INTERNATIONAL
SBTi postpones revision of Corporate Net Zero Standard
The SBTi has postponed the release of the Corporate Net Zero Standard and will first hold a public consultation on its revised version. Expert Working Groups are developing the standard, focusing on key areas such as Beyond Value Chain Mitigation (BVCM), Scope 2 and 3 emissions, Carbon Dioxide Removal (CDR), and data quality. The consultation process will begin no earlier than March, lasting at least 60 days, followed by a second consultation. SBTi aims to ensure that companies can align commitments with the initial version without duplicating efforts.
EUROPE
EU Commission unveils Omnibus Package
The European Commission has proposed sweeping legislative changes under the Omnibus package, aimed at simplifying sustainability reporting, easing compliance burdens, and refining due diligence requirements. The Omnibus was unveiled on 26th February 2025, introducing sweeping legislative changes to key pillars of the sustainable finance package including the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy. The proposal seeks to reduce administrative costs by over €6 billion, while maintaining strong environmental standards. Key changes include the following:
- CSRD Adjustments:
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- Reporting limited to large companies (1,000+ employees).
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- 80% reduction in covered entities, aligning more closely with CSDDD thresholds.
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- Two-year reporting delay for large companies and listed SMEs.
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- “Value Chain Cap” limits data requests from smaller companies.
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- ESRS revision to cut data points and remove sector-specific standards.
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- No upgrade from limited to reasonable assurance.
- EU Taxonomy Regulation:
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- Voluntary reporting for mid-sized firms (<€450M turnover).
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- 70% reduction in data points for reporting.
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- Exemptions for non-material activities (<10% of turnover/assets).
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- Green Asset Ratio (GAR) adjustments for banks.
- CSDDD (Corporate Sustainability Due Diligence Directive):
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- Postponed transposition deadline to 2027, with phased implementation from 2028.
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- Less frequent due diligence assessments (5-year intervals instead of annually).
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- Narrower liability scope: indirect partners assessed only if adverse impact is plausible.
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- No EU-wide civil liability—national laws will apply.
- CBAM (Carbon Border Adjustment Mechanism):
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- Exemptions for small importers (<50 tonnes/year) and individuals.
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- 90% of businesses exempted from reporting, while still covering 99% of emissions.
The European Parliament and Council will review the proposal. The Commission is urging priority treatment, particularly for CSRD reporting delays and CSDDD extensions. A public consultation on simplifying the “Do No Significant Harm” criteria is also underway.
For businesses, while the Omnibus package may reduce immediate reporting burdens, maintaining long-term sustainability commitments remains crucial. More importantly, investor demand for sustainability information remains significant, making sustainability reporting essential for maintaining competitiveness. Additionally, a recent report from the European Banking Authority (EBA) underscores the importance of regulatory data stemming from key policy initiatives—such as the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS)—in enhancing ESG risk management in the financial sector. The report highlights how these initiatives contribute to the development of standardised methodologies for assessing ESG exposures.
NORTH AMERICA
US halts enforcement of anti-corruption law
The Foreign Corrupt Practices Act (FCPA) has prohibited US firms from bribing foreign officials for nearly 50 years. President Trump argues that the law hampers American business competitiveness, calling it “over-expansive” and an obstacle to economic growth. An official White House statement provides that the FCPA enforcement creates “an uneven playing field” by prohibiting practices common among international competitors. US domestic and international policy are undergoing a seismic shift with several initiatives ranging from DEI and anti-corruption under question. The FCPA, if repealed, would eliminate a key safeguard that helps maintain accountability and prevent corruption in business operations across US borders.
ASIA-PACIFIC
Japan positioned as regional leader for establishing the ISSB standards
Japan’s Sustainability Standards Board (SSBJ) has introduced sustainability disclosure standards aligned with the ISSB, making them part of the listing requirements for companies on the Tokyo Stock Exchange’s Prime Market. This move builds on the Financial Services Agency’s (FSA) 2023 mandate, which requires companies to include sustainability disclosures in their annual filings. Additionally, it complements existing regulatory frameworks like the Corporate Governance Code, which mandates that Prime Market-listed companies provide TCFD-aligned disclosures on a comply or explain basis. The SSBJ’s framework includes three standards:
- Universal Sustainability Disclosure Standard (general reporting requirements)
- General Disclosures Standard (aligned with IFRS S1)
- Climate-related Disclosures Standard (aligned with IFRS S2)
While maintaining ISSB alignment, SSBJ incorporated some jurisdiction-specific alternatives. The SSBJ has not released details on the scope and timing for regulatory compliance.
Australian Prudential Regulatory Authority releases Governance Review Discussion Paper
The paper presents eight proposals to reinforce APRA’s core prudential standards and guidance on governance. In certain areas, APRA has taken a more prescriptive approach, proposing additional checks and balances in fitness and propriety to ensure entities integrate governance processes instead of treating obligations as a ‘cursory tick-a-box exercise’. Where governance issues are persistent, APRA aims to exercise its supervisory and enforcement authority, including but not limited to a higher supervisory risk rating, adjusting capital requirements, issuing a notice to remove a director. Other proposals are designed to reduce the regulatory burden for entities in scope and their boards.
Indonesia Sustainable Finance Taxonomy (TKBI) Version 2 refines framework
The OJK has released Version 2 of the Taxonomy, bolstering the classification system by introducing TKBI Version 2, technical screening criteria (TSC) for the Construction & Real Estate (C&RE), Transportation & Storage (T&S), and select Agriculture, Forestry, and Other Land Uses (AFOLU) activities, including forestry and palm oil plantations. Other key refinements include a new Life Cycle Assessment (LCA) worksheet for DNSH assessment, expanded use cases for consumer credit/financing and a Climate Risk and Vulnerability Assessment (CRVA) worksheet as a tool to measure climate adaptation efforts. The OJK will release a guidance document shortly Additionally, a TKBI User Guidance document to support users in applying TKBI across activity, portfolio, and entity levels. TKBI will serve as a primary reference for green and sustainable indicators in Sustainability Reports and regulatory frameworks. As a living document, TKBI will undergo periodic updates to align with evolving sustainability policies and global best practices, including relevant international taxonomies such as the regional ASEAN Taxonomy.
State Bank of Pakistan launches consultation on Pakistan Green Taxonomy Draft
Pakistan’s Green Taxonomy defines eligible green projects and activities to help financial institutions and investors direct capital toward sectors that support climate mitigation and adaptation. It aims to enhance transparency in green investments, reduce climate-related financial risks, and align capital flows with the country’s environmental and climate goals. The consultation period closed on February 18th, 2025.
HKMA Adoption Practice Guide on Greentech in the Banking Sector
The Guide highlights the importance of Authorized Institutions (AIs) embedding sustainable practices, including Greentech, from regulatory, reputational, and business perspectives. It provides an overview of how Greentech solutions can support green and sustainable banking, offering best practices for the net zero transition, such as defining a transition agenda, assessing adoption levels, and integrating sustainable finance into corporate strategies. Additionally, it features real-world cases from Hong Kong, showcasing challenges, solutions, and key lessons from successful Greentech implementations.
External Reporting Board clarifies scope of assurance engagements for climate reporting
The XRB clarifies that by December 31st, 2025, only GHG emissions disclosures in Climate Reporting Entities’ (CREs) climate statements require mandatory assurance. The FMA has approved in principle a class exemption for CREs using Adoption Provision 8 under NZ CS 2, exempting them from scope 3 GHG emissions assurance under section 461ZH of the FMC Act. This applies to climate statements for periods ending between December 31st, 2024, and November 30th, 2025, aligning with the XRB’s relief granted on November 27th, 2024.
Adoption Provision 8 addresses challenges in obtaining reliable scope 3 emissions data for assurance. The FMA exemption provides legal certainty by aligning this relief with FMC Act requirements. Entities relying on it must submit a disclosure notice when lodging climate statements. The exemption follows industry consultation on the regulatory interface between Climate Standards and the FMC Act, with the FMA now preparing the exemption notice for gazetting.
MIDDLE EAST AND AFRICA
Rwanda defines standards and frameworks for ESG reporting
Rwanda has introduced various ESG and sustainability disclosure frameworks to enhance transparency and corporate governance. The Rwanda Stock Exchange (RSE) ESG Reporting Guidelines issued by the RSE and CMA, require listed companies to disclose ESG information, covering a broader scope than IFRS Sustainability Disclosure Standards but ensuring interoperability. In February 2025, the Steering Committee chaired by the Institute of Certified Public Accountants of Rwanda (ICPAR), also launched a public consultation on the draft ‘IFRS Sustainability Disclosure Standards Adoption Roadmap’. A draft roadmap aims to ensure a structured and credible adoption of IFRS standards in Rwanda. Key goals include capacity building, enhancing transparency, and ensuring timely adoption of the standards. The Committee has proposed a phased implementation timeline between 2025-2031 as follows:
2025-2028: Entities listed on the Rwanda Stock Exchange (RSE); Tier I financial institutions
2026-2029: Public utility companies; Tier II and III financial institutions
2027-2030: Other entities applying IFRS Accounting Standards; Tier IV financial institutions
2028-2031: Entities applying the IFRS for SMEs Accounting Standard.
The comment period for the consultation closes on 19th March 2025.
OTHER NEWS AND RESOURCES:
- GRI releases exposure drafts for the Sector Standards Project for Financial Services, covering three key areas: Banking, Capital Markets, Insurance
- ACCA releases Sustainability Reporting – Risk and Materiality (ACCA). Read more
- Japanese Exchange Group (JPX) Joint Development of New Index Focusing on Human Capital. Read more
