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 guidance from the International Sustainability Standards Board (ISSB) on greenhouse gas emissions disclosure, India’s draft climate finance taxonomy and the EU banking regulator’s proposed amendments to its sustainability-related disclosure requirements.

INTERNATIONAL    EUROPE   ASIA PACIFIC

INTERNATIONAL

ISSB publishes guidance on greenhouse gas emission disclosures

The ISSB on May 29 published educational materials designed to guide companies on disclosing greenhouse gas (GHG) emissions under IFRS S2, the ISSB’s climate-related disclosure standard. The guidance includes information about whether companies need to disclose GHGs on a gross basis and whether an entity must set targets under IFRS S2. The IFRS S2 standard requires companies to disclose GHG emissions according to the GHG Protocol Corporate Standard, and the guide explains what steps companies need to take. The guide also explains how companies can use the standard’s Scope 3 measurement framework to measure their Scope 3 emissions, which are those that occur up and down their value chain. Under IFRS S2, companies are required to disclose specific metrics such as GHG emissions, climate-related physical and transition risks and scenario analysis.

EUROPE

European Commission launches call for evidence on SFDR

The European Commission on May 2 launched a call for evidence related to a review of the EU’s Sustainable Finance Disclosure Regulation (SFDR), which requires fund managers to disclose sustainability-related risks in their portfolios. The Commission is seeking feedback on SFDR with the aim of bringing the regulation into line with its proposed simplifications of other major sustainability rules — the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy. The potential simplification of SFDR would likely include streamlining and reducing disclosure requirements and the creation of product categories, the Commission said. The call for evidence ran until May 30, and feedback will inform revisions to the SFDR scheduled for the fourth quarter of 2025. The Commission had undertaken a consultation on the SFDR in 2023 to gain market feedback on implementation of the regulation, which had been phased in from March 2021. The European Supervisory Authorities issued recommendations on simplifying SFDR in June 2024.

Council of Europe adopts treaty on environmental protection through criminal law

The Council of Europe, an international organization distinct from the European Union that aims to promote human rights in Europe and elsewhere, on May 14 adopted a legally binding instrument using criminal law to protect the environment. The Convention aims to prevent and combat environmental crime, promote national and international cooperation and establish minimum legal standards for policymakers to include in national legislation, the Council said in a statement. Offenses under the Convention include unlawful pollution, unlawful management of hazardous waste, unlawful recycling of ships and trade in unlawfully harvested timber, among other things. It also includes protections for victims, witnesses and whistleblowers. The Convention will enter into force three months after 10 signatories ratify it.

European Commission proposes easing supply chain regulation for batteries

The European Commission on May 21 proposed easing due diligence rules for companies placing batteries on the market or putting them into service. The proposal exempts small mid-cap companies, or those with net annual revenues of less than €150 million, from the EU’s 2023 battery regulation, which oversees the entire life cycle of batteries from production to reuse and recycling. Under the proposals, all economic operators, which include manufacturers, importers, retailers and recyclers, would need to report on their due diligence policies every three years, instead of annually. The Commission published a separate proposal which would delay implementation of the battery regulation by two years until Aug. 18, 2027, to give companies more time to adapt to the new rules. The move is part of the Commission’s simplification drive to reduce the overall reporting burden for companies by at least 25% and for SMEs by at least 35% by the end of its current mandate in 2029.

EU banking regulator proposes simplifying disclosure requirements for ESG risks

The European Banking Authority (EBA) on May 22 proposed amendments to its disclosure requirements for environmental, social and governance risks to bring its rules into line with proposals by the European Commission to simplify its sustainability-related reporting framework. Under the EBA’s current requirements, banks have to provide information on how much an institution’s banking book is in line with the EU Taxonomy, the EU’s classification system of sustainable economic activities. The Commission is seeking to reduce the number of data points companies have to report on under its proposals to simplify the EU Taxonomy. The EBA’s proposals would simplify the number of disclosures small and non-listed banks have to report on. For large banks listed on stock exchanges, the proposed amendments would reduce the frequency of reporting on certain data points should they be regarded as immaterial. Large banks would have to report in line with Taxonomy disclosure requirements. A consultation runs until Aug. 22, 2025.

European Parliament votes in favor of CBAM simplification

The European Parliament on May 22 approved proposed changes to 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 measures are part of the European Commission's Omnibus package presented in February 2025 aimed at simplifying the EU’s sustainability-related reporting requirements. Under the changes, importers will be able to purchase CBAM certificates starting in February 2027 rather than from Jan. 1, 2026, to cover the emissions embedded in their imports for 2026, giving businesses more time to adapt to the new carbon pricing mechanism. The proposal also includes a de minimis threshold of 50 metric tons that would exempt 90% of importers while still covering 99% of CO2 emissions from key industrial imports. The vote paves the way for negotiations with the Council of the EU, made up of government ministers of the 27 EU member states, to decide on the final shape of the legislation. The Council agreed on its negotiating position on May 27.

European Commission adopts new rules under Net-Zero Industry Act

The European Commission on May 23 adopted new rules related to its Net-Zero Industry Act (NZIA), clarifying which manufacturing projects can benefit from the act’s specific provisions, including permitting and strategic project status. The NZIA, announced in February, plans to boost the manufacturing of clean technologies within the EU and reduce the bloc’s dependence on imports. The Commission adopted rules on non-price criteria in renewable energy auctions in member states. The criteria include responsible business conduct, cybersecurity, sustainability and resilience. The new rules must be applied to 30% of auction volumes, as of December 30, 2025. Other new rules include listing net-zero technology final products and their main specific components to identify which products may trigger the non-price criterion of resilience. Under the rule, contracting authorities in public procedures must consider supply chain resilience alongside price when selecting technologies or suppliers.

EU lawmakers adopt amendments on emission reduction regulation for carmakers

The Council of the EU on May 27 adopted an amendment to regulation on carbon emission standards for new passenger cars and vans, a move designed to give car manufacturers more time to prepare for stricter EU regulation on carbon emissions from new cars and vans. The European Parliament voted in favor of the amendment on May 13. The amendment allows manufacturers to comply with their obligations for the years 2025, 2026 and 2027 by averaging their performance over the three-year period, rather than each individual year, the Parliament said in a statement. Under the current rules, car manufacturers have to reach annual carbon emission reductions for new cars and vans every five years. An annual carbon emission reduction target of 15% compared to 2021 values will apply for the 2025-2029 period, the Parliament said.

UK financial regulator proposes adopting global standard on sustainability assurance

The UK Financial Reporting Council (FRC), which regulates auditors, accountants and actuaries, on May 29 proposed adopting a UK version of a global standard for sustainability assurance. The FRC said it is proposing the adoption of the International Standard on Sustainability Assurance (ISSA) 5000, “General Requirements for Sustainability Assurance Engagements,” to be used on a voluntary basis for assurance providers. The UK version of the standard would reduce the administrative burden for firms conducting assurance across multiple jurisdictions, the regulator said. The FRC said it had undertaken a market study prior to launching the consultation, which had shown that there was a lack of consistency in the quality of assurance provided in the UK. Without an established regulatory framework, there is a risk that the UK sustainability assurance market may not produce consistent, high-quality sustainability information to guide companies in decision-making, the FRC said. A consultation runs until July 31, 2025.

ASIA-PACIFIC

India publishes draft climate finance taxonomy

India’s Ministry of Finance on May 7 published a draft climate finance taxonomy designed to drive capital into mitigation and adaptation and help the country achieve its climate commitments. The taxonomy will act as a tool to identify technologies, projects and activities that will improve energy efficiency, reduce emissions through the expansion of renewable energy, enhance resilience in sustainable water management, protect and restore ecosystems, undertake geography-specific adaptation measures and support the transition of hard-to-abate sectors. It will also take into account India’s goal of being a developed country by 2047. Under its Nationally Determined Contribution (NDC) under the Paris Agreement on climate change, India is aiming to reduce its emission intensity by 45% and is targeting non-fossil fuel-based electric power installed capacity of 50% by 2030, the Ministry said. Meeting its NDC goals will require an investment of $2.5 trillion, the Ministry estimated. The taxonomy will play a central role in raising that money, it said.