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 the latest developments on the European Commission’s Omnibus Simplification Package, plans by the US to reconsider climate-related rules and Japan’s sustainability-related disclosure standards.

INTERNATIONAL    ASIA PACIFIC    EUROPE   UNITED STATES AND CANADA

INTERNATIONAL

ISSB launches jurisdictional roadmap tool for adoption of sustainability standards

On March 26, the International Sustainability Standards Board (ISSB) launched a roadmap development tool aimed at guiding jurisdictions in adopting or using the ISSB standards. The tool is designed to help jurisdictions set objectives and measure their progress toward adoption. It can also provide companies with a plan for implementing the standards, as regulators develop their regulatory frameworks, the ISSB said. The tool complements a set of templates to help regulators assess how well their jurisdictional approach will help them achieve their objectives and how well it will be understood by market participants and other stakeholders.

EUROPE

EU delays applicability of sustainability reporting rules

The Council of the EU, made up of government ministers of the 27, on March 26 agreed to delay the applicability of EU sustainability reporting rules for some companies, one of the first steps in the bloc’s move to simplify its sustainability regulations. The “stop-the-clock" proposal 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 European 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. Following an EU Parliament vote in favor of the delay, the directive was published in the EU Official Journal on April 16, and EU member states must transpose it into national law by Dec. 31, 2025.

European Commission mandates advisor to simplify EU reporting standards

The European Commission on March 27 asked the European Financial Reporting Advisory Group (EFRAG), which serves as technical advisor to the European Commission, to simplify the first set of the European Sustainability Reporting Standards. 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. The Commission asked EFRAG to provide its technical advice by Oct. 31, 2025, so it could adopt a delegated act in time for companies to use the revised standards for reporting based on financial year 2027. The revisions would reduce the number of datapoints requested by removing those deemed least important for general purpose sustainability reporting, prioritizing quantitative datapoints and improving consistency with other EU legislation.

European Commission consults on state aid framework for Clean Industrial Deal

The European Commission on March 11 released a draft state aid framework as part of its Clean Industrial Deal, which is designed to accelerate the decarbonization of the EU’s energy-intensive industries and support the cleantech sector. The draft sets out how member states can design state aid measures to support the rollout of renewable energy and clean tech. For example, the framework would permit member states to grant state aid for innovative technologies like renewable hydrogen without a tender in some cases, the Commission said. It would also allow EU states to carry out simplified tender procedures for investments in renewable energy and energy storage. Adoption of the framework is expected in June 2025.

UK regulators decide against new rules on diversity and inclusion

The Financial Conduct Authority (FCA) and the Bank of England’s Prudential Regulation Authority (PRA) said on March 11 they had decided against the implementation of new rules on diversity and inclusion following a consultation. In letters to the Chair of the Treasury Committee of the House of Commons, both regulators acknowledged market concerns about increased costs and duplication of reporting. The PRA added that it was currently seeking to reduce the regulatory burden on companies, rather than increase the amount of reporting. Both regulators said they would continue to support voluntary industry initiatives. The PRA noted it would not consider rules related to diversity and inclusion until the “substantive implementation” of new legislation in this area. 

UK launches consultation on mandatory ethnicity and disability pay gap reporting

The UK government launched a consultation on March 18 on proposals to introduce mandatory ethnicity and disability pay gap reporting for companies with 250 or more employees. Feedback to the consultation will shape the upcoming Equality (Race and Disability) Bill, announced in the King’s Speech in July 2024, the government said. UK companies with 250 employees or more have been required to report on their gender pay gap since 2017. The government is proposing that companies report the same set of pay gap measures for ethnicity and disability. They would be required to report the mean and median differences in average hourly pay and bonus pay. The proposals also include requirements for companies to provide the overall breakdown of their workforce by ethnicity and disability as well as the percentage of employees who did not disclose this data.

UNITED STATES AND CANADA

SEC ends legal defense of US climate disclosure rules

US Securities and Exchange Commission (SEC) Acting Chairman Mark Uyeda announced on March 27 that the SEC is stepping back from defending its climate disclosure rules in ongoing litigation. The rules, finalized in March 2024 but then paused to allow legal challenges against them to proceed, require thousands of US companies to disclose some greenhouse gas emissions, climate-related risk management practices and climate-related risks to strategy or financial performance. Legal challenges against the rules were in progress when Uyeda was named acting chairman. In February, Uyeda said he would ask the court not to schedule the case for argument as the SEC reconsidered its position on the rules. In the March 27 press release, the SEC said it voted to withdraw its legal defense of the rules and that its counsel is no longer authorized to advance the SEC's arguments. Paul Atkins was sworn in as the new chairman of the SEC in April.

US EPA announces plan to reconsider slew of climate-related rules

The US Environmental Protection Agency announced on March 12 plans to reconsider many climate-related policies, including a rule on limiting carbon emissions from power plants,  regulations on power plants' mercury emissions and wastewater, and tailpipe emissions restrictions for vehicles, among other rules. The EPA also said it would launch a formal reconsideration of its landmark greenhouse gas (GHG) endangerment finding from 2009, which allowed it to regulate GHG emissions. It also plans to reconsider the Greenhouse Gas Reporting Program, in place since 2010, which requires more than 8,000 facility owners and suppliers to calculate and report their emissions annually.

New York State proposes regulation to collect GHG emission data

New York State Department of Environmental Conservation (DEC) proposed on March 26 draft regulations that would require power plants, suppliers of electricity and natural gas, landfills and other sectors to report on GHG emissions. Facilities that emit 10,000 metric tons or more of carbon dioxide equivalent per emissions year would be subject to the proposed regulation. The move comes after the EPA said it would reconsider its emissions reporting program. Facilities required to report emissions would have to provide the DEC with emissions data on an annual basis as of June 2027 based on the previous year’s emissions. The state program would not require companies to reduce their carbon emission or obtain carbon allowances, the DEC said.  A public comment period runs until July 1, 2025.

Canada removes consumer carbon charge

The Canadian government announced on March 14 it would remove its consumer carbon charge from April 1, ending a fuel fee on consumers and small businesses. The government also said it was removing requirements for Canada’s provinces and territories to have the tax in place by that date. The country amended its Greenhouse Gas Pollution Pricing Act and Fuel Charge Regulations to eliminate the tax. Under the Act, the tax applied to 21 fossil fuels and combustible waste upon delivery, importation or use in Newfoundland and Labrador, Prince Edward Island, Nova Scotia, New Brunswick, Ontario, Manitoba, Saskatchewan, Alberta, Nunavut and Yukon. The government said it would focus on carbon pricing systems on industrial GHG emissions, adding that it intends to strengthen Canada’s approach to carbon pricing for industry.

ASIA-PACIFIC

Japan issues sustainability disclosure standards

The Sustainability Standards Board of Japan (SSBJ) on March 5 issued its sustainability disclosure standards aligned with the ISSB’s two disclosure standards. The SSBJ has issued three standards, with the ISSB’s IFRS S1 General Requirements standards divided into two different standards — the General Standard for disclosures of sustainability-related risks and opportunities and the Application Standard with requirements for sustainability-related financial disclosures. All three standards are to be applied at the same time. The board said that the standards do not define the scope and timing of disclosures but were developed under the assumption they would be required for companies listed on the Tokyo Stock Exchange’s Prime Market.

Australian financial regulator publishes guidance on sustainability reporting

The Australian Securities & Investments Commission (ASIC) released on March 31 a regulatory guide to steer companies required to report climate-related disclosures under the country’s amended Corporations Act. The guide can help determine which companies must prepare sustainability reports and what content they need to provide. Following stakeholder feedback on a draft of the guide, ASIC said it had added information on climate scenario analysis and disclosure of Scope 3 emissions, which are the emissions that occur up and down a company’s value chain. The amendment, passed in September 2024, forms the foundation for Australia’s Sustainability Reporting Standards, which are based on the ISSB’s two sustainability-related standards. The Australian standards apply as of Jan. 1, 2025, for companies with annual revenues of more than A$500 million; as of July 1, 2026, for companies with annual revenues of more than A$200 million; and as of July 1, 2027, for companies with annual revenues of more than A$50 million.