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 environmental, social and governance regulatory developments and disclosure standards from around the world.

In this month's update, we look at proposals by the European Commission to simplify the EU’s sustainability reporting rules, Canada’s update of climate risk management guidelines for financial institutions and Rwanda’s proposals for the adoption of global sustainability standards.

INTERNATIONAL    EUROPE    ASIA-PACIFIC    MIDDLE EAST AND AFRICA    UNITED STATES AND CANADA

INTERNATIONAL

Governments agree on strategy to raise funds to protect biodiversity

Parties to the Convention on Biological Diversity on Feb. 27 reached an agreement on how to raise funds to address nature and biodiversity loss. Parties adopted a Strategy for Resource Mobilization outlining what mechanisms could be used to achieve targets set in the landmark 2022 Kunming-Montreal Global Biodiversity Framework (GBF) agreement, which aims to raise least $200 billion annually by 2030. Financing would come from a variety of sources, including government and private funds, multilateral development banks and blended finance. The agreement also includes a commitment to establish permanent arrangements for financial mechanisms in accordance with Articles 21 and 39 of the Convention. Parties also agreed to the creation of a monitoring framework for the GBF to support them in measuring their progress against the framework’s goals. The agreements came from the continuation of talks at COP16, the UN’s major biodiversity conference that took place in Colombia in October 2024.

EUROPE

European Commission proposes simplifying sustainability reporting rules

The European Commission on Feb. 26 proposed measures to simplify the EU’s rules on corporate sustainability reporting, sustainability due diligence reporting and Taxonomy reporting. The proposals would remove around 80% of companies from the scope of the EU’s Corporate Sustainability Reporting Directive (CSRD) and postpone reporting requirements for some companies currently in the scope of CSRD by two years. They would also reduce EU Taxonomy reporting obligations and limit Taxonomy reporting to the largest companies. The Taxonomy is the EU’s classification system of sustainable economic activities. They would also postpone the application of Corporate Sustainability Due Diligence Directive (CSDDD) requirements for the largest companies by one year, to 2028. The Commission is also seeking to streamline the EU's Carbon Border Adjustment Mechanism (CBAM), which puts a carbon cost on imports of goods from certain sectors based on carbon intensity and carbon prices within the exporting country. The proposals on the CSRD and CSDDD are subject to approval by the European Parliament and the Council of the EU.

European Commission releases plan to accelerate decarbonization

The European Commission on Feb. 26 presented its Clean Industrial Deal, designed to accelerate the decarbonization of the EU’s energy-intensive industries and support the cleantech sector. Under the plan, the Commission is proposing the creation of an Industrial Decarbonization Bank, aiming for €100 billion in funding. It also said it would adopt a Clean Industrial Deal State Aid Framework, which would simplify and speed up approval of state aid for the rollout of renewables. The plan also includes the Industrial Decarbonization Accelerator Act designed to boost demand for EU-made clean products by introducing “made in Europe criteria” in public and private procurements. The act would launch a voluntary carbon intensity label for industrial products, starting with steel in 2025, followed by cement, the Commission said, adding that it also plans to simplify and harmonize carbon accounting methodologies. It also plans to amend regulation governing InvestEU, a program that supports sustainable investment, to “increase InvestEU's risk bearing capacity,” which would mobilize an additional €50 billion in private and public investment in cleantech, clean mobility and waste reduction.

EU legislators reach provisional agreement on rules to reduce textile and food waste

The European Parliament said on Feb. 19 it has reached a provisional agreement with the Council of the EU, composed of government ministers of the 27 EU member states, on a revision of the waste framework directive aimed at reducing food and textile waste. Legislators agreed to a 10% binding reduction of food waste in food processing and manufacturing and a 30% per capita reduction in food waste in retail, restaurants, food services and households by 2030. With regard to textile waste, EU countries would have to establish producer responsibility schemes, which would oblige producers that make textiles available in an EU country to cover the costs for their collection, sorting and recycling, 30 months after the entry into force of the directive. These provisions would apply to all producers, including those using e-commerce and irrespective of whether they are established in or out of an EU country. The Council and the Parliament will now have to endorse the agreement. Once formally adopted, EU member states will have up to 20 months to update their national laws.

EU securities regulator publishes draft standards for EU green bond standard

The European Securities and Markets Authority on Feb. 14 published its final draft on technical standards for external reviewers of the EU Green Bond Standard. The standards set out the criteria for the qualifications and experience of senior management and the board of external reviewers, as well as analysts involved in assessing green bonds ESMA said. The standards also define the criteria for management of conflicts of interest, regulation for outsourcing assessments and provide templates for registration as an external reviewer. ESMA said it has submitted the draft standards to the European Commission for adoption. It also said the technical standards will also be subject to “non-objection” by the European Parliament and Council.

ASIA-PACIFIC

Hong Kong pension fund authority sets out disclosure requirements for ESG funds

Hong Kong’s Mandatory Provident Fund Schemes Authority on Feb. 24 published disclosure requirements for funds that incorporate ESG factors. Under the requirements, fund trustees must disclose in their investment brochures their investment objectives, strategies, risks and mechanisms for monitoring and measuring ESG criteria, the regulator said in a circular letter. They are also required to conduct annual assessments to disclose to what extent the funds have achieved their ESG-related goals in their annual governance reports. Trustees must make the necessary revisions and updates to their ESG fund disclosures before Sept. 30, 2025, the letter said. For new funds, trustees are required to provide self-confirmation of compliance or independent certification.

MIDDLE EAST AND AFRICA

Rwanda publishes draft proposals for adoption of global sustainability standards

The Steering Committee on IFRS Sustainability Standards Adoption in Rwanda, chaired by the Institute of Certified Public Accountants of Rwanda, on Feb. 19 announced  its draft proposals for adoption of the two disclosure standards developed by the International Sustainability Standards Board. Under the proposals, Rwanda Stock Exchange-listed companies and large financial institutions would be required to phase in simplified reporting from 2026 based on the 2025 financial year, with full compliance with the standards expected in 2029. Public utility companies and smaller financial institutions would phase in reporting for the 2026 reporting period until 2029. Other entities using IFRS accounting standards would start disclosing in 2028 based on the 2027 financial year, with full disclosure expected in 2030, while small and medium-sized enterprises would phase in reporting from 2029 for the 2028 financial year, with full reporting in 2031. A consultation ran from Feb. 19 to March 19.

UNITED STATES AND CANADA

Acting SEC chairman questions climate disclosure rule

The acting leader of the US Securities and Exchange Commission on Feb. 11 gave an indication of the future of the agency’s climate-related disclosures rule. The SEC finalized a long-anticipated rule requiring thousands of publicly traded companies to disclose certain climate-related information on March 6, 2024. Shortly after, the agency issued a stay on implementation while a federal appeals court reviewed legal challenges to the rule. In a statement issued Feb. 11, 2025, Acting SEC Chairman Mark Uyeda said he directed SEC staff to request that the court not schedule the pending case for argument. In his statement, Uyeda called the climate disclosure rule “deeply flawed” and questioned the need for it, the SEC’s statutory authority to adopt it and the commission’s evaluation of costs and benefits in creating the rule.

Canada updates climate risk management guidelines for financial institutions

Canada’s Office of the Superintendent of Financial Institutions (OSFI), which regulates the country’s banks and insurers, on Feb. 20 updated climate risk guidelines for financial institutions to align with the Canadian Sustainability Standards Board’s two sustainability standards issued on Dec. 18, 2024. The regulator said it has extended the implementation date for the disclosure of Scope 3 emissions, which are the emissions that occur throughout a company’s value chain, to fiscal year 2028 from 2025. It also said it is “clarifying” expectations for on-balance sheet versus off-balance sheet assets under management, and it is setting the implementation date to disclose Scope 3 emissions for off-balance sheet assets under management to fiscal year 2029. However, the OSFI said it expects financial institutions to make progress in understanding, measuring, and managing their climate-related risks, despite the extension to the implementation of disclosures.