Mid-summer policy updates

What's happening in Brussels ahead of Europe's summer break, new FAQ from CARB, and more

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As summer break begins in Europe, there has been the usual flurry of activity from Brussels, with key votes, announcements, and publications completed before everyone heads off. We cover the key points below, as well as the FAQ on California’s climate disclosure laws published by the local regulator, CARB.

And, if you missed it yesterday, we held a webinar discussing what the One Big Beautiful Bill means for clean power in the US. Matt Konieczny, Watershed’s Head of Decarbonization, was joined by Jeff St. John, chief reporter at Canary Media. Access the recording.

The European Commission has adopted its “quick fix” delegated act for CSRD, extending key reliefs for wave 1 reporters

All wave 1 companies, not just those with fewer than 750 employees, may now exclude ESRS E4 (biodiversity), S2 (workers in the value chain), S3 (affected communities), and S4 (consumers and end‑users) from their sustainability reporting for financial years 2025 and 2026. These standards still need to be assessed for materiality and, if deemed material, a short qualitative summary must be provided, but no datapoints.

The option to delay scope 3 emissions reporting remains available only to companies with fewer than 750 employees, but that option is also extended until FY 2027.

The delegated act is separate from the wider negotiations taking place on the CSRD, and the revision of the ESRS by EFRAG. It still requires formal approval by the European Parliament and the Council, but this is expected to be nodded through.

Early signals on draft ESRS show significant datapoint reductions

An early draft of the amended ESRS (the CSRD’s reporting standards) is under review by EFRAG’s technical experts. While not final, the draft gives a clear sense of the simplification package that will be subject to a public consultation at the end of this month.

The draft points to an overall 66% reduction in datapoints, taking into account both mandatory and voluntary items. This includes:

  • Around 300 datapoints removed, mostly from the topical standards;
  • Cuts that fall largely on qualitative disclosures, making up about three quarters of the reduction;
  • All remaining voluntary datapoints moved into a separate, non‑mandatory guidance document.

Alongside the datapoint reductions, EFRAG is also proposing changes to make the standards easier to apply, for example, clearer guidance on double materiality, greater flexibility in how companies structure their reporting, and adjustments to reduce overlap between cross‑cutting and topical standards.

EFRAG has described these figures and proposals as provisional. For companies, it’s best to wait until the full proposals are released at the end of the month before making any serious assessment of how future reporting will be affected. The response deadline for that consultation will be November 30.

California’s climate disclosure FAQs: Key clarifications for SB 261 and SB 253

CARB has released an updated FAQ document on California’s corporate climate disclosure laws. Much of the content repeats guidance shared in the recent CARB workshop, but there are a few useful clarifications that help shape planning for the months ahead:

  • Deadlines remain unchanged: Companies in scope of SB 261 (climate‑related risk disclosures) must publish their first reports by January 1, 2026, while SB 253 (GHG emissions reporting) will follow later in 2026, with exact dates to be set through CARB’s regulatory process.
  • Public availability of reports: On December 1, 2025, CARB will launch a public docket. In‑scope companies will be required to post links to their reports in this centralized, public‑facing hub, creating one place to access disclosures.
  • SB 261 timeframes clarified: The FAQs also clarify the time period that SB 261 reports can cover. Companies have flexibility to base their first climate risk disclosures on either FY 2023/24 or FY 2024/25 data, depending on internal readiness and reporting cycles.
  • SB 253 filing deadlines under consideration: For emissions reporting under SB 253, CARB reiterated that the specific filing deadlines will be finalized later this year through its ongoing regulatory process.

UK drops green taxonomy plans as EU presses ahead with simplification

The UK government has confirmed it will not go ahead with a UK green taxonomy, drawing a line under a process that began with a consultation in 2023. In its response, published this week, the government acknowledged broad support for the idea but pointed to concerns about complexity, cost, and duplication with other frameworks. This is in stark contrast to the recent announcement from the UK government that it will be upgrading its broader climate disclosure regime to align with the ISSB standards.

Meanwhile, the EU continues to simplify its own green taxonomy (​​the classification system that underpins parts of the CSRD by defining which activities count as environmentally sustainable and the information companies must disclose about those activities). On July 4, the European Commission adopted a delegated act that simplifies both disclosure obligations and technical screening criteria. Companies will be able to focus reporting on financially material activities thanks to a new 10% materiality threshold, and updated templates cut the number of required datapoints, in some cases by more than half. The act also removes dedicated templates for fossil gas and nuclear to avoid duplication and makes some of the “do no significant harm” criteria, particularly those on chemicals, easier to apply. Certain reporting requirements for financial institutions, including trading book and fee‑based KPIs, are pushed back to 2028.

Parliamentary pushback raises the risk of further delays to the EU’s Deforestation Regulation

The European Parliament has backed a motion, tabled by the center‑right European People’s Party (EPP), objecting to the European Commission’s draft “country‑risk” list under the EU Deforestation Regulation (EUDR). The EPP is calling for the introduction of a new “no‑risk” category for countries with minimal deforestation risk, a change that would be extremely difficult for the Commission to design and implement before reporting obligations begin at the end of this year. The motion follows similar calls from a group of member states, including Austria, Finland, Italy, and Poland, who have urged the Commission to simplify the law and cut compliance costs for business.

For companies, nothing has changed yet (the motion does not compel the Commission to do anything), but the combination of political pressure and the time needed to develop any new country‑risk framework means the risk of further delays and a broader rethink of the rules is now very real. Reporting this week suggests that the EUDR may now be up for a wider revision under a new omnibus proposal later this year.

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