Energy & Infrastructure Legal Outlook 2025

We expect 2025 to be another exciting year as the energy transition continues at pace. Regulatory frameworks supporting low carbon technology and energy markets will see further development and implementation this year, contributing to growing certainty for investors and project developers. Our Energy & Infrastructure Legal Outlook 2025 explores these key themes and highlights what to look out for in the year ahead.

EU: What does the new European Commission have in store for sustainability?

The new European Commission started work on 1 December 2024. This marked the start of a new five-year mandate (December 2024 to October 2029). In relation to the EU’s sustainability agenda, two key, competing, trends are emerging: (i) the need to boost the EU’s competitiveness and growth, while still “staying the course” on the core objectives of the European Green Deal and the decarbonisation agenda and (ii) the need to simplify regulatory burdens for businesses (sustainability reporting burdens) without straying too far into deregulation. The new European Commission is expected to publish its Annual Work Programme for 2025 on 11 February 2025. It will outline key actions for the year, including new proposals and reviews of existing legislation. Read our blog post to find out who are the key sustainability players in the new Commission - and the key new initiatives they have planned.

EU Competitiveness Compass: key sustainability issues

The European Commission published its Competitiveness Compass on 29 January 2025. The Compass is intended to guide the work of the new Commission in the coming five years and lists priority actions to boost the EU’s flagging competitiveness. It also provides a roadmap to how the Commission intends to take forward some of the recommendations in the Draghi report on the future of EU competitiveness. The Compass sets out three core areas for action: innovation, decarbonisation and security. The three core areas for action are complemented by five “horizontal enablers”: simplification, lowering barriers to the Single Market, financing competitiveness, promoting skills and quality jobs and better coordination of policies at EU and national level. Our blog post focuses on sustainability issues and details on the Omnibus proposal.

EU: Carbon Removal Certification Framework published in the OJEU

Regulation (EU) 2024/3012 of the European Parliament and of the Council of 27 November 2024 establishing a Union certification framework for permanent carbon removals, carbon farming and carbon storage in products (Carbon Removal Certification Framework) was published in the Official Journal of the EU (OJEU) on 6 December 2024. This Regulation introduces the first EU-level statutory framework around projects taking place within the EU that generate carbon credits. This voluntary certification framework for permanent carbon removals, carbon farming, and carbon storage in products is intended to facilitate and encourage the uptake of high-quality carbon removals and reductions in soil emissions.

The Regulation covers: (i) permanent carbon removals that capture and store atmospheric or biogenic carbon for several centuries (e.g. bioenergy with carbon capture and storage, direct air capture with storage); (ii) carbon storage activities that capture and store carbon in long-lasting products for at least 35 years (such as wood-based construction products); and (iii) carbon farming activities that enhance carbon sequestration and storage in forests and soils, or reduce greenhouse gas emissions from soils, conducted over at least five years (e.g. reforestation, restoring peatlands or wetlands, improved fertiliser use). Carbon removal activities must meet four overarching criteria for certification: (i) they must deliver a quantified net carbon removal benefit or net soil emission reduction benefit; (ii) they must be additional, going beyond statutory requirements for an individual operator and requiring the certification’s incentive for financial viability; (iii) they must ensure long-term carbon storage while minimising the risk of carbon release; and (iv) they must not significantly harm the environment and should result in co-benefits to one or more sustainability goals. Activities eligible for certification must be independently verified by third-party certification bodies.

EU: Regulation on Packaging and Packaging Waste published in the OJEU

On 22 January 2025, Regulation (EU) 2025/40 of the European Parliament and of the Council of 19 December 2024 on packaging and packaging waste, amending Regulation (EU) 2019/1020 and Directive (EU) 2019/904, and repealing Directive 94/62/EC (Packaging and Packaging Waste Regulation) was published in the Official Journal of the EU (OJEU). It will apply from 12 August 2026, except for Article 67(5), which will apply from 12 February 2029. 

The Regulation aims to reduce the generation of packaging waste by setting binding re-use targets, restricting certain types of single-use packaging and requiring economic operators to minimise the packaging used. It covers the full life cycle of packaging.

The Regulation specifies requirements such as: (i) 2030 and 2040 targets for a minimum percentage of recycled content (up to 65% for single-use plastic bottles by 2040); (ii) minimising the packaging weight and volume, and avoiding unnecessary packaging; and (iii) minimisation of substances of concern, including restricting the placing on the market of food contact packaging containing per- and polyfluorinated alkyl substances (PFAS) if they exceed certain thresholds. Labelling, marking and information requirements (e.g., on material composition or recycled content) are designed to facilitate consumer sorting and choices.

EU: Construction Products Regulation published in the OJEU

Regulation (EU) 2024/3110 of the European Parliament and of the Council of 27 November 2024 laying down harmonised rules for the marketing of construction products and repealing Regulation (EU) No 305/2011 (Construction Products Regulation) was published in the Official Journal of the EU (OJEU) on 18 December 2024. The Regulation harmonises the EU rules for the marketing of construction products. It aims to facilitate their free movement in the single market and reduce administrative burdens, updating the existing legislation from 2011. 

The Regulation establishes harmonised rules on expressing the environmental and safety performance of construction products concerning their essential characteristics, including life cycle assessment and environmental, functional and safety product requirements. It also stipulates rights and obligations for economic operators, such as manufactures or suppliers dealing with construction products or their components, as well as obligations for other actors providing services linked to manufacturing and commercialisation.

In addition, the Regulation facilitates the adoption and implementation of new standards and empowers the Commission to adopt common specifications under certain conditions when standardisation routes are blocked. It also introduces a digital passport system for construction goods, providing comprehensive information, including declarations of performance and conformity, safety information and usage instructions. 

EU Omnibus Regulation: what do we know so far?

The European Commission is expected to publish the “Omnibus simplification package” on 26 February 2025. The idea of an Omnibus Regulation was first mentioned by Ursula von der Leyen in the press conference after the Budapest meeting on 8 November 2024. She said that the Commission is planning to propose an Omnibus Regulation to reduce red tape. The Commission will be looking at, for example, the “triangle of the EU Taxonomy Regulation, the CSRD and the CSDDD”.

At present, there is still a great deal of uncertainty as to what exactly that package will do and its format. The Commission will have a difficult job balancing the need to reduce red tape and streamline sustainability reporting burdens without straying too far into the camp of deregulation. We are keeping a close eye on developments and will let clients know as soon as the Omnibus simplification package has been published. For more information, see our blog post.

EU CSRD: 2024 end-of-year set of EFRAG explanations

On 6 December 2024, the European Financial Reporting Advisory Group (EFRAG) published 64 new explanations of the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD). The new explanations have been incorporated into the Compilation of Explanations, which now contains 157 explanations released up to November 2024. In addition, on 23 December 2024, EFRAG published five additional explanations. Explanation ID 177 was published separately and includes the mapping of sustainability matters in AR 16 of ESRS 1 with the Disclosure Requirements in topical standards. It is designed to assist in identifying the Disclosure Requirements and datapoints linked to material matters already determined. This explanation includes a flowchart, narrative content and mapping tables. For the highlights of new explanations, see our blog post.

EU CSRD: EFRAG publishes Voluntary Sustainability Reporting Standard for non-listed SMEs

On 17 December 2024, EFRAG released the VSME, the voluntary reporting standard for non-listed micro-, small-, medium-sized undertakings (SMEs). The VSME is designed for undertakings that are not within the mandatory scope of the CSRD. It has been prepared to provide a standardised set of information to replace the current multiple and uncoordinated ESG data requests from SMEs’ business partners. EFRAG's work on the VSME falls outside the CSRD, meaning the VSME will not be issued as a Delegated Act. This Standard has no legal authority, unlike the ESRS for large undertakings. For more information, see our blog post.

Sustainable Finance Regulation in the UK and EU: What’s coming up in 2025

The development of new, and implementation of existing, sustainability law and regulation continues apace. In our recently published Financial Regulation Legal Outlook Report for 2025, we explore a number of ESG topics and what to look out for in the year ahead, including: (i) CSRD, TCFD and the move to ISSB standards, transition plans – what is happening next for corporate disclosure obligations and how you can comply; (ii) product level disclosure obligations – plotting the next steps for SFDR, SDR and related sustainability product disclosure obligations; (iii) ESG due diligence obligations – mapping the obligations, unearthing their complexity and dissecting their impact; and (iv) ESG ratings – regulation picking up the pace for this soon to be fully regulated sector. See also our timeline showing the key dates on the horizon for UK and EU developments in the area of sustainable finance for 2025-2029.

Debt Capital Markets Legal Outlook

See our Debt Capital Markets Legal Outlook, winch includes an overview of the latest market and regulatory developments in sustainable finance, including market trends, the EU Green Bond Regulation and future ESG disclosures under the EU and UK prospectus regimes.

Sustainable Finance in Europe: Regulatory State of Play: Updated Linklaters / AFME report

Linklaters and AFME (Association for Financial Markets in Europe) have updated our report on the regulatory state of play of the sustainable finance market in Europe. Sustainable finance rightly remains front and centre as policymakers and regulators focus on the need to mobilise finance in support of the transition to a sustainable economy. The new report provides a practical guide to the plethora of initiatives relating to sustainable finance in Europe. It especially highlights how the banking sector is impacted, although is highly relevant reading for any participants in the financial services sector.

EU: ESG Rating Regulation published in the OJEU

Regulation (EU) 2024/3005 of the European Parliament and of the Council of 27 November 2024 on the transparency and integrity of Environmental, Social and Governance (ESG) rating activities, and amending Regulations (EU) 2019/2088 and (EU) 2023/2859 (known as the ‘ESG Ratings Regulation’) was published in the Official Journal of the EU (OJEU) on 12 December 2024. It came into force from 1 January 2025 and will apply from 2 July 2026. The Regulation is designed to govern the issuance, distribution and, where relevant, publication of ESG ratings, without being intended to regulate their use. Read our earlier client alert for an overview of the Regulation.

EU: ESMA publishes submission questionnaire under EU Green Bond Regulation

Issuers of the European Green Bonds (EuGB) are required to notify European Securities and Markets Authority (ESMA) within 30 days of publication of all documentation listed in Article 15(1) of the EU Green Bond Regulation (including the factsheet, pre-issuance external review, and link to the website where the prospectus can be consulted) unless the issuer is exempt under the EU Prospectus Regulation. ESMA has created an issuer disclosure section on its website, which sets out the details for how EuGB issuers can meet their notification requirements to ESMA under Article 15(5) of the EU Green Bond Regulation. 

To comply with such notification requirements, issuers are directed to complete a questionnaire (which may relate to multiple documents). Issuers will be able to download a copy of their notification once completed and will also obtain a unique notification ID, which is necessary to amend the submission. Any queries relating to Article 15 notifications to ESMA should be directed to: EUGB.article15@esma.europa.eu.

EU: ESMA webpage for external reviewers of European Green Bonds

The EU Green Bond Regulation, in force since 21December 2024, lays down an 18-month transition period during which external reviewers of European Green Bonds (EuGB) will need to comply with the requirements of the Regulation applicable to them on a ‘best efforts’ basis. In order to act as an external reviewer of EuGB labelled bonds during the transition period, such reviewer must notify ESMA of their intention to provide external reviews for EUGB labelled bonds during the transition period. ESMA has created a dedicated webpage for external reviewers of EuGB labelled bonds and also published the current list (as at 17 January 2025) of external reviewers who can provide external reviews of European Green Bonds during the transition period.

EU: ESMA provides further clarification on its fund names guidelines

On 13 December 2024, ESMA published three new Q&As on the practical application of its guidelines on funds' names using ESG or sustainability-related terms. The new Q&As are related to the key topics of green bonds, the interpretation of “meaningfully investing in sustainable investments” and the definition of controversial weapons. Read our blog post for more information on the Q&A, as well as our earlier blog post for details on ESMA's fund naming guidelines.

EU Platform on Sustainable Finance suggests product categorisation scheme within the SFDR

The EU Platform on Sustainable Finance (PSF) has published a briefing note setting out a proposal to establish a product categorisation scheme within the Sustainable Finance Disclosure Regulation (SFDR). The intention of the proposal is to address the existing fragmentation and confusion in the EU market around the current SFDR Articles 8 and 9 product categories. Whilst the proposal remains high-level, it aims to serve as a basis from which to build a complete and detailed categorisation scheme, and the PSF claims to leverage the positive elements of the SFDR and the broader Sustainable Finance Framework in its proposal. Whilst the proposal is non-binding on the Commission, it is significant as an indicative direction which the Commission may pursue, as part of its Level 1 review of the SFDR. For more information, see our blog post.

EU: EBA Final Report on Guidelines on the management of ESG risks

Following its consultation in early 2024, on 9 January 2025, the European Banking Authority (EBA) published its Final Report setting out its Guidelines in the management of ESG risks. These guidelines set out requirements for the internal processes and ESG risks management arrangements that financial institutions should have in place and have been developed to address the EBA’s mandate specified in paragraphs (a), (b), and (c) of Article 87a (5) of the Capital Requirements Directive VI (CRD VI) and in line with its roadmap on sustainable finance. 

In its report, the EBA stressed the increasing significance of ESG risks, which can challenge the safety and soundness of institutions and may affect traditional financial risk categories such as credit, market, operational and reputational risks, and addressing this is the key focus of the Guidelines. For more information, see our blog post.

EU: EBA consults on CRD VI draft Guidelines on ESG Scenario Analysis

The European Banking Authority (EBA) is consulting on Draft Guidelines on ESG Scenario Analysis. These guidelines are to be issued pursuant to the EBA’s mandate under Article 87a(5) of the Capital Requirements Directive VI (CRD VI) to issue guidelines on the identification, management, measurement and monitoring of ESG risks, and encompassing ESG related scenario analysis (including stress testing) as an important tool of an institution’s risk management framework.  On 9 January 2025, the EBA published Guidelines on the Management of ESG risks (see above) which covered a large part of that mandate. The guidelines in the present consultation are intended to: (i) complement those earlier guidelines and set out the criteria for setting the scenarios that institutions should use to test their business and financial model resilience to the negative impacts of ESG factors; and (ii) for institutions using the IRB approach, to assist the use of scenarios that include ESG risks, as part of their credit risk stress tests. For more information, see our blog post.

EIOPA and ECB propose European approach to reduce economic impact of natural catastrophes

The European Insurance and Occupational Pensions Authority (EIOPA) and the European Central Bank have published a joint paper in which they propose a possible EU-level approach to reduce the insurance protection gap for natural catastrophes, building on existing national and EU structures. The paper is intended to provoke a discussion on possible ways to reduce the insurance protection gap through an EU-level solution. As stated in the press release, a possible solution is composed of: (i) an EU public-private reinsurance scheme to increase the insurance coverage for natural catastrophe risk - it would be funded by risk-based premiums from (re)insurers or national insurance schemes; and (ii) an EU fund for public disaster financing financed by contributions from Member States, that is aimed to help rebuild public infrastructure following natural disasters, subject to Member States having implemented agreed risk mitigation measures prior to the event to minimise moral hazard.

EU Platform on Sustainable Finance publishes report on transition plans with recommendations for the European Commission

On 23 January 2024, the EU Platform on Sustainable Finance (PSF) published a Report named “Building trust in transition: core elements for assessing corporate transition plans”. The Report aims to guide companies in developing their transition plans and to assist financial market participants (FMPs) in assessing these plans. It provides an overview of the EU legal framework on transition plans and offers recommendations to the European Commission for targeted policy interventions. The PSF urges the Commission to develop policy frameworks that will enable corporates to prepare transition plans for due diligence and sustainability reporting in a consistent and coherent manner. For more information, see our blog post.

EU Platform on Sustainable Finance publishes draft report on changes to activities and technical screening criteria in EU Taxonomy

On 8 January 2025, the Platform on Sustainable Finance (PSF) published a draft report on preliminary recommendations for the review of the Climate Delegated Act and the addition of activities to the EU Taxonomy, with a related call for feedback. 

The Draft Report contains recommended revisions to the technical screening criteria (TSC) of the economic activities included in the Climate Delegated Act (Climate DA) adopted in 2021, with a focus on transitional activities. The PSF has also developed TSC for a list of new economic activities and Do No Significant Harm (DNSH) criteria for activities to be included in Annex II to the Climate Delegated Act, as “adapted” activities. 

The PSF is inviting feedback on the Draft Report until 5 February 2025, after which the PSF will finalise the report and submit this to the European Commission. For more information, see our blog post.

UK: SDR Naming and Marketing rules in force, and FCA updates its pre-contractual disclosure examples

The Financial Conduct Authority’s (FCA) Sustainability Disclosure Requirements (SDR) Naming and Marketing rules became applicable on 2 December 2024. The FCA has updated its guidance page on the SDR & Labelling regime with further illustrative examples of how applicants can meet the pre-contractual disclosure requirements. For more information, see our blog post.

UK: FCA consultation on proposals for "minor amendments" to AGR and SDR

The Financial Conduct Authority (FCA) has published its Quarterly Consultation (CP24/26) No 46 which includes proposals to make what it considers to be some “minor amendments” to the Anti-Greenwashing Rule and SDR for clarification. For more details on the proposals, see our blog post.

UK: PRA published Dear CEO letter on 2025 supervisory priorities for insurance firms

On 9 January 2025, the Prudential Regulation Authority (PRA) published a “Dear CEO letter” outlining its 2025 supervisory priorities for the UK insurance sector. The letter provides an insight into the regulator’s timeline for the year ahead and the key focus areas that firms should bear in mind. The PRA's view is that insurance firms are yet to fully embed the PRA's climate expectations. The PRA is expecting firms to make further progress - particularly on scenario analysis and risk management, and firms should expect engagement with supervisors in 2025, particularly those firms for which physical climate risk are most material. For the analysis of the wider aspects of the “Dear CEO letter”, see our blog post.

EU Deforestation Regulation: final green light for the one-year postponement

On 23 December 2024, the Regulation (EU) 2024/3234 of the European Parliament and of the Council concerning the delay of the application date of the EU Deforestation Regulation (EUDR) was published in the Official Journal of the EU. It came into force on 26 December 2024, a few days ahead of the initially foreseen date of entry into application. 

The new Regulation provides for a one-year postponement of application date, from 30 December 2024 to 30 December 2025 for large in-scope companies and 30 June 2026 for small and micro enterprises. This will allow operators and traders, as well as third countries and EU Member States, an extra year to prepare for the implementation of the EUDR. However, the Commission must publish the list of countries that present a low or high risk no later than 30 June 2025 so that operators and traders have this information ahead of the EUDR start of application date. For more information, see our blog post.

EU Forced Labour Regulation published in the OJEU

The Forced Labour Regulation (EU Regulation 2024/3015) on prohibiting products made with forced labour on the Union market was published in the Official Journal of the EU (OJEU) on 14 December 2024 and will apply as of 14 December 2027. 

The Forced Labour Regulation, which has a very broad scope of application, lays down rules prohibiting economic operators from placing and making available on the EU market or exporting from the EU market any products made with forced labour. It imposes on all economic operators (EU and non-EU) a general ban on any products made with forced labour, prohibiting them from being placed on the EU market or exported from it, starting from 14 December 2027. 

The Regulation does not impose specific due diligence requirements. Companies that are in-scope of the Corporate Sustainability Due Diligence Directive (CSDDD) (once applicable from July 2027 for the largest companies), other EU/national due diligence regimes (such as the French, German or Norwegian regimes), or those that have voluntarily adhered to soft law standards, will need to implement the requirements of these regimes in combination with the forced labour ban. For more information on the Regulation, see our blog post. 

DEI in 2025: a binary choice?

At the start of 2024, we reflected on the landscape for diversity, equity and inclusion (DEI) for employers and the pace at which it was evolving, as businesses sought to develop meaningful strategies which reflected commercial objectives but also complied with applicable laws and met cultural and societal expectations. Whilst many of our 2024 reflections remain live, arguments around DEI in 2025 have become more polarised in the public arena. Does this mean that businesses are faced with a simple binary choice whether to proceed with DEI initiatives at all costs or stop their DEI initiatives entirely? In this article, we suggest that the situation is more subtle and nuanced in light of global political developments.

National transposition of EU Pay Transparency Directive

The EU Pay Transparency Directive (EUPTD) aims to combat pay discrimination and help close the gender pay gap in the EU. It has been in force since 7 June 2023, and EU member states have until 7 June 2026 to transpose it into national law. Unlike some EU directives, the EUPTD is not a maximum harmonisation directive, meaning member states can extend or "gold-plate" it when they transpose it into national law. 

As the transposition deadline approaches rapidly, EU member states are progressing the EUPTD’s implementation. We created a transposition tracker that is designed to monitor national transposition across Member States. Where available, we provide more detailed insights into the substance of draft implementing laws. 

Up until now, Ireland has become the fourth EU member state to initiate this process (see our latest blog post), following Sweden’s proposal in May 2024, Belgium’s transposition within the public sector in September 2024 (see our blog post), and Poland’s proposal in December 2024 (see our blog post). Several other countries indicated that they started the implementation and further confirmed their national transposition deadline.

UK: Managing conflicting beliefs in the workplace 

Conflicting beliefs in the workplace are, to some degree, an inevitable part of modern working life, but have the potential to escalate and create significant legal and reputational risk. Our employment and diversity lawyers have launched a new guide which looks at the legal framework for managing conflicting beliefs and provides practical advice on how businesses can manage conflicts in the workplace appropriately, safely and with confidence.

ESG Legal Outlook 2025 – key Asia themes

The last couple of years have seen ESG policy and regulation across the globe develop at a frenetic pace. But with many economies concerned about competitiveness and energy costs, questions are now being asked about the private sector’s ability to cope. We expect the pace of change going forward will slow and that there will be a pause for thought and increased focus on practical implementation, giving businesses some much-needed breathing space. In our ESG Legal Outlook 2025 we highlight the key global themes set to shape the legal landscape for ESG in the coming year. For further information on key themes for Asia, see our blog post, which highlights the themes of energy transition; transition finance and transition plans; sustainability disclosure and due diligence regimes; sustainable finance; and ESG litigation and greenwashing.

Hong Kong SAR: Government publishes roadmap on sustainability disclosures

On 10 December 2024, the Hong Kong SAR Government published a roadmap on sustainability disclosures in Hong Kong (the Roadmap), which builds on the Vision Statement issued on 25 March 2024 (see our previous blog post). The Roadmap sets out Hong Kong’s approach to require “publicly accountable entities”, or “PAEs”, to adopt the International Financial Reporting Standards - Sustainability Disclosure Standards (the ISSB Standards). It provides a pathway for large PAEs to fully adopt the ISSB Standards no later than 2028. The Hong Kong Institute of Certified Public Accountants published the HKFRS Sustainability Disclosure Standards on 12 December 2024 (see below). As it stands, all Main Board issuers are required to disclose against the “New Climate Requirements” based on the IFRS S2 Climate-related Disclosures on a “comply or explain” basis starting from 1 January 2025. Issuers that are Hang Seng Composite LargeCap Index constituents (Large Cap Issuers) are further required to disclose against the “New Climate Requirements” on a mandatory basis starting from 1 January 2026 (see our previous blog post). The Roadmap states that Hong Kong Exchanges and Clearing Limited (HKEX) will consult the market in 2027 on mandating sustainability reporting against the HKFRS Sustainability Disclosure Standards for listed PAEs with an expected effective date of 1 January 2028, under a proportionate approach. Relevant financial regulators will require financial institutions carrying a significant weight (being non-listed PAEs) to apply the HKFRS Sustainability Disclosure Standards no later than 2028. The Roadmap also sets out a plan to develop sustainability assurance, data and technology, as well as skills and competencies.

Hong Kong SAR: HKICPA publishes HKFRS Sustainability Disclosure Standards 

On 12 December 2024, the Hong Kong Institute of Certified Public Accountants (the HKICPA) published the HKFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and HKFRS S2 Climate-related Disclosures (the HKFRS Sustainability Disclosure Standards). The publication of the HKFRS Sustainability Disclosure Standards follows the public consultation that closed on 27 October 2024 (see our previous blog post). The HKFRS Sustainability Disclosure Standards are fully aligned with the IFRS Sustainability Disclosure Standards - IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS S2 Climate-related Disclosures (the ISSB Standards). The HKFRS Sustainability Disclosure Standards have an effective date of 1 August 2025. As outlined in the Government’s Roadmap on Sustainability Disclosure in Hong Kong (the Roadmap) (see above), Hong Kong will prioritise the application of HKFRS Sustainability Disclosure Standards by large “publicly accountable entities” or “PAEs” under a phased approach, with the aim to fully adopt the standards by 2028. To facilitate the implementation and application of the HKFRS Sustainability Disclosure Standards, the HKICPA has published FAQs and launched an implementation support platform for stakeholders to submit technical questions and will use this platform to relay any Hong Kong-specific issues to the ISSB as appropriate. The HKICPA has also established a Sustainability Capacity Building Framework and the Sustainability Community to facilitate exchanges and information sharing among industry participants.

Hong Kong Stock Exchange will tighten corporate governance requirements from 1 July 2025

On 19 December 2024, the Hong Kong Stock Exchange (the Exchange) published the conclusions to its June 2024 consultation on “Review of Corporate Governance Code and Related Listing Rules”. Whilst all the proposals will be adopted, the Exchange noted practical concerns raised in the market feedback on four proposals, where the views of the market are more diverged. The Exchange addresses these concerns by either scaling back the proposed requirements or delaying, extending or staggering their implementation to allow issuers more time and greater flexibility to plan their actions regarding those governance improvements. The effective date of the new requirements, which was initially targeted to take effect from 1 January 2025, will be postponed by six months to 1 July 2025. This means calendar year-end companies will first report on the new requirements in their annual reports in 2027. The proposed transition periods and arrangements to phase out overboarding INEDs and long-serving INEDs have also been modified. For more information on the proposals, see our briefing.

Hong Kong Monetary Authority publishes guidance on good practices on transition planning

On 16 December 2024, the Hong Kong Monetary Authority (HKMA) published a circular and annex on key observations and good practices on transition planning (the Guidance). The Guidance is based on a survey of 38 authorised institutions (AIs) conducted in Q4 2023. The Guidance also builds on the high-level principles on transition planning published by the HKMA on 29 August 2023. The Guidance covers (i) governance; (ii) implementation strategy; (iii) engagement strategy; (iv) metrics and targets; (v) data collection and processing; (vi) scenario analysis; and (vii) disclosure and communication. Also to note that on 21 October 2024, the HKMA published the Sustainable Finance Action Agenda (the Action Agenda) (see our previous blog post) which sets out eight sustainable finance goals. Goal #1 of the Action Agenda sets out the aim for “all banks to strive to achieve net zero in their own operations by 2030 and in their financed emissions by 2050”. The HKMA have said that they will provide further guidance on this goal in due course.  The Guidance states that the HKMA is preparing a new Supervisory Policy Manual module GS-2 on “Transition Planning” setting out its expectations on how AIs should manage and address the risks associated with the net-zero transition, as well as expectations on how AIs should fulfil Goal #1 of the Action Agenda, which they will consult the industry on.

Hong Kong SAR: HKMA launches the Professional Level of the Enhanced Competency Framework on Green and Sustainable Finance

The HKMA has launched the Professional Level of the Enhanced Competency Framework on Green and Sustainable Finance (ECF-GSF). The ECF-GSF sets out the competency standards for banking practitioners performing GSF-related functions in the banking industry in Hong Kong. July 2023 saw the launch of the Core Level targeting the entry-level and junior-level banking practitioners, this new Professional Level is for middle-level and senior-level banking practitioners to acquire specialised domain knowledge related to GSF and develop professional competencies in the GSF-related area.

China releases corporate sustainability disclosure standards

On 17 December 2024, China’s Ministry of Finance formally published the Corporate Sustainability Disclosure Standards - Basic Standards (Trial) (the Standards) with eight other ministries, following the release of the consultation draft on 27 May 2024 (the Consultation Draft) (see our previous ESG newsletter). The Standards are designed to guide businesses in disclosing sustainability-related information and aim to gradually establish a sustainability disclosure standard system in China. The Standards consist of six chapters, including general provisions; disclosure objectives and principles; information quality requirements; disclosure elements; other disclosure requirements; and miscellaneous, which together clarify the basic concepts, principles, methods, objectives and general requirements for sustainable information disclosure. While the Standards generally follow the core contents of the Consultation Draft, they offer further clarification and flexibility in respect of the application scope, criteria for sustainability disclosure and other matters. According to the notice regarding the issuance of the Standards, enterprises may choose to voluntarily adopt these Standards until further requirements on the application scope and implementation are made. Separately, China is among 31 jurisdictions to join a newly launched network to support the adoption of ISSB standards in emerging markets, launched by IOSCO’s Growth and Emerging Markets Committee (see IOSCO’s press release).

China’s three major Stock Exchanges issues new guidance on sustainability reports formulation

On 17 January 2025, the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the Beijing Stock Exchange released the Guidance for Listed Companies on Formulation of Sustainability Reports (the Guidance). The Guidance implements the sustainability reporting guidelines released in April 2024 (see our previous ESG newsletter), and provides more detailed instructions and requirements with respect to the sustainability reporting of listed companies. The Guidance mainly comprises two chapters. The first chapter elaborates on the methods for identifying material topics, outlines the key focuses of disclosure, and provides a framework for sustainability reports. The second chapter stipulates the assessment and calculation methods for climate change-related indices. The Guidance seeks to align with international sustainability reporting standards and aims to help listed companies to improve sustainability reporting and sustainability management.

2025 UK-China Economic and Financial Dialogue covers green finance, energy and climate change

On 11 January 2025, the UK’s Chancellor of the Exchequer and Chinese Vice Premier concluded the UK-China Economic and Financial Dialogue in Beijing. The outcome covers a wide range of sectors and initiatives. In respect of green finance and biodiversity, the UK and China reiterated their recognition of each other as primary partners in green finance, for capital raising, product innovation, and international thought leadership. China stated that it will issue an inaugural RMB-denominated sovereign green bond in 2025 and that this would be listed in London, the first in a programme of Chinese green sovereign issuances in the UK. The UK and China agreed to further climate and energy cooperation, including strengthening the existing UK-China clean energy partnership, pursuing cooperation on climate, for example via a new MoU and a climate dialogue, and the UK-China environmental dialogue committed to at the Convention on Biological Diversity in 2024.

Japan launches the GX Acceleration Declaration Framework

On 6 December 2024, the Ministry of Economy, Trade and Industry (METI) launched the GX Acceleration Declaration Framework (the Declaration Framework). The Declaration Framework aims to encourage companies on the demand side (i.e., processors and end-users) that proactively intend to make efforts that are essential for creating a market for green transformation (GX). The Declaration Framework aims to help identify those companies engaging, not only in proactively reducing their emissions, but also in tackling GX throughout supply chains by making GX Acceleration Declarations. Such GX Acceleration Declarations will help such companies to be positively evaluated in the market, thereby promoting the creation of a market for GX products. In the early phase after the launch of the Declaration Framework, it will target products and services currently subject to the government’s support measures, including green steel, green chemicals, hydrogen, SAF and so on. Although the details have not been disclosed, it appears that METI is planning to provide certain benefits to companies making such declarations.

Japan’s Ministry of Environment publishes sustainable finance guidelines, principles on achieving NDCs and guidance on evaluating GHG emissions

On 8 November 2024, the Ministry of Environment (MoE) published 2024 editions of the (i) Green Bond and Sustainability Linked Bond Guideline and (ii) Green Loan and Sustainability Linked Loan Guideline, together with the MoE’s responses to questions raised though public consultation (here and here). The key updates were made in order to reflect the current market situation and recent updates of (i) the LMA’s Green Loan Principles and Sustainability-Linked Loan Principles and (ii) ICMA’s Sustainability-Linked Bond Principles.

On 15 November 2024, the MoE published the “Guideline for Assessment and Valuation of Climate Tech’s Impact on GHG (for investors and start-ups)”. The purpose is to provide guidance on evaluating the impact on GHG reductions by climate tech start-up businesses so that investors can use the guideline as a reference. 

On 18 November 2024, the MoE announced the “Cooperative Actions for NDC Implementation and Transparency Enhancement”, which set out the principles of Japan’s actions towards achieving its nationally determined contributions (NDCs).

The Monetary Authority of Singapore publishes guidance on good disclosure practices for retail ESG funds 

On 4 December 2024, the Monetary Authority of Singapore published an information paper setting out good disclosure practices that retail ESG funds may adopt when adhering to Circular No. CFC 02/2022: Disclosure and Reporting Guidelines for Retail ESG Funds (the ESG Funds Circular). For more information on the ESG Funds Circular, see our previous blog post). Good disclosure practices set out in the information paper covers, for example, defining ESG-related terms upfront, clearly setting out how ESG criteria or metrics are used and making disclosures related to stakeholder engagement activities.

Singapore and Australia collaborate to support sustainable infrastructure and decarbonisation in Southeast Asia

The Australian Government has approved an investment of USD 50 million in the Green Investments Partnership (GIP) under Singapore’s Financing Asia’s Transition Partnership (FAST-P) initiative (see our previous ESG newsletter), to support clean energy transition and sustainable infrastructure in Southeast Asia. This marks the first investment under Australia’s Southeast Asia Investment Financing Facility (SEAIFF) and reinforces Australia’s commitment to fostering regional economic partnerships. The GIP aims to catalyse infrastructure projects in renewable energy, electric vehicle infrastructure, and other green sectors.

Singapore’s parliament passes the Workplace Fairness Bill

The hotly anticipated Workplace Fairness Bill was passed in Parliament on 8 January 2025. We anticipate that a second bill will be introduced this year to address claims procedures and corresponding changes to the Employment Claims Act 2016 and both bills, when passed, are expected to take effect in 2026 or 2027. Companies with fewer than 25 employees will initially be exempt from the Workplace Fairness Legislation, subject to review. For more information, see our briefing.

Bursa Malaysia requires increased sustainability reporting by listed companies

In December 2024, Bursa Malaysia Securities Berhad (Bursa Malaysia) announced enhancements to the sustainability reporting requirements in the Listing Requirements to align with the National Sustainability Reporting Framework. Under these enhancements, a listed issuer must include a sustainability statement in its annual report in accordance with the IFRS Sustainability Disclosure Standards as a baseline. They must also include metrics and targets that demonstrate the listed issuer’s performance and progress for the last three years on a rolling basis and a statement concerning whether there has been an internal review by its internal auditor over such statements or otherwise independent assurance has been performed in accordance with recognised assurance standards on the Sustainability Statement. The rollout of these requirements will be staggered with Large MAIN Market listed issuers being required to comply from the annual reporting period on 1 January 2025 onwards, followed by the remaining MAIN Market listed issuers on 1 January 2026 and ACE Market listed corporations on 1 January 2027. Additionally, Bursa Malaysia has also introduced amendments that promote shareholder participation in general meetings of listed issuers by requiring in person or hybrid meetings from 1 March 2025, and have strengthened the accountability of listing advisers by requiring them to be named in public documents of listed issuers for a specified period from 2 January 2025.

Indonesia: New implementing regulation on licence-based carbon capture and storage

On 20 December 2024, MEMR issued the long-awaited Minister of Energy and Mineral Resources Regulation No. 16 of 2024 on Implementation of Carbon Storage Activities in Carbon Storage Licence Area for CCS (MEMR 16 / 2024) regulating carbon capture and storage (CCS) activities conducted under the new licensing scheme introduced by Presidential Regulation No. 14 of 2024 on Implementation of CCS Activities (PR 14 / 2024). By the issuance of MEMR 16 / 2024, the legal basis for two different schemes of CCS activities is now implemented – the other one being CCS conducted by Production Sharing Contract (PSC) contractor as part of Petroleum Operations under the PSC, as regulated under MEMR Regulation No.2 of 2023 on Undertaking CCS and CCUS in Oil and Gas Activities (MEMR 2 / 2023). In addition to providing more details on technical, procedural and licensing aspects of licence-based CCS activities, MEMR 16 / 2024 also deals with some important issues which are not specifically captured in PR 14 / 2024, including licence-based CCS business activities by a PSC contractor, which will be highlighted in this publication. MEMR 16 / 2024 is effective as of 24 December 2024 being the enactment date of the regulation. For more information, see our briefing.

ASEAN Taxonomy Board issues version 3 of the ASEAN Taxonomy for Sustainable Finance

On 20 December 2024, the ASEAN Taxonomy Board (ATB) released an updated iteration of the ASEAN Taxonomy for Sustainable Finance (ASEAN Taxonomy) Version 3 and FAQs. Version 3 of the ASEAN Taxonomy reflects comments received during the consultation process which concluded in October 2024 (see our previous ESG newsletter). The ASEAN Taxonomy Version 3 includes technical screening criteria (TSC) for the (i) construction and real estate; and (ii) transportation and storage sectors. The ATB has also developed FAQs to help clarify the taxonomy’s purpose and application, as well as publishing use cases of the ASEAN Taxonomy for SMEs.

Changes in International Commitments

On 17 January 2025, the U.S. Federal Reserve announced its withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System (“NGFS”), a global group focused on climate change and green finance issues. This move occurs amidst increased skepticism from Republicans towards climate change-focused groups, such as the NGFS. The Federal Reserve had joined the NGFS in late 2020 under the first Trump administration at the direction of a Federal Chair who was appointed by President Trump. This exodus from green initiatives has been seen by other major U.S. financial institutions, which have recently withdrawn from climate action networks in anticipation of Donald Trump's second presidency. Several notable institutions have left their net zero alliances citing potential legal risks and backlash from Republican lawmakers. 

On 20 January 2025, the U.S. Climate Alliance, consisting of 24 state governors, announced its commitment to the Paris Agreement goals after President Trump’s withdrawal of the U.S. from same. In a letter to the United Nations Framework Convention on Climate Change, the U.S. Climate Alliance emphasized its intention to pursue significant GHG reductions and implement state-driven climate change policies and programs irrespective of federal changes. The U.S. Climate Alliance aims to reduce GHG emissions at least 50-52% by 2030 and 61-66% by 2035, below 2005 levels, and highlights ongoing initiatives like clean energy standards and methane reduction programs – all to ensure continued progress in line with global climate change objectives. 

Presidential Actions

On 20 January 2025, President Trump issued a slew of executive actions that may have wide-reaching effects on ESG matters in the U.S. and represent a significant shift in U.S. federal ESG policy. The major ESG-related executive actions issued by President Trump on his first day in office include:

• An Executive Order titled “Unleashing American Energy”, which reduces regulatory burdens by streamlining the approval process for energy projects and eliminates what the Trump administration views as unnecessary red tape. By cutting these regulations, the Trump administration hopes to encourage innovation and investment in the development of domestic energy resources, specifically focusing on natural gas, coal, hydropower, biofuels, critical mineral, and nuclear energy. Some key presidential actions from the Executive Order are the: (1) restart of the processing of liquefied natural gas export applications; (2) halt on the distribution of Inflation Reduction Act of 2022 funding (including to electric vehicle infrastructure); (3) elimination of the electric vehicle mandate; (4) refill of the National Defense Stockpile; and (5) rescission of various efforts by the Biden administration to advance environmental justice. 
• A Memorandum titled “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects” that will affect both onshore and offshore wind energy projects. The Memorandum (1) withdraws all areas of the U.S. Outer Continental Shelf from offshore wind leasing such that the Bureau of Ocean Energy Management cannot issue new offshore wind leases; and (2) prohibits the issuance of new or renewed approvals, rights of way, permits, leases, or loans for onshore or offshore wind projects. For more information on this Memorandum, see our article. 
• An Executive Order titled “Declaring a National Energy Emergency”, which declares a national energy emergency pursuant to the National Emergencies Act, 50 U.S.C. 1601 et seq., and 3 U.S.C. 301. The primary goal of the national emergency declaration is to enable the President to both reduce environmental restrictions on energy infrastructure and projects and ease permitting for new transmission and pipeline infrastructure associated with traditional fossil fuels and some less carbon-intensive and GHG-emitting forms of energy. As defined in the Executive Order, “energy” does not include renewable energy projects. 
• An Executive Order titled “Putting America First in International Environmental Agreements” that will pull the U.S. out of the Paris Agreement and any other agreements under the United Nations Framework Convention on Climate Change. This is the second time President Trump has pulled the U.S. out of the Paris Agreement, which binds developed and developing countries to curb GHG emissions in order to keep average global temperatures from rising 2 degrees Celsius above pre-industrial levels.
• An Executive Order titled “Unleashing Alaska’s Extraordinary Resource Potential”. The policy of the Executive Order is to fully maximize the development of natural resources in Alaska, focusing on liquefied natural gas. Since 2021, federal restrictions, policies, and environmental impact statements have limited resource development on Alaskan land. The Executive Order directs federal agencies to review, revise, or rescind these federal actions to expedite the permitting and leasing of energy and natural resource projects in Alaska.
• An Executive Order titled “Ending Radical and Wasteful Government DEI Programs and Preferencing”, which terminates all DEI-related programs in the federal government, including all “environmental justice” office and positions, among other things. 
• An Executive Order titled “Initial Rescissions of Harmful Executive Orders and Actions”, which revokes a slew of executive orders and other actions taken by the Biden administration, including various executive orders related to climate change and environmental justice.

On 21 January 2025, President Trump issued an Executive Order titled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity” which, among other things, revokes President Clinton’s landmark 1994 Executive Order No. 12898 on environmental justice. This is widely considered the origin of implementing environmental justice initiatives throughout the federal government, as it directed all federal agencies for the first time to incorporate environmental justice into their missions “to the greatest extent practicable.” It also entailed consistent enforcement of all health and environmental statutes, along with improved research of the well-being of “minority and low-income populations”. 

IN CASE YOU MISSED IT

EU CS3D: Financial Services webinar on the transition plan requirements – watch the recording

EU CS3D: Financial Services webinar on how the CS3D interacts with other due diligence regimes – watch the recording

UK corporate reporting 2024/25: recent developments and guidance for listed companies – read our briefing

Corporate Governance On the Horizon: UK-listed companies – read our briefing

US Election Outcome and the Impact on the Global Energy Transition – watch the recording

The US Election: William Hague, Meghan O’Sullivan and George Casey discuss the impact on global business and geopolitics – watch the recording

France: The AMF amends its ESG Doctrine in light of the ESMA Guidelines on funds’ naming – read our blog post