BITCI Regulatory Round-Up – Q3 2025 Edition
On a quarterly basis, Business in the Community Ireland (BITCI) shares the latest developments in EU sustainability regulations. Topics covered throughout this series in 2025 include sustainability reporting, environmental and human rights due diligence, green taxonomy, nature and biodiversity, greenwashing, and forced labour. These updates aim to inform our network about policy changes, stakeholder perspectives, and available resources.
Regulatory Outlook
Last month, Denmark took over the Presidency of the EU Council for the second half of 2025 which appears to be a decisive period for the future of sustainability regulations in Europe. As discussions regarding the Omnibus simplification package continue until the end of 2025, clarification measures are adopted and simplification measures are open to public consultation. In terms of sustainability reporting, a Quick-Fix delegated act clarifies disclosure requirements for Wave 1 companies that were not subject to the Stop-The-Clock Directive. Exposure drafts of the simplified European Sustainability Reporting Standards (ESRS) have recently been released by Efrag which is launching a public consultation until the 29th of September to get feedback from users, preparers and a wide range of stakeholders. Developments to support the implementation of the EU Deforestation Regulation (EUDR) continue, while facing obstacles such as the recent rejection of the reference system categorizing countries according to their level of deforestation risk. The European Commission formalised its propositions to simplify the EU Taxonomy in a delegated act, and various initiatives such as the Roadmap towards Nature Credits and the Circular Economy Act are subject to consultation.
Find out more about the most material updates in this regulatory round-up for Q3 2025.
BITCI Update
Discover our programme of CSRD peer-support sessions for member companies for the second half of the year:
- Session #5: ESG ratings and sustainability reporting
- Session #6: Review of sustainability reporting frameworks
- Session #7: Looking back on a turbulent year for sustainability reporting
And check the findings from our recent ‘CSRD in practice’ workshop with member companies here: Learnings from the first CSRD-compliant sustainability statements – bitci
For more information, contact Neela Couture, Sustainability Adviser, ncouture@bitc.ie
News & Resources
The future of EU ESG regulation
Business in the Community Ireland is proud to be a signatory to this important joint statement on the Omnibus simplification package coordinated by Eurosif, IIGCC, PRI, CLG Europe, GRI and E3G. Alongside 295 other signatories — including a powerful mix of large and small businesses, investors, and civil society groups — we’re calling on EU policymakers to protect the core of the EU sustainability framework.
In a nutshell, here’s what we’re advocating for:
📌 Keep double materiality in reporting
📌 Include companies with 500+ employees in CSRD scope
📌 Enable value chain transparency
📌 Uphold a risk-based approach to due diligence
📌 Retain key elements of the CSDDD, including climate transition plans
The statement remains open for new signatories and will be reissued on 1 September with the full cohort. We encourage Irish companies and organisations to consider adding their name.
EU Climate Law
The Commission has proposed an amendment to the EU Climate Law, setting a 2040 EU climate target of 90% reduction in net greenhouse gas emissions, compared to 1990 levels. The Commission’s proposal setting a 2040 climate target will now be submitted to the European Parliament and the Council for discussion and adoption under the ordinary legislative procedure.
Roadmap towards Nature Credits
The Roadmap towards Nature Credits aims to develop clear standards and reliable certification for these nature-positive actions to make nature credits effective and trustworthy. The Commission invites all interested parties — businesses, scientists, governments, and civil society — to engage in shaping this initiative through an open call for feedback open until 30 September 2025.
Corporate Sustainability Reporting Directive (CSRD)
Irish transposition
The Department of Enterprise, Tourism and Employment introduced a statutory instrument in July amending certain provisions and clarifying the scope of the national transposition of the CSRD, and also giving legal effect to the Stop-The-Clock directive. This aims to deliver legal certainty for business at all levels in Ireland.
Quick-Fix delegated act for Wave 1 companies
To simplify and align disclosure requirements for Wave 1 companies that were not subject to the Stop-The-Clock Directive, the European Commission adopted in July some quick fix amendments to the 1st set of ESRS by way of delegated act.
- Wave 1 companies with more than 750 employees may omit for FY 2025 and 2026 all information* related to ESRS S2, S3, S4, E4, as well as certain information under ESRS S1 that was already part of a previous phase-in provision.
- Wave 1 companies with up to 750 employees may omit for FY 2025 and 2026 all information* related to ESRS S1, S2, S3, S4, E4, as well as scope 3 GHG emissions and total GHG omissions under ESRS E1.
*However, these matters still need to be assessed as part of the materiality assessment and, if deemed material, companies must provide the information required by ESRS 2, paragraph 17.
- The phase-in provision for FY2024 allowing organisations to omit information on the anticipated financial effects of certain sustainability-related risks is extended to FY 2025 and 2026 for all Wave 1 companies regardless of their employees’ numbers.
Insights from Wave 1 sustainability statements
In parallel, Efrag launched a new portal showing the results from their analysis of CSRD-compliant sustainability statements published in 2025, on which we can access a statistics dashboard, a report repository and a full “2025 State of Play” report.
Among other observations, the report highlights how double materiality assessments support high-level comparability while also recognising the variability in data point-level disclosures. It also emphasises the difference in value chain approach depending on sectors, some focusing on downstream and some on own operations and upstream value chain, and demonstrates some gaps in stakeholder engagement during materiality assessments with broader societal stakeholders being rarely consulted.
Frank Bold, a public interest law organisation, also released some interesting preliminary findings from their analysis of 50 sustainability statements, looking at different angles and indicators, and will release a full report later in September.
European Sustainability Reporting Standards (ESRS)
ESRS simplification and public consultation
On the 31st of July, Efrag released the simplified Exposure Drafts of the ESRS now subject to public consultation for 60 days, until the 29th of September. The 12 exposure drafts are accompanied by supporting documentation such as an FAQ, logs of amendments, a basis for conclusions document explaining the rationale and methodology behind the amendments, a non-mandatory illustrative guidance and annexes.
“In total, mandatory datapoints (to be reported if material) have been cut by 57%, and the full set of disclosures—mandatory and voluntary—reduced by 68%. The overall length of the standards has been shortened by over 55%, making ESRS more accessible and implementable, especially for companies that will be in the scope of the CSRD beyond the ones that reported already on financial year 2024.”
This follows the mandate given by the European Commission to Efrag to revise the first set of standards after the Omnibus Simplification Package was issued. Efrag is expected to provide its final technical advice to the European Commission before 30 November, instead of 31 October initially. This extension allows the public consultation on Exposure Drafts to run for 60 days from the end of July until the end of September. We encourage companies and all stakeholders in Ireland to take part in the consultation, and to attend the outreach events that will be organised at the end of September.
On the 20th of June, Efrag communicated a progress report to the European Commission, showing the state of work and clarifying next steps. In parallel, based on the Exposure Drafts of the revised ESRS, a service provider will be providing an evidence-based cost and benefit analysis, including an evaluation of the anticipated burden reduction.
Voluntary Sustainability Reporting Standard for SMEs (VSME)
The VSME standard was developed for voluntary implementation by micro, small and medium-sized enterprises (SMEs) with less than 250 employees. Following the Omnibus simplification package proposing to reduce the number of companies subject to CSRD compliance, the European Commission plans to develop and adopt a voluntary standard, inspired by the VSME standard, for all companies falling out of scope. Clarification on this voluntary standard is expected to be provided once the discussions between the co-legislators on the Omnibus proposals and the revision of the first set of ESRS are finalised.
For now, on 30 July, the European Commission endorsed this voluntary reporting standard for SMEs (VSME) and encourages:
- European and non-European SMEs to use the VSME standard on a voluntary basis to provide sustainability information;
- large companies and financial institutions seeking sustainability information from SMEs to limit their requests for sustainability information to the content of the VSME standard;
- member states to raise awareness among SMEs about the benefits of reporting sustainability data and to develop national measures to support the implementation of the VSME standard and digitalisation of SME sustainability disclosure.
In May, as part of the VSME Deliverables Ecosystem, Efrag released a digital template (Excel), an XBRL taxonomy as well and as a XBRL converter, to illustrate a technical reporting solution for SMEs.
Work is currently ongoing with the development of three implementation guidance documents on following disclosures aimed to be published in autumn:
- C2: Description of practices, policies and future initiatives for transitioning towards a more sustainable economy
- C3: GHG reduction targets and climate transition
- C7: Severe negative human rights incidents
As well as an exercise to map various ISO standards against the VSME standard. “This mapping will serve to help SMEs to understand which VSME disclosures can be incorporated by reference from existing ISO standards, with the aim of avoiding double reporting”.
EU Taxonomy
The European Commission adopted in July measures to simplify the EU Taxonomy, now subject to discussion with the Parliament and Council. Given that the requirements of this directive apply from 2022 first to financial institutions and then to non-financial companies, there is sufficient implementation experience and lessons learned on the basis of which to discuss simplification measures without diluting or losing material elements of the framework and maintain alignment with the European Green Deal objectives.
If approved by European institutions, these measures would apply from 1st January 2026 and cover FY2025 and include simplification of the Do No Significant Harm criteria for pollution prevention and control related to the use and presence of chemicals, simplification of reporting rules for financial undertakings and introduce some materiality thresholds.
EU Deforestation Regulation (EUDR)
The EU Deforestation Regulation (EUDR) entered into force on 28 June 2023. The commodities covered by the regulation included beef, cocoa, coffee, palm oil, natural rubber, soy or wood and some of their derived products, such as leather, chocolate, tires, or furniture.
Under the Regulation, any operator or trader who places these commodities on the EU market, or exports from it, must be able to prove that the products do not originate from recently deforested land or have contributed to forest degradation, have been produced in accordance with the relevant legislation of the country of production and are covered by a due diligence statement. A due diligence statement involves companies digitally mapping their supply chains down to the plot where their raw materials were grown.
In Ireland the Department of Agriculture, Food and the Marine is the designated Competent Authority which means that they have responsibility for overseeing the correct implementation of the regulation in the Republic of Ireland.
The EUDR Information System opened on 4 December 2024 and is available in all EU languages. Operators can already submit and manage their due diligence statements (DDSs).
In October 2024 the Council agreed to postpone the date of application by 12 months, to 30 December 2025, for medium & large enterprises and to 30th June 2026 for small and micro enterprises.
In April 2025 simplification to the legislation were introduced. The updated measures are expected to significantly reduce the number of due diligence statements (DDS) that companies need to file. The main changes include:
- Large companies can reuse existing DDSs when goods, previously on the EU market, are reimported.
- An authorised representative can now submit a DDS on behalf of members of company groups.
- Companies will be allowed to submit DDSs annually instead of for every shipment or batch placed on the EU market.
- Large companies downstream benefit from simplified obligations: a minimal legal obligation of collecting reference numbers of DDSs from their suppliers and using those references for their own DDS submissions now applies.
In addition, an updated guidance document was published along with updated FAQs.
In July 2025, the European Parliament voted to reject a benchmarking system classifying countries by the level of risk, marking a potential new setback for the new EU Deforestation Regulation (EUDR). The classification system impacts the compliance obligations under the regulation, with sourcing from low-risk countries, for example, allowing for more simplified due diligence requirements from operators and traders.
Anti-Greenwashing Directives
Green Claims Directive
The Green Claims Directive (GCD), proposed by the European Commission in March 2023, aims to introduce common criteria to prevent misleading environmental claims across the EU. However, due to political pushback and concerns about the administrative burden on small businesses, the European Commission paused trilogue negotiations in June 2025 and signaled its intention to withdraw the proposal. While the directive has not been formally withdrawn, its future remains uncertain pending further consultation and possible revision.
Empowering the Customer for The Green Transition
The Empowering Consumers for the Green Transition Directive, adopted in March 2024, now serves as the primary legislative tool addressing corporate greenwashing. It amends the Unfair Commercial Practices Directive and the Consumer Rights Directive by prohibiting vague or unverified environmental claims, such as “climate neutral” or “eco-friendly,” unless they are backed by clear, verifiable evidence. This directive must be transposed into national law by 27 March 2026 and will apply in Ireland and all other EU Member States from 27 September 2026.
Other regulations to watch out for
Circular Economy Act (CEA)
The European Commission wants to create well-functioning markets for secondary materials and stimulate the supply of quality recyclates and the demand for secondary raw materials via the Circular Economy Act expected in 2026. Various aspects touch to rules on waste shipments, extended producer responsibility (EPR) schemes reform, Landfill Directive amendments, Waste Electrical and Electronic Equipment (WEEE) Directive… A public consultation will soon be launched to shape the 2026 Circular Economy Act.
AI Act
Governance rules and the obligations for general-purpose AI models become applicable on 2 August 2025.
European Accessibility Act (EAA)
The European Accessibility Act (EAA) is an EU directive aimed at ensuring accessibility for people with disabilities across a range of products and services. All affected products and services must comply by 28 June 2025. After that, enforcement will begin in all EU member states.
For more information, please contact Neela Couture, Sustainability Adviser: ncouture@bitc.ie
