Regulation is shaping the sustainability agenda and changing the way companies do business in different jurisdictions, but keeping pace with constant regulatory updates has become a mammoth task for businesses and investors. In this recurring series, S&P Global Sustainable1 presents key developments to sustainability regulations and standards from around the world.

In this month's update, we look at the latest developments in the European Commission’s drive to simplify the EU’s sustainability reporting rules, China’s draft climate disclosure standards and proposals by the International Sustainability Standards Board to ease some Scope 3 emission reporting requirements.

INTERNATIONAL    EUROPE   ASIA PACIFIC    UNITED STATES AND CANADA    LATIN AMERICA AND THE CARIBBEAN

INTERNATIONAL

International Maritime Organization approves rules on shipping emissions

The International Maritime Organization (IMO) on April 11 approved new draft regulations that will create a legally binding global framework for the shipping sector to reduce greenhouse gas (GHG) emissions and reach net-zero emissions by around 2050. The net-zero framework will introduce a new fuel standard for ships and a global pricing mechanism for emissions. The IMO plans to formally adopt the measures in October 2025, and they are expected to enter into force in 2027. The rules will be mandatory for large ships of 5,000 gross tonnage, which emit 85% of the total CO₂ emissions from international shipping, the IMO said. Under the regulations, ships will be required to reduce their annual greenhouse gas fuel intensity (GFI), which is for a measure of emissions per unit of energy used. A carbon trading system will be implemented in which ships with lower GFI can remediate emissions from ships generating emissions above the program’s thresholds. Ships with higher emissions that are not offset will pay fees to the IMO Net-Zero Fund, which will create financial rewards for low-emission ships and finance the mitigation of impacts from shipping emissions on vulnerable states like small-island nations.

ISSB proposes easing Scope 3 emissions reporting for financial firms

The International Sustainability Standards Board (ISSB) on April 28 proposed amending its IFRS S2 climate-related disclosures standard to remove some types of Scope 3 emissions from the reporting requirements. The ISSB is considering granting financial institutions relief from measuring and disclosing Scope 3 emissions associated with derivatives, investment banking (facilitated emissions) and insurance and reinsurance underwriting. These activities fall under the GHG Protocol’s Category 15 of Scope 3 emissions, a category that also includes financed emissions and emissions from equity investments. The ISSB’s proposed amendment would still require a company to disclose Scope 3 emissions associated with loans and investments. Other proposed amendments would change IFRS S2’s requirement that companies disclose emissions according to the GHG Protocol Corporate Standard if a company’s jurisdiction requires a different method.

EUROPE

EU policymakers approve delay for sustainability reporting rules

The Council of the EU on April 14 gave its final approval on a “stop the clock” mechanism to delay the application of EU sustainability reporting rules for some companies, amid efforts by the European Commission to simplify its sustainability regulations. The European Parliament voted in favor of a delay on April 3. The “stop-the-clock" directive postpones implementation of the Corporate Sustainability Reporting Directive (CSRD) by two years for some companies and the Corporate Sustainability Due Diligence Directive by one year. The proposal was part of the Commission’s Omnibus simplification package announced Feb. 26, which seeks to overhaul EU sustainability reporting rules by drastically reducing the number of in-scope companies and reducing the number of data points firms are required to report.  The proposals are part of the Commission’s drive to reduce the overall reporting burden for companies by at least 25% and for small and medium-sized enterprises by at least 35% by 2029 to boost the EU’s competitiveness and spur economic growth.

EU advisor launches consultation on simplifying EU sustainability reporting rules

The European Financial Reporting Advisory Group (EFRAG), which serves as technical advisor to the European Commission, on April 8 launched a consultation on simplifying the European Sustainability Reporting Standards (ESRS). Companies subject to the CSRD report according to the standards, and under the Commission’s proposed changes to the CSRD, companies would be subject to a simplified set of standards. EFRAG said it was seeking input on mandatory datapoints that are least important or problematic for general-purpose sustainability reporting and feedback on how to improve consistency with other EU regulations, how to improve provisions on materiality to ensure companies only report information material to their business and how to simplify the structure of the standards, among other topics, without comprising the objectives of the EU’s Green Deal. EFRAG said on April 25 it had submitted its official work plan to the European Commission, outlining how it aims to provide its technical guidance by Oct. 31, the deadline set by the Commission. 

European Commission releases new guidance to simplify EU Deforestation Regulation

The European Commission on April 15 published new guidance designed to simplify the EU Deforestation Regulation, which aims to ensure that key goods placed on the EU market do not contribute to deforestation and forest degradation. The new deforestation guidance allows large companies to reuse existing due diligence statements when goods previously in circulation on the EU market are reimported. Companies will also be allowed to submit due diligence statements annually instead of for every shipment on the EU market, the Commission said. The guidance also eases obligations when companies have to certify that due diligence has been carried out. These changes will apply from the end of 2025. The Commission also said it had opened a consultation on further simplifications through a delegated act, which is a non-legislative act that can be adopted by the Commission to amend non-essential parts of legislation. The delegated act would clarify which products are not covered by the regulation and would make application more straightforward, as well as provide legal certainty for companies, the Commission said in the draft delegation act.

EU legislators approve new rules on preventing microplastic pollution

The Council of the EU, composed of government ministers of the 27 EU member states, and the European Parliament on April 9 came to a provisional agreement on new rules proposed by the European Commission to prevent microplastic pollution from plastic pellets, which are the raw materials used to make products derived from plastic. The rules provide a framework for the clean-up work that operators must undertake in case of accidents by operators, EU carriers and non-EU carriers both on land and at sea. They also outline measures for risk management plans, including how operators should package, load and unload plastic pellets. Operators handling more than 1,500 metric tons of plastic pellets annually will have to obtain a certificate issued by an independent third party. The regulation will be applicable two years after being published in the EU’s Official Journal. 

EU legislators reach agreement on soil monitoring law

The Council of the EU and the European Parliament on April 10 reached a provisional political agreement on the European Commission’s proposal for a soil monitoring law. The law’s objective is to achieve a non-binding goal of having “healthy” European soils by 2050. Under the law, EU member states will have to monitor soil health using common soil descriptors and an EU methodology for sampling points. The law will also require member states to create a public list of potentially contaminated sites within 10 years of its entry into force and address risks to human health and the environment. According to the Parliament, the Commission will support member states by strengthening its existing EU soil sampling program, LUCAS Soil. It will also offer  technical support and support research and innovation to support farmers’ efforts to improve soil quality, the Parliament said. It will enter into force 20 days after its publication in the EU’s Official Journal, and member states will have three years to transpose it into their national laws.

UK regulator proposes updating guidance for banks and insurers on managing climate-risks

The Bank of England's Prudential Regulation Authority (PRA) on April 30 proposed updating its supervisory expectations for banks and insurers regarding their management of climate-related risks. The PRA published its first set of expectations in 2019 but in its April 2025 proposal said progress had been “uneven and more needs to be done.” It also said firms had asked the PRA to “provide greater clarity” on the regulator’s expectations. In its proposals, the PRA places greater emphasis on the use of scenario analysis to inform business decisions and better manage risk. The regulator also proposes that a firm’s management should provide their board with relevant information on climate-related risks and that companies should provide boards with training on climate-related risk. A consultation runs to July 30, 2025.

ASIA-PACIFIC

New Zealand standard setter launches consultation on global alignment of climate reporting

New Zealand’s External Reporting Board (XRB), which establishes financial reporting standards, on April 28 launched a consultation on potential alignment of New Zealand’s current climate disclosure standards with international standards such as the ISSB’s. The XRB said there is a “strong degree of alignment” between its standards and those of the ISSB, but there were differences in detail that would mean an entity applying the IFRS S2 climate standard would not comply with the XRB’s standards. Furthermore, the ISSB standards are more prescriptive, while the New Zealand standards are more flexible, the XRB said. The consultation seeks information on standards used by companies, what degree of alignment is most desirable and whether increased alignment would better achieve the objectives of New Zealand’s climate reporting framework The feedback could form the basis for another consultation in the fourth quarter of 2025 on potential changes to the existing requirements. The XRB said any updates to its standards would likely be made by June 2026. The consultation closes on June 13.

China issues draft climate-related sustainability disclosure standards

The Chinese Ministry of Finance on April 30 issued draft climate-related sustainability disclosure standards aligned with the ISSB standards. The standards would also take into account the needs of the Chinese market, for example by using national methods to measure carbon emissions. They would be voluntary. The draft climate-related standards are open for comment until May 31. China published draft general requirements for corporate sustainability information disclosures for certain companies in May 2024. At that time, the Ministry of Finance said the country expects to introduce basic corporate sustainability disclosure standards and climate-related disclosure standards by 2027 and plans to establish a nationwide standard by 2030.

UNITED STATES AND CANADA

Canadian regulator pauses work on climate disclosure rule

The Canadian Securities Administrators (CSA) on April 23 announced it is pausing its work on a new mandatory climate-related disclosure rule and amendments to existing diversity-related disclosure requirements. The regulator said it was halting development of the rule given the rapidly changing global economic and geopolitical environment, adding that it is now focusing on initiatives to support Canadian business. Current securities legislation requires issuers to disclose climate-related risks that have a material impact on their business in the same way as other types of material information, the CSA said. It also noted that the Canadian Sustainability Standards Board had issued its own standards based on those of the ISSB and that they provide a framework for voluntary climate disclosures. Regarding diversity-related disclosure, companies listed on large exchanges will continue to disclose on the representation of women on boards and in executive positions under current corporate governance rules, the regulator said.

LATIN AMERICA AND THE CARIBBEAN

Brazil launches consultation on National Mitigation Strategy

The Brazilian government on April 9 launched a consultation on a new National Mitigation Strategy, one of the two pillars of Brazil’s National Climate Plan, aimed at helping the country meet its carbon reduction goals. The main objectives of the strategy are addressing deforestation; the conservation, restoration and sustainable use of Brazilian ecosystems; the promotion of sustainable and low-carbon transport; the expansion of renewable energy sources; and the development of sustainable supply chains. The strategy sets out how Brazil will meet its nationally determined contribution (NDC) under the Paris Agreement on climate change. Brazil’s NDC aims for a reduction in GHG emissions of 59% to 67% by 2035 compared to 2005 levels. The consultation closed on May 9. Once responses to the National Mitigation Strategy have been considered, they will be sent to the Interministerial Committee on Climate Change for approval.  Brazil has already held a consultation on its adaptation strategy, the second pillar of its climate plan.