal governance and guidelines on sound remuneration policies – to include ESG risks (Q3)
- Continue building its ESG risk assessment tools to enable efficient monitoring of ESG risks in the banking sector and development of the green financial market, with a primary focus on environmental risks
- Publish the second batch of ESG risk assessment and monitoring tools, as well as a report on effective riskiness, additional modifications to the framework and effects on financial stability and banking in (Q4)
Finally, the EBA will continue to work on ESG disclosures in the context of the Pillar 3 technical standards and coordinate the work on non-financial reporting at the EU level under the Corporate Sustainability Reporting Directive (CSRD).
EIOPA: For the European Insurance and Occupational Pensions Authority (EIOPA), sustainable finance remains one of its priorities [5]. EIOPA’s 2025 sustainable finance priorities focus on:
- embedding ESG into the prudential and conduct frameworks
- enhancing sustainability reporting
- supporting supervisory authorities in managing climate-related risks
Key actions include implementing Solvency II Directive and working towards improved ESG data and catastrophe modelling to strengthen ESG risk management. EIOPA will advance rules on sustainability disclosures, greenwashing, and corporate reporting. It also plans to update its natural catastrophe insurance protection gap dashboard, prioritise addressing protection gaps, and address demand-side challenges to promote risk awareness and inclusion.
Globally, EIOPA will engage with international organisations (e.g., The Network for Greening the Financial System (NGFS), and United Nations Environmental Programme (UNEP)), broadening its scope to include nature-related and social risks in its supervisory dialogues.
EU deforestation rule delayed by one year, until 30 December 2025
The European Commission proposed a one-year delay (as a phasing-in period) to the European Deforestation Regulation (EUDR). If approved by the European Parliament and the Council, it would make the law applicable on 30 December 2025 for large companies, and 30 June 2026 for micro- and small enterprises.
The Commission also published additional guidance documents [6] and a stronger international cooperation framework [7] to support global stakeholders, member states and third countries in their preparations for the implementation.
ESMA set application deadlines for its guidelines on ESG Fund Names
The European Securities and Markets Authority (ESMA) set compliance deadlines [8 ] for its guidelines on fund names using ESG or sustainability-related terms. New funds must comply by 21 November 2024, whereas the transitional period for funds existing before the application date will be 21 May 2025.
ESMA published consultation paper on prospectus regulation, including ESG and green bond standard considerations
On 28 October 2024, ESMA published a Consultation Paper (CP) [9] on draft technical advice under the prospectus regulation and a Call for Evidence (CfE) on prospectus liability – open for feedback by 31 December 2024. Among other topics, the CP puts forward proposals for non-equity securities that are advertised with ESG features.
ESMA uses its public statement on sustainability disclosure in prospectuses as the foundation for its recommendations, introducing a new Annex 21 as a supplemental building block for non-equity securities, particularly sustainability-linked and “use of proceeds” bonds (e.g., green, and social bonds, including bonds issued under the EU Green Bond Standard). ESMA proposes a reclassification of EU Green Bond factsheet disclosures to so called “Category C” information, allowing their incorporation by reference in final terms post-approval of the base prospectus. This aims to streamline the process for issuers.
While facilitating some flexibility, ESMA emphasises that most disclosures under the new Annex 21 will have to be made at the base prospectus level to meet the Prospectus Regulation’s "necessary information" test.
ESAs finalised rules to facilitate access to financial and sustainability information on the ESAP
The three European Supervisory Authorities (EBA, EIOPA and ESMA – the ESAs) published the final report [10] on the draft implementing technical standards (ITS) regarding certain tasks of the collection bodies and functionalities of the European Single Access Point (ESAP).
The requirements are designed to enable future users to be able to access and use financial and sustainability information effectively and effortlessly in a centralised ESAP platform.
The ESAP will facilitate access to publicly available information relevant to financial services, capital markets and sustainability.
The ESAP is expected to start collecting information in July 2026, while the publication of the information will start no later than July 2027.
UK
TFMR released its recommendations on scaling the transition finance market
On 17 October 2024, the UK Transition Finance Market Review (TFMR) published a report [11] with its recommendations on scaling an effective and credible transition finance market. TFMR is an independent market-led review commissioned by the UK Treasury and the Department for Energy Security and Net Zero and hosted by the City of London Corporation. James Close, Head of Climate Change at NatWest Group, was a member of the Transition Finance Market Review’s Expert Group.
The TFMR puts forward a series of recommendations on how to unlock the required levels of finance by creating the right policies, pathways, and signals for investment, including the following:
- Transition Finance Classification System: establishing a classification system to ensure credibility and integrity in transition finance products.
- Guidelines for Credible Transition Finance: proposing principles-based guidelines that allow flexibility while maintaining core standards across various markets, including those in emerging economies.
- Transition Finance Council: forming a council to oversee the implementation of these recommendations, focusing on capacity building, and fostering collaboration among stakeholders.
- Public-Private Collaboration: the review underscores the importance of collaboration between public and private sectors to unlock necessary financing and drive the transition effectively.
The review marks an important development which clearly demonstrates the UK’s focus on taking a leading role in transition finance. While the findings will now have to be analysed by the government prior to any further policy action taking place, the report provides valuable guidance that can be considered by the market– especially given the fact that financial institutions are already working to set up transition finance frameworks.
FCA provided temporary flexibility on SDR compliance
FCA announced temporary measures [12] allowing firms until 2 April 2025, to comply with the naming and marketing rules under the UK Sustainability Disclosure Requirements (SDR). The extension is aimed at helping firms prepare necessary disclosures while addressing concerns about greenwashing and pertains to firms that:
- have submitted a completed application for approval of amended disclosures by 1 October 2024; and
- are currently using one or more of the terms ‘sustainable’, ‘sustainability’ or ‘impact’ (or a variation of those terms) in the name of a fund and are intending either to use a label, or to change the name of that fund.
These temporary measures do not apply to funds using any other sustainability-related terms that are not specified above.
A new solar taskforce was established to accelerate the rollout of solar energy in the UK
The UK government has reactivated its Solar Taskforce to accelerate solar energy rollout as part of its 2030 clean power mission [13]. Led by Energy Secretary Ed Miliband, the taskforce aims to strengthen energy independence by expanding solar capacity, reducing reliance on fossil fuels, and protecting consumer bills. It will deliver an updated roadmap focusing on ethical supply chains, workforce development and scaling solar installations nationwide.
The UK government has launched a new investment support scheme aimed at boosting funding for long-duration energy storage (LDES) projects
The UK government has launched a new investment support scheme [14] to address barriers that have hindered the development of LDES for nearly 40 years. This initiative is designed to enhance energy security by allowing technologies like pumped storage hydro, which function similarly to giant batteries, to store renewable energy and release it when needed. The scheme is seeking to create jobs, expand energy independence, and is expected to save the electricity system £24bn by 2050, contributing to the UK’s clean energy goals.
The UK government has announced an initiative to improve energy efficiency standards for rented homes
This announcement, aiming to lift over 1m households out of fuel poverty [15], is part of the broader Warm Homes Plan, which includes the introduction of the Warm Homes: Local Grant to assist low-income tenants and homeowners with energy upgrades, as well as the continuation of the Public Sector Decarbonisation Scheme. By 2030, the government intends to raise the minimum energy efficiency standards for both private and social rented properties to at least Energy Performance Certificate (EPC) C, addressing the current inadequacies where private rentals can meet only EPC E, and social rentals have no minimum standard. The initiative aims to ensure warmer, more affordable homes while tackling issues such as dampness and high energy bills amid ongoing economic challenges. The government will shortly set out a consultation with proposals for improvements to EPCs to make them more accurate and reliable.
UK Climate Risk Forum published guides on 3 key areas of climate risk
The UK Climate Financial Risk Forum (CFRF), a financial services industry forum established jointly by the FCA and the Prudential Regulation Authority (PRA) in 2019, released new guides addressing 3 critical areas of climate risk [16].
- The Nature-related Risk Handbook for Financial Institutions, aiming to introduce financial institutions to the concept of nature as a risk and explore emerging practices for integrating nature-related risks into financial risk management.
- The Short-term Scenarios guide provides guidance for banks, asset managers and insurers on using short-term climate scenarios, in response to rising interest and their increasing application in financial planning.
- The Mobilising Adaption Finance to Build Resilience guide focuses on assessing physical climate-related risks and offers insight on facilitating investment in climate adaptation, highlighting the challenges in understanding and pricing physical risks.
Each guide is supported by additional documents and is intended to help the financial sector develop effective climate risk management practices. The views expressed are industry-driven and not regulatory guidance from the FCA or PRA.
US (other news)
SEC dissolved its climate and ESG taskforce
SEC disbanded its Division of Enforcement’s Climate and ESG Taskforce [17], which was established in 2021 to address ESG-related misconduct and evaluate whistleblower complaints. The dissolution occurred amidst industry resistance and backlash from conservative groups opposing ESG initiatives. During this tenure, the taskforce issued several enforcement actions against companies for material misstatements and omissions regarding ESG factors in investment decisions, misleading disclosures about ESG goals and practices (greenwashing), and failures to enforce stated ESG polices. Despite the taskforce’s disbandment, the SEC emphasised that its expertise now resides across the division, and ESG-related enforcement actions will continue.
Lawsuit filed against Texas saying the anti-ESG law violates the Constitution
In September this year, the American Sustainable Business Council (non-profit representing thousands of businesses) filed a first amendment lawsuit on grounds that Texas passed a law prohibiting state institutions from investing in companies that “boycott” energy companies. The law is claimed to be unconstitutional because it intends to “coerce and punish” businesses seeking to reduce reliance on fossil fuels [18]. Whilst anti-ESG laws have been passed in several states in the past three years, the Texas law is amongst the most prominent. The results of this lawsuit are being watched closely and they are likely to set a future precedent for legislative action against similar rulings across the country.
