Sustainability: What is the pipeline for 2026?

2026 is set to be a key year in terms of ESG and sustainability regulation. Over the coming months, companies and advisors will need to keep a close eye on the progress of European regulatory simplification initiatives, transposition of pending directives and the entry into force of several new obligations in areas as diverse as industrial emissions or capital markets. 

Below, we review the main regulatory milestones planned for 2026 in three areas: environment, transparency and sustainable finance. For each of these areas, we identify the critical dates, regulations currently being processed, and obligations that will become enforceable, with the aim of facilitating planning and regulatory compliance for our clients.

In regard to the environmental, we highlight the Environmental Omnibus simplification package and the relevant deadlines for transposing directives on industrial emissions and on energy performance of buildings, as well as the entry into force of the European Regulation on packaging in August. 

As for the area of transparency, the main focus is on the amendment of the CSRD Directive through the EU Omnibus I and on its pending transposition in Spain, as well as on the balanced representation requirements on boards and the CS3D Directive.

Finally, in sustainable finance, the implementation of the Guidelines on the management of ESG risks released by EBA, the mandatory registration of external reviewers of European green bonds and the entry into force of the ESG rating providers regime will be decisive.

Environment

On 10 December 2025, the European Commission introduced the Environmental Omnibus package, to simplify EU environmental legislation, reduce administrative burdens and accelerate permit granting procedures, with an estimated reduction of €1 billion per year for European companies.

The Environmental Omnibus package focuses on four areas: (i) streamlining the granting of permits (single points of contact, digitalisation and faster procedures); (ii) simplification of the industrial emissions standards (extending deadlines and eliminating the requirement for external audits and transformation plans); (iii) improvement of the processing of hazardous products; and (iv) facilitated access to geospatial data. 

It is expected that we will see this initiative being approved during 2026 and its implementation calendar clarified. 

Other milestones to keep an eye on in environmental matters include the following: 

• Spain has to adapt its regulations to the Directive (EU) 2024/1275 on the energy performance of buildings. This directive establishes more demanding performance requirements. The changes will affect energy certification and urban planning. The autonomous communities will also have to adapt their regulations. The Ministry for Ecological Transition and Demographic Challenge (Ministerio para la Transición Ecológica y el Reto Demográfico) has already begun this process. The Royal Decree draft amending the Royal Decree 390/2021 on energy certification for buildings has been subject to public consultation (available in Spanish) until 6 February 2026. 
• On 4 March 2026, the proposal for an Industrial Acceleration Regulation was published. This Regulation aims to accelerate industrial production in the European Union while contributing to EU climate targets. It seeks to balance industrial competitiveness with sustainability, facilitating investment in clean technologies and simplifying administrative procedures for strategic industrial projects. 
• The transposition deadline of the Directive (EU) 2024/825 as regards empowering consumers for the green transition is due on 27 March 2026. However, the draft bill on sustainable consumption (available in Spanish) that intended to complete this incorporation (together with the Directive 2024/1799 on common rules promoting the repair of goods) is still being studied in the first round by the Spanish Government.
• Law 1/2025, of 1 April, on the prevention of food loss and waste, establishes various obligations for actors in the food chain, including the need to have a specific plan for the prevention of food loss and waste. Compliance with said obligations shall be mandatory from 2 April 2026.
• Before 1 July 2026, Spain should transpose Directive (EU) 2024/1785 on industrial emissions into its legal system, which significantly strengthens the requirements applicable to large-scale industrial facilities. However, to our knowledge, the Government has not made any progress beyond the preliminary consultation (available in Spanish) that ended a year ago
• On 19 July 2026, the ban of destruction of unsold consumer products such as clothing and footwear by large companies coming from the European Regulation (EU) 2024/1758 on ecodesign will enter into force. For medium-sized companies, it will become enforceable from 19 July 2030.
• The European Regulation (EU) 2025/40 on packaging and packaging waste will be directly applicable from 12 August 2026 which makes it advisable to update design, recycling and marketing protocols with a view to achieving 90% collection of beverage containers by 2029 and taking into account bans on certain single-use plastics from 2030 onwards.

Transparency

On 16 December 2025, the European Parliament's plenary session approved, at first reading, the proposal for a Directive on simplification of EU legislation (EU Omnibus I). This proposal amends, among others, Directive (EU) 2022/2464 on corporate sustainability reporting (CSRD). The next milestone will be for the European Council to adopt its position or for a political agreement to be reached in trilogues. It will then be published in the Official Journal of the European Union (OJEU). From that moment on, Member States will have to start working to transpose the amendment into their domestic legal systems as soon as possible.

In Spain, the situation is complex, as the CSRD has not yet been transposed into domestic law. The corresponding Corporate Sustainability Reporting Bill (Proyecto de Ley de Información Empresarial sobre Sostenibilidad) has been awaiting approval on the Spanish Parliament since November 2024. Although the Spanish National Securities Market Commission (CNMV) and the Spanish Institute of Accounting and Auditing (Instituto de Contabilidad y Auditoría de Cuentas) (ICAC) have issued statements on the matter (November 2024 and November 2025, respectively), it is up to the legislator to work rapidly in 2026 to clear up the uncertainty generated by the lack of transposition.

Other developments or entries into force expected during 2026 in Spain are the following: 

• The European Commission is expected to approve the European Sustainability Reporting Standards (ESRS) proposed by European Financial Reporting Advisory Group (EFRAG) in December 2025, which reduce mandatory data points by 61% and align the standards with the Delegated Regulation (EU) 2025/1416 (Quick Fix Regulation), providing greater regulatory certainty.
• From 30 June 2026, the gender balance requirements set out in the Organic Law 2/2024 of 1 August will be enforceable for: (i) the thirty-five listed companies with the highest market capitalisation in Spain, in accordance with the provisions of Article 529 bis of the Spanish Companies Act; and (ii) public interest entities, which must achieve at least 33% representation of the under-represented sex on their boards of directors and in senior management on that date.
• The deadline for transposing Directive (EU) 2024/1760 (CS3D) expires on 26 July 2026. This directive imposes obligations on large companies to identify, prevent, mitigate and account for adverse impacts on human rights and the environment throughout their value chains. To date, there is no draft transposition bill. It is expected that the legislative process will begin in the coming months, probably coordinated with the transposition of the CSRD given the connection between the two regulations.

Sustainable Finance

The Joint Committee of European Supervisory Authorities has included in its 2026 Work Programme support for the review of Regulation (EU) 2019/2088 on sustainability-related disclosures in the financial sector (SFDR), as well as joint actions on risk supervision and investor protection, which suggests that potential proposals or guidelines to simplify and clarify sustainability-related disclosure may be released throughout the year.

Please find below a list of other relevant aspects of sustainable finance that we are in the 2026 pipeline: 

• The Royal Decree 115/2025, of 17 December, on Carbon Fund for a Sustainable Economy and its implementation regulations came into force at the beginning of 2026, opening up opportunities for structuring transactions related to the purchase of verified reductions with public participation and potential obligations for emitting sectors.
• Throughout 2026, the European Banking Authority (EBA) will continue to adjust the prudential disclosure and reporting framework to fully integrate CRR3/CRD6 (Capital Requirements Regulation 3/Capital Requirements Directive 6) with a focus on proportionality and ESG templates. In particular, Reporting Framework 4.3 is expected to become applicable from the last quarter of 2026 and includes reporting changes (including ESG) and Pillar 3 disclosures.
• On 11 January 2026, the EBA Guidelines on ESG risk management for credit institutions will become applicable, setting out expectations on the identification, measurement, management and monitoring of these risks and on the coherence of transition plans. For small and non-complex institutions, implementation is deferred until 11 January 2027.
• On 28 January 2026, the EBA launched the Pillar 3 Data Hub, a single platform for to centralise the publication of prudential data. Data has been public since January 2026 and, during the transitional period of 2026, the hub will progressively collect the 2025 reports from institutions, with extended availability expected around June 2026. This will increase the public disclosure of prudential and ESG metrics disclosed under Pillar 3 by Spanish institutions.
• 5 June 2026 is the deadline for the European Commission to adopt delegated acts standardising the format, sequence and annexes of the prospectus in accordance with the amendment of Regulation (EU) 2017/1129 on prospectus by the Listing Act (approved by Regulation (EU) 2024/2809). This new regulation uniformly places information on risks, strategy and use of sustainable funds, facilitates comparability between issuers, and improves consistency with other frameworks (CSRD/Taxonomy).
• As for Regulation (EU) 2023/2631 (EUGB), starting on 21 June 2026, external reviewers must be registered with the European Securities and Markets Authority (ESMA) in order to provide services under this scheme, thus bringing to an end the regime of mere notifications. ESMA is finalising and rolling out the technical standards (RTS/ITS) and has been preparing the market through its External Reviewers of European Green Bonds webpage.
• No later than 30 June 2026, the European Commission plans to adopt, by means of delegated acts, the sector-specific ESRS (Article 29b of Directive 2013/34/EU) and the ESRS applicable to certain third-country undertakings (Article 40b), in accordance with the legislative proposal that postponed these deadlines to 2026.
• Finally, on 2 July 2026, Regulation (EU) 2024/3005 on ESG rating providers will become applicable. From that date, the notification regime will be activated, and between 2 August 2026 and 2 November 2026, providers already operating will be required to notify ESMA and submit their application for authorisation to continue providing services during the transitional regime.

Other news in recent weeks

Environment

1. Plastics recycling under the Commission's spotlight

On 23 December 2025, the Commission presented a set of pilot actions to accelerate the transition to a circular economy with a focus on plastics, within the framework of Directive (EU) 2019/904 on Single-Use Plastics or “SUP” and in alignment with the new Packaging Regulation (Regulation (EU) 2025/40, adopted on 19 December 2024).

Among the main measures are: (i) work to harmonise “end-of-waste” criteria for plastics; (ii) strengthening the methodology for calculating and verifying recycled content in PET (polyethylene terephthalate) bottles in accordance with SUP; (iii) a study to create differentiated customs codes for virgin and recycled plastics; and (iv) relaunching the Circular Plastics Alliance.

Running parallel, the Commission launched a public consultation on SUP (open until 17 March 2026 and accessible via the following link) and has announced that the forthcoming Circular Economy Act, expected in 2026, will contain measures to harmonise end-of-waste criteria and stimulate the supply and demand for recycled materials.

2. Amendment of the European Deforestation Regulation: simplification of obligations

Regulation (EU) 2025/2650, of 19 December 2025, amends Regulation (EU) 2023/1115 on deforestation-free products, introducing significant simplifications and postponing its application.

Among the main changes are:

• New category of “downstream operators”: This figure is introduced to provide legal clarity in the downstream links of supply chains. Neither downstream operators nor traders will be required to submit due diligence statements, significantly reducing information requirements.
• Simplified regime for “micro or small primary operators”: A new subcategory is created covering natural persons, micro-enterprises and small enterprises established in countries classified as low-risk that produce and place their own products on the market. These operators must submit a simplified single submission statement instead of the full due diligence statement. Furthermore, they may substitute the geolocation of plots with the corresponding postal address.
• Postponement of the date of application: The date of application of the obligations is postponed by twelve (12) months, becoming applicable from 30 December 2026. For operators who are natural persons, micro-enterprises or small enterprises established before 31 December 2024, the obligations will be applicable from 30 June 2027.
• Simplification review: The Commission must carry out a simplification review and submit a report by 30 April 2026 at the latest, assessing the administrative burden and impact of the Regulation. The general review of the Regulation is postponed to 30 June 2030.

3. Spain launches the new FES-CO2: green investments with aid control and DNSH principle

Royal Decree 1151/2025, of 17 December, published in the Spanish Official Gazette (BOE) on 19 December 2025 and in force since 8 January 2026, establishes the new legal regime for the Carbon Fund for a Sustainable Economy (FES-CO2, by its Spanish acronym), a public fund without legal personality under the management of the Spanish Environment State Secretariat. This royal decree fully repeals the former Royal Decree 1494/2011 and also Royal Decree 1315/2005.

The FES-CO2 aims to generate low-carbon and climate-resilient economic activity, contribute to the fulfilment of national greenhouse gas emission reduction targets, and promote technological development for decarbonisation and climate resilience.

Actions eligible for funding from the Fund include:

• Actions for adaptation to the effects of climate change at national level.
• Actions to reduce emissions and increase carbon sinks, based on a price per tonne of equivalent CO2 reduced or absorbed.
• Support for flagship technological development projects with significant potential for decarbonising the electricity generation sector or industry.
• Acquisition of international carbon credits, on a subsidiary and last-resort basis.

The Fund will be preferentially allocated to energy efficiency, renewable energy and waste management projects, as well as those representing a high component of technology transfer.

As a general rule, eligible actions must be voluntary (not required by any regulation). They may be implemented through public subsidies, credit acquisition contracts and, where appropriate, offer or auction mechanisms. In any case, double financing and disproportionate returns will be avoided.

In particular, national carbon credits may not come from installations subject to the EU Emissions Trading Scheme, except in the cases and conditions provided for in the regulation.

Compatibility with other public aid is subject to the state aid regime and the applicable de minimis rules.

Eligible actions must progressively respect the DNSH (“Do No Significant Harm”) principle in accordance with Article 17 of the Taxonomy Regulation and may not hinder compliance with the conservation measures of the Natura 2000 Network.

The management of the Fund is structured around a Governing Board, chaired by the Spanish Environment State Secretariat, and an Executive Committee, chaired by the General Director of the Spanish Climate Change Office.

4. Sustainable Mobility Act: hierarchy of transport modes, infrastructure assessment and financing

On 4 December 2025, Law 9/2025 on Sustainable Mobility was published. This provision came into force on 5 December 2025 and establishes the comprehensive framework for the promotion and regulation of sustainable mobility in Spain, recognising mobility as a right of citizens that public authorities are obliged to regulate and safeguard.

The main purposes of the provision are:

• To reorient mobility towards more sustainable modes of transport that protect the health, environment, climate, well-being and safety of citizens.
• To promote the progressive decarbonisation of transport to achieve climate neutrality for the sector by 2050.
• To contribute to the reduction of greenhouse gas emissions, setting specific targets in the Spanish National Integrated Energy and Climate Plan (PNIEC, by its Spanish acronym) for 2030 and 2040 relative to 1990 levels.

In practical terms, this opens up a demanding compliance schedule whilst also incorporating a set of investment and operation opportunities in public transport, electrification of ports and airports, and low-emission mobility services.

Among the most relevant instruments and measures are:

• Sustainable mobility plans: The Law regulates different types of plans, including sustainable mobility plans for local authorities, plans for large activity centres, and sustainable commuter mobility plans. Companies with workplaces of more than 200 employees (or 100 per shift) must prepare sustainable mobility-to-work plans by 5 December 2027, carry out periodic monitoring and report the data to the competent authority. Furthermore, high-occupancy workplaces (more than 1,000 workers located in municipalities or metropolitan areas of more than 500,000 inhabitants) must include measures to reduce worker mobility during peak hours or during the working day and promote the use of low or zero-emission transport modes and collaborative mobility services, as well as encourage active mobility, including tools to facilitate public or private charging for such transport modes.
• Calculation and communication of carbon footprint: Entities providing transport or mobility services must calculate the greenhouse gas emissions of their services and provide this information to users. Airport managers and port authorities must calculate and annually publish the carbon footprint of their activities and have a reduction plan in place. This calculation and information obligation will be developed by regulation (methodology, scope, deadlines, exemptions, etc.).
• Modal hierarchy: The Law establishes an order of preference in urban environments that prioritises active mobility (walking and cycling), followed by collective public transport, high-occupancy schemes, and finally private vehicles with lower-emission technologies.
• Infrastructure assessment: The requirement to carry out preliminary socio-environmental profitability analyses and ex-ante and ex-post assessments for investments in state transport infrastructure is introduced.
• Sustainable mobility funding: State participation in financing urban collective public transport is regulated, and a Convergence Plan for Basic Access to Mobility is envisaged, prioritising territories with higher rates of depopulation.

5. EFRAG proposes simplifying ESRS: 61% fewer requirements and an end to voluntary disclosures

On 3 December 2025, EFRAG submitted its technical advice on the review of the ESRS under the CSRD to the European Commission. The whole press release can be read here.

Among the main simplifications are, inter alia, “usefulness of information” as a general filter and reinforcement of the fair presentation principle; simplification of double materiality and its documentation; elimination of the preference for direct data in the value chain (greater flexibility for estimates); and proportionality and gradual application mechanisms. Additionally, a 61% reduction in mandatory disclosure requirements and the elimination of all voluntary disclosures are proposed. The Commission will now prepare the delegated act revising the first set of ESRS on the basis of this technical advice.

Until the Commission adopts the delegated act, existing obligations remain unchanged. However, we recommend identifying and documenting where the usefulness and proportionality criteria could apply and reviewing data requests to the value chain.

6. Potentially contaminated soil inventories by 2035: key points of the new Directive

On 26 November 2025, Directive (EU) 2025/2360 on soil monitoring and resilience was published in the European Union Official Gazette.

This Directive establishes a comprehensive framework for soil monitoring across all EU Member States, with the long-term objective of achieving healthy soils by 2050. The provision recognises soil as a vital and limited resource, non-renewable on the human timescale, essential for food security, climate change mitigation and biodiversity conservation.

Member States must establish soil districts and soil units covering the entirety of their territory for monitoring purposes. The Directive establishes soil descriptors and criteria for good soil health status, including parameters related to salinisation, loss of soil organic carbon, subsoil compaction, nutrient excess, erosion, soil contamination and reduction of water retention and infiltration.

The Directive introduces a risk-based approach for contaminated soils. Member States must systematically identify potentially contaminated soils before 17 December 2035 and establish national inventories containing georeferenced data on such soils, which must be made available to the public.

Among the key implementation deadlines are the following:

• 17 December 2028: Transposition deadline for Member States.
• 17 December 2029: Establishment by Member States of a risk-based and phased approach for contaminated soils and national inventories.
• 17 December 2030: Completion of the first soil measurements.
• 17 December 2031: Completion of the first soil health assessments.
• 17 December 2035: Identification and registration in the inventory of all existing potentially contaminated soils.

The European Commission and the European Environment Agency will establish a digital soil health data portal by 17 December 2027 to provide access to soil monitoring data in georeferenced spatial format.

The Directive also establishes principles for mitigating the effects of soil sealing and removal, calling on Member States to consider measures to prevent or reduce the loss of ecosystem services, including food production. Businesses operating industrial installations subject to the Directive (UE) 2010/75 (Industrial Emissions Directive) should pay particular attention to the implications regarding baseline reports and soil contamination obligations.

7. Second clarification by the CNMV and the ICAC on sustainability reporting until the transposition of the CSRD Directive

The CNMV and the ICAC published on 19 November 2025 a second joint statement addressed to Spanish companies required to report sustainability information, pending the transposition of the CSRD Directive into Spanish law.

The statement recalls that, since the 2024 financial year, sustainability information in the European Union must be prepared in accordance with CSRD, the ESRS and the national implementing legislation.

In this context, the CNMV and the ICAC make the following main recommendations:

1. For Spanish Phase 1 entities (large public-interest companies with more than 500 employees), it is recommended that they publish the sustainability report for the 2025 financial year in accordance with the ESRS, with the aim of making the information comparable with that of the rest of the European issuers. It is also advisable to consider the Delegated Regulation amending the ESRS, which freezes certain disaggregation requirements for two years. All this without prejudice to complying with the requirements of Law 11/2018 and, for certain climatic contents, Royal Decree 214/2025.
2. For Phase 2 entities (other large companies that, during two years, exceed two of these thresholds: 250 employees, €50 million in turnover or €25 million in assets), it is recommended to assess whether it would be advisable to apply the ESRS (with the adjustment of the quick fix regulation) or, where appropriate, the voluntary sustainability reporting standard for SMEs. Directive (EU) 2025/794 ("temporary suspension") delays the entry into force of the CSRD for these companies and for listed SMEs by two years (Phase 3), although it has not yet been transposed in Spain.

Regarding the verification of information by an independent expert, the reference to the draft ICAC technical standard (published in December 2024 and pending approval), the COESA guidelines and ISSA 5000 (International Standard on Sustainability Assurance 5000) as frameworks to be considered while harmonizing the requirements is maintained.

Transparency

1. Sustainability requirements under the CSRD, CS3D and CSDDD are reduced and simplified

On 26 February 2026, Directive (EU) 2026/470 amending the CSRD, CS3D and CSDDD with regard to certain sustainability and corporate sustainability due diligence reporting requirements was published in the OJEU. The main purpose of the new Directive is to amend and simplify the European regulatory framework on sustainability reporting and corporate sustainability due diligence obligations.

The adoption of the standard stems from the findings of the "Future of European Competitiveness" report, which identified the sustainability reporting framework as "a major source of regulatory burden", concluding that it was necessary to take greater account of the size of the companies concerned.

The deadline for transposing the Directive is 26 July 2028. From that date, the national provisions transposing it must apply from 26 July 2029.

Main changes in the CSRD

The reform significantly reduces the scope of application of the CSRD. Only EU companies that exceed 1,000 employees and €450 million in net turnover for two consecutive years will be obliged to report. For third-country companies, the turnover threshold is raised to €450 million generated in the EU, with an additional threshold of €200 million for subsidiaries or branches.

A transitional exemption is introduced for companies that began reporting in the 2024 financial year but will be outside the scope of application after the modifications. Companies outside the mandatory scope will be able to report voluntarily using simplified standards. Likewise, the reporting requirements are simplified, which will be more quantitative, while the sectoral report becomes voluntary.

The Commission will adopt a delegated act to substantially revise the ESRS, removing less important data points, prioritising quantitative indicators over descriptive text, and improving consistency with other EU legislation.

Major changes to the CS3D

The application thresholds of the CS3D are tripled compared to the original ones. Only EU companies with more than 5,000 employees and a turnover of more than €1,500 million will be affected. For companies from third countries, the threshold is €1,500 million of turnover in the EU. It is estimated that the regulation will affect approximately 1,600 companies, compared to the 7,000 initially planned.

Article 8 reinforces the risk-based approach, allowing companies to focus their efforts on the areas of their chain of activities where adverse impacts are most likely or severe. The obligation to draw up climate transition plans is eliminated, although companies that have them must disclose them in their sustainability reports.

The harmonised civil liability regime at European level is abolished, which will be regulated by the national law of each Member State. Sanctions may not exceed 3% of global turnover. Member States will have to transpose the Directive by 26 July 2026 and implement it in stages between 2027 and 2029 according to the size and turnover of the companies (EU and third countries), with some specific obligations deferred to subsequent years.

Main changes in the CSDDD

A two-phase structured identification system is introduced: (i) an initial exploratory exercise, based only on reasonably available information, to determine the general areas where adverse effects are most likely to occur and, subsequently, (ii) an in-depth assessment in these areas.

Important restrictions are put in place to reduce the "trickle-down effect" on other companies: companies can only request information from business partners when strictly necessary and, for business partners with fewer than 5,000 employees, only when it cannot reasonably be obtained by other means.

The obligation to terminate business relations is modified by a suspension regime as a last resort. The suspension remains in place while work continues with the trading partner to find a solution and should end once the adverse effect has been addressed. Before suspending, the company must assess whether the adverse effects of the suspension would be manifestly more serious than the effects that could not be prevented.

The provisions on the transition plan for climate change mitigation, considered disproportionate due to the administrative burden for companies and supervisory authorities, and for generating legal uncertainty, are repealed.

Sustainable Finance

Financial Reporting

1. SFDR II: proposal with three categories and a minimum threshold of 70% of investments

On 20 November 2025, the European Commission published a consisting of a comprehensive revision of the Sustainable Finance Disclosure Regulation (SFDR), aiming at simplifying and improving the current regulations on sustainable financial products. This reform, known as SFDR II, provides response to issues identified since the original regulation came into force, including the complexity of disclosure templates, divergent interpretations, and the use of Articles 8 and 9 as ‘quasi-labels’ without clear criteria.

In this regard, a new categorisation of financial products is proposed by removing the current distinction between Article 8 and Article 9 products, replacing it with a system of three categories based on the sustainability claim (or assertion) made by the relevant product:

It should be noted that the 70% threshold is considered to be met for products in the transitional and sustainable categories with, at least 15% of investments aligned with the EU Taxonomy. All categories exclude controversial weapons, tobacco, breaches of the principles of the UN Global Compact or the OECD Guidelines, and thermal coal (when exceeding 1% of revenue). Transitional and sustainable categories add additional exclusions related to fossil fuels and new exploration or extraction projects.

The proposal introduces a specific designation of ‘impact’ for products in the transitional and sustainable categories that pursue a predefined, intentional and measurable environmental or social impact. Only these products shall be entitled to use the term ‘impact’ in their name.

The reform removes the obligation to disclose principal adverse impacts ("PAIs") at entity level, resulting in an estimated saving of €56 million per year in recurring costs for the sector. Financial advisers and portfolio managers are also removed from the scope, focusing the regime on participants who create, manage or make financial products available.

Terms related to sustainability in product names and marketing communications are reserved exclusively for categorised products. Non-categorised products may include ancillary sustainability information, but this may not constitute a central element of the disclosure nor exceed 10% of the presentation of the investment strategy.

Once negotiations between the European Parliament and the Council have concluded, the new SFDR will become applicable 18 months after its entry into force. Pre-contractual disclosure templates and periodic disclosure templates may not exceed two pages.

This revision implies that asset managers and other financial market participants will have to review their current products to determine which category they fall into under the new criteria. The 70% threshold is more demanding than the current one under ESMA guidelines, although the conditions for calculating investments are clearer. A period of recalibration is expected in the market while investment strategies and product documentation are adapting.

For further information, see SFDR 2.0: Level 1 revision – proposal by the European Commission as well as the question and answer document on the initiative prepared by the European Commission and available at the following link.

2. The EU's Quick Fix Regulation

On 10 November 2025, Delegated Regulation (EU) 2025/1416, known as the ‘Quick Fix’, was published in the Official Journal of the EU, amending Delegated Regulation (EU) 2023/2772 to adjust the implementation timetable and transitional phases of the ESRS, with the aim of reducing the reporting burden and facilitating a more proportionate implementation.

This adjustment is part of the ‘Omnibus Simplification Package’ of 26 February 2025, which proposes reducing the scope of companies subject to sustainability reporting requirements, so that only large companies with more than 1,000 employees would retain the obligation, and is coordinated with the ‘stop-the-clock’ adopted by Directive (EU) 2025/794 for first reporters in 2025 and 2026. The Quick Fix Regulation is already in force and applies to financial years beginning on or after 1 January 2025. In particular, its immediate focus is on the so-called first-wave companies which were not covered by the ‘stop-the-clock’ Directive, which published their first report under the CSRD in 2025.

Main exemptions and transitional phases

The Delegated Regulation (EU) 2025/1416 extends or standardises the temporary exemptions provided for in Appendix C of ESRS 1, including companies with up to 750 employees and, in certain cases, also extending benefits to larger companies in the most complex standards. For companies in the firstwave, these flexibilities are extended, as appropriate, until the 2027 financial year. In summary:

• In ESRS E1-6 (scope 3 and total GHG emissions), companies with up to 750 employees may omit this data for one year, and first-time reporting entities under Article 5.2.a) of the CSRD may omit it for three years.
• In ESRS E1-9 (anticipated climate-related financial effects) and ESRS 2 SBM-3 (anticipated financial effects), it is allowed to omit one year for all companies, or three years for first-time reporters. During this period, qualitative disclosure is also allowed when quantitative disclosure is not practicable. For first-wave companies, the obligation to report on the anticipated financial effects of certain sustainability risks is generally postponed until the 2027 financial year.
• In ESRS E2-6 (pollution), E3-5 (water and marine resources) and E5-6 (circular economy), it is permissible to omit one year, or three years for first-time reporters. Qualitative disclosure is also permitted during this period, with specific exemptions in E2-6.
• In ESRS E4 (biodiversity and ecosystems), all requirements may be omitted for two years for companies with up to 750 employees, or three years for first-time reporters. In the case of first-wave companies, those with up to 750 employees have these exemptions extended until 2027, and those with more than 750 employees can also benefit from these phased implementation provisions until 2027.
• In ESRS S1 (own employees), all requirements may be waived for one year for companies with up to 750 employees, or three years for first-time reporters, with additional flexibilities in various disclosure requirements, such as S1-7, S1-8, S1-11 to S1-15).
• In ESRS S2 (value chain), S3 (affected communities) and S4 (consumers and end users), all requirements may be omitted for two years for companies with up to 750 employees, or three years for first-time reporters. For first-wave companies, organisations with more than 750 employees — which were previously ineligible — will be able to benefit from these phased implementation provisions until 2027.

When a company claims full exemptions in E4 or S1–S4, it must declare whether the relevant topic is material according to its double materiality assessment and, if so, provide summary information on that topic in accordance with ESRS 2.

Accordingly, the Delegated Regulation (EU) 2025/1416 provides significant relief for planning the deployment of ESRS — including companies with more than 750 employees in certain complex standards — but noting that are transitory measures.

Legislative progress and current situation

Its proposal clarifies and makes the double materiality assessment more proportionate, strengthens interoperability with the sustainability reporting standards of the IFRS (International Financial Reporting Standards) and the GRI (Global Reporting Initiative) standards, and reduces the mandatory data points by 61%, while maintaining the essential objectives of the CSRD and the Green Deal. A shortened version of the proposal is available at the following link. These simplified ESRS still need to be approved by the European Commission. Their adoption would align the ESRS with the Quick Fix Regulation, standardising extensions and providing for new phases of gradual implementation — including the possibility of omitting the quantification of anticipated financial effects under certain scenarios — which would provide immediate regulatory certainty while the Omnibus initiative progresses at the legislative level.

3. Key points of the SFDR Q&A update

ESMA, EBA and EIOPA (European Insurance and Occupational Pensions Authority), as European Supervising Authorities, consolidated and updated their question and answer (Q&A) document on SFDR and its Delegated Regulation in early November 2025. The new version is currently available at this link.

Among the new clarifications provided, we would like to highlight the following:

• In ‘sustainable investment’ (Art. 2.17), SFDR does not prescribe a single methodology for determining whether an investment is sustainable. Managing entities must disclose the methodology used to assess: (i) the contribution to environmental or social objectives, (ii) that they do not cause significant harm (DNSH); and (iii) that the investee companies follow good governance practices. Sustainable investment can be measured both at the economic activity level and at the company level.
• With regard to PAI, the obligation to publish the statement is confirmed for companies exceeding 500 employees, calculated at group level. PAI indicators must be based on the average of at least four quarterly measurements for the financial year. If there are no investments in sovereigns or real estate, the corresponding sections may be left blank or filled in with zero. In the case of products with delegated management, the responsibility for reporting and calculation remains with the delegating party and must cover all investments.
• With regard to the products referred to in Articles 8 and 9, the distinction remains. Those referred to in Article 9 must invest in assets that meet the definition of sustainable investment and may allow exposures for hedging or liquidity purposes provided that they comply with minimum safeguards. Products referred to in Article 8 merely ‘promote’ environmental or social characteristics, and the mere integration of risks does not trigger that article. In both cases, a lack of good governance in invested companies constitutes non-compliance. With regard to the Taxonomy, pre-contractual commitments are binding. In new products, the universe of expected investments may be used to determine the commitment, while periodic reports must reflect actual investments.

Green bonds

4. Technical standards of the EuGB Regulation allowing for the timely registration of external green bond reviewers approved

On 30 December 2025, two technical standards implementing Regulation (EU) 2023/2631 on European Green Bonds ("EuGBRs") in relation to external reviewers were published in the OJEU. The scheme applies both to reviewers established in the European Union as well as to reviewers from third countries who wish to provide services in the EU. Their actions are subject to the EUGBR Regulation and specific mechanisms have been established. The approved standards are as follows:

• Delegated Regulation (EU) 2025/2180 (RTS) which includes registration conditions, sound and prudent management criteria, staff knowledge and experience requirements and rules on outsourcing of activities.
• Implementing Regulation (EU) 2025/2179 (ITS) which approves the forms, templates and standard procedures for registration applications.

ESMA has also set up a specific page for external reviewers that centralizes the regulatory framework, notification and registration requirements, and documentation models. It includes an updated list of entities that have reported their activity during the transitional period running until 21 June 2026. After that date, registration will be mandatory. The page is available at the following link.

5. New ICMA Guide: 'Climate Transition Bond' label launched to finance hard-to-abate decarbonisation

The International Capital Market Association (ICMA) published in November 2025 the Guidelines for Climate Transition Bonds (CTBGs), which introduce a specific Climate Transition Bond (CTB) label for use of funds emissions aimed at critical decarbonisation projects, especially in high-emitting sectors and activities. It is a voluntary framework that seeks to expand the role of the sustainable bond market in financing the transition aligned with the Paris Agreement beyond the typical scope of the Green Bond Principles (GBPs).

According to the CTBG, climate transition projects cover assets, investments, activities, early retirement and decommissioning, as well as other expenses (e.g. R&D) linked to high-emission activities that achieve substantial and quantifiable GHG avoidance, reduction or removal. These projects complement and often go beyond the scope of GBP ‘green’ projects in pursuit of the Paris Agreement objectives. To safeguard their integrity, issuers must comply with (or explain how they will comply with) safeguards such as: having a sustainability/transition strategy at the issuer level, justifying the technological or economic unfeasibility of low-carbon alternatives, demonstrating alignment or compatibility with official or market taxonomies and decarbonisation pathways/roadmaps, mitigating emissions above BAU (business as usual) with reference to BAT (best alternative technology), and identifying and mitigating carbon lock-in risks transparently, with requirements being reinforced when the project is substantially related to fossil fuels.

The document includes an illustrative appendix with preliminary categories of projects that can be financed via CTB, including carbon capture, utilisation and storage and removal technologies, the early retirement and decommissioning of intensive assets (including the permanent withdrawal of coal-fired power plants), fuel switching to replace higher-intensity fuels and designs prepared to integrate low-carbon alternatives with methane control, and methane abatement and venting in oil & gas infrastructure existing at the date of publication of the CTBG.

CTBGs adapt the four components of fund utilisation bonds to the transition context: fund utilisation, project evaluation and selection, fund management, and reporting. They recommend an external review prior to issuance on alignment with these components and subsequent verification of internal monitoring and fund allocation, as well as a high level of transparency in annual allocation and impact reporting, ideally based on ICMA's Harmonised Framework for Impact Reporting.

The guide includes appendices with practical resources for avoiding carbon lock-in and overviews of official and market taxonomies (including the EU Taxonomy), as well as scientifically based sectoral pathways and roadmaps that can be used as a reference for the eligibility and ambition of transition investments. In the case of financial institutions, it clarifies that they can finance or refinance transition loan portfolios through CTBs, with transparency recommendations on the financing/refinancing ratio and look-back periods where appropriate. Finally, it offers specific guidance for emission-intensive issuers opting for Sustainability-Linked Bonds (SLBs).

Overall, the CTBG provides an operational framework for financing the decarbonisation of existing assets and credible interim measures where fully low-carbon alternatives are not yet available, enhancing transparency and traceability of impact. The guidance aligns with relevant European references, including the EU Taxonomy and the European Commission's Recommendations on transition finance, which clarify the coexistence and evolution of green and transition finance and the use of taxonomy criteria to define significant performance improvements. For issuers in difficult sectors, CTBs open the door to mobilising capital towards transition projects with robust safeguards, while SLBs allow the financial cost to be linked to credible GHG targets and trajectories, reinforcing integrity and alignment with net-zero emissions goals.

6. European Commission clarifies how to label, verify and report under the EuGB

The European Commission has published a Communication (frequently asked questions) interpreting and clarifying various provisions of the EuGB Regulation. The text was published in the Official Journal (Series C, C/2025/5885) on 6 November 2025, and aims to facilitate the practical application of the European green bond standard for issuers, verifiers and investors.

The Communication confirms that it is possible to ‘convert’ an existing green bond into a ‘European green bond’ or ‘EGB’ provided that the issuer fully complies with the requirements of the Regulation before the conversion takes effect, including the EGB factsheet positively verified by an external verifier, the updating of the prospectus where applicable, and clear and timely communication to investors. The text also clarifies the consequences of non-compliance during the life of the bond: if a subsequent verification detects that the allocation of proceeds does not comply with Articles 4 to 8 of the Regulation, the issuer loses the right to the EGB designation and may face penalties from the competent authority. It also details the use of the “gradual” and “portfolio” allocation approaches, specifying that they cannot be combined in the same issue and explaining the requirement that, under the portfolio approach, the total value of eligible assets must exceed the value of outstanding EGB in each annual allocation report.

In terms of taxonomy, the document specifies that CapEx eligible under the gradual approach must be incurred after issuance, and develops the 15% flexibility margin for activities without current technical criteria or for international support, always under the principles of substantial contribution and ‘no significant harm’. It also addresses cases involving sovereign issuers (subsidies, transition plans) and legal certainty in the face of changes in technical criteria, introducing a seven-year ‘grandfather clause’ to maintain assets that cease to be aligned due to subsequent modifications.

Finally, with regard to transparency, the European Commission encourages the use of standardised templates for disclosure documents, allocation and impact reports, and clarifies the interaction with corporate green bond frameworks, the use of the prospectus and possible admission provided that the conditions are met and, where applicable, a prospectus is published (including voluntary publication in exemption scenarios).

Carbon Border Adjustment Mechanism (CBAM) and other carbon markets

7. CBAM in the EU: regulatory closure and import carbon pricing

In December 2025, the European Commission finalised the package of implementing acts for the CBAM provided for in Regulation (EU) 2023/956, through six Implementing Regulations. The key elements are:

• Calculation of embedded emissions — Implementing Regulation (EU) 2025/2547 which defines in detail the methodologies and standards for measuring, attribution, reporting and verifying embedded emissions of goods covered by the CBAM when imported into the EU, including system limits and functional units, rules for using actual values and default values, specific treatments for imported electricity and complex goods, and the report and test formats required.
• Price of certificates — Implementing Regulation (EU) 2025/2548 establishing the method for determining the reference price of CBAM certificates, aligned with that of the Emissions Trading System (EU ETS) and regularly updated.
• Authorised declarants — Implementing Regulation (EU) 2025/2549 aligning the CBAM authorised declarant regime with the amendments to Regulation (EU) 2025/2083.
• CBAM Register — Implementing Regulation (EU) 2025/2550 incorporating the possibility of delegating declarations, interoperability with customs systems, the verifier and independent person register, the application of a single mass-based threshold, and rules for access, processing and exchange of data between the Commission, competent authorities and customs.
• Customs communication — Implementing Regulation (EU) 2025/2619 standardising electronic messages between customs and the CBAM Register (declaration data, CN/ID, quantities and country of origin).
• Adjustment for free allocation — Implementing Regulation (EU) 2025/2620 specifying the deduction mechanism for free allowances of the EU ETS to avoid double taxation and detailing adjustment formulas.

These acts develop, among others, Articles 6, 7, 8, 9, 14, 22 and 31 of the CBAM Regulation on annual declaration, calculation and verification of emissions, price and delivery of certificates, and interaction with free allocations of the EU ETS.

This regulatory closure provides a price signal and a more predictable operational framework for imports with a high carbon footprint. Together, these acts increase cost visibility, intensify the integration of carbon pricing into risk, valuation and disclosure models, and may redirect trade and capital flows towards suppliers and technologies with lower emission intensity.

The time has come for EU importers and operators to review contracts and cost pass-through clauses to reflect the price of CBAM certificates, prepare data and traceability systems to report embedded emissions, and assess the financial and risk impact by adjusting procurement and supply policies towards options with lower emission intensity.

Regarding next steps, the Commission and competent authorities may adopt additional implementing acts and, where appropriate, delegated acts to adjust methodologies (e.g., default values and emission factors), refine verification and registration procedures, and align the CBAM with the trajectory of phasing out free allocation from the EU ETS from 2026-2030. Periodic technical updates to the price and customs data formats can also be expected as the EU ETS and the material scope of the CBAM evolve.

8. CBAM in Spain: the operational phase in customs already underway

The CBAM moved from its transitional phase to its operational phase in Spanish customs on 1 January 2026, with the activation of the TARIC (Integrated Tariff of the European Communities) measure 775-CBAM in import declarations, according to Information Note 02/2026 from the Department of Customs and Special Taxes. The measure is supported by Regulation (EU) 2023/956 and the recent Implementing Regulation (EU) 2025/2210 for cases of goods introduced on the continental shelf or Exclusive Economic Zone.

From now on:

• Goods shall be imported into the customs territory of the Union (CTU) only by an authorised declarant for CBAM purposes. EU importers of goods covered by the CBAM must apply for authorised declarant status from the Ministry for Ecological Transition and the Demographic Challenge and operate through the European Commission's CBAM Registry, where they acquire CBAM certificates at a price calculated weekly based on the EU ETS (€/tCO2). The CBAM will ensure that the carbon price of imports is equivalent to the carbon price of domestic production and that the EU's climate objectives are not undermined.
• Additionally, the EU importer must submit an annual CBAM declaration no later than 30 September of each year (for the first time in 2027 in respect of 2026 imports), with the quantities imported and the embedded emissions calculated using verified actual values or default values. On the same date, the authorised declarant shall surrender the number of CBAM certificates equivalent to the declared emissions; during the year, they must maintain in their account, at the end of each quarter, at least 50% of the certificates corresponding to accumulated emissions. The progressive phase-out of free allocation under the EU ETS will take place in parallel with the progressive introduction of the CBAM in the period 2026-2034. If importers can demonstrate that a carbon price has already been paid during the production of the imported goods, the corresponding amount may be deducted from their final invoice.

Furthermore, from 1 January 2026, a single de minimis threshold of 50 tonnes/year per importer applies for the iron and steel, aluminium, fertilisers and cement sectors; below that threshold, CBAM obligations do not apply and there is no need to be an authorised declarant (this does not apply to hydrogen or electricity). Also, exceptionally, if the authorisation application has been submitted no later than 31 March 2026, provisional importing is permitted until a decision is reached by the competent authority.

More information can be found at Carbon Border Adjustment Mechanism (CBAM), where interested parties can access various resources with answers about the implementation of the CBAM in Spain and the application for CBAM authorised declarant status.

9. Galicia activates its voluntary carbon market

On 18 November 2025, Decree 95/2025 of the Xunta came into force. This decree launches a voluntary carbon credit system that only recognises projects carried out in Galicia, but allows the purchase of credits even without having a registered office or tax domicile in the Community. The framework aligns with Regulation (EU) 2024/3012 and requires three basic guarantees: additionality (that the project would not occur without the incentive of the credit), permanence (that the climate benefit is maintained over time) and single accounting (avoiding counting the same reduction twice), with controls against double counting and interoperability "to the extent possible”.

The methodologies, based on IPCC (Intergovernmental Panel on Climate Change) guidance and national inventories, define which projects can participate, what the baseline situation is, how additionality is demonstrated, how leakage risk is measured and controlled, how monitoring is carried out and for how long. The annex enables key typologies for energy and industry: biomass, solar, geothermal, biochar, biogas, green methanol and hydrogen, as well as DAC (direct air capture of CO2) and BECCS (bioenergy with carbon capture and storage). Similarly, the regulation requires prior review of the project design (ex ante validation) and subsequent verification of results (ex post verification) by bodies accredited under Regulation (EC) 765/2008, with audits at least every five years and the possibility of random inspections.

In this market, only Verified Carbon Credits (VCCs) are traded, each with a unique serial number. Estimated Carbon Credits (ECCs) cannot be bought or sold, and those who purchase for offsetting purposes cannot resell the credits.

Finally, a cap of 30% of ECCs per project is established for intermediaries (with an exception for projects of ≤1,000 tCO2e), exceeding which may result in disqualification for five years. If a "reversal" occurs (loss of the reductions or removals achieved), a proportional discount is applied and, if intentional, the promoter must replace the credits. If unintentional, balances are cancelled and recourse is made to a common guarantee pool, which is non-tradable and equivalent to 10% of the ECCs.

Others

10. ESMA intensifies its sustainability agenda: overview of recent developments

In recent weeks, ESMA has taken relevant and complementary steps in its work against greenwashing and in favour of market clarity: it has analysed the real impact of its Guidelines on ESG fund names, has included new answers in its Q&A documents on ESG ratings regulation, and has published a practical guide on how to communicate ESG strategies in compliance with EU regulations. All of this is of particular interest to fund managers, small ESG ratings providers, and marketing and compliance teams in general.

• Review of the accelerated implementation of the Guidelines on ESG names
  
  The report published on 17 December 2025 confirms rapid adoption of the Guidelines of 14 May 2024 on the use of ESG or sustainability-related terms in fund names. According to the analysis (available only in English at the following link), approximately two-thirds of funds with sustainability-related names have modified their name, and more than half have revised their investment policies, mainly introducing exclusions linked to fossil fuels.
  
  The study compares the situation before and after the entry into force of the Guidelines, cross-checks names against policies and documents adjustments also in marketing and disclosure materials. It also highlights that some funds have removed ESG terms as they could not guarantee sufficient alignment, with greater effect on products with environmental terms. Due to its empirical approach, the report is emerging as a useful reference for new fund launches and for decisions on strategy or name changes.
• New responses regarding ESG ratings
  
  Also in December 2025, ESMA answered the following questions regarding ESG ratings:
  • Small rating providers belonging to medium or large groups are not eligible for the temporary regime of Article 5 of Regulation (EU) 2024/2005.
  • ESMA only verifies whether the notifier is a small business or a small group (assets, sales and employees), but does not verify its compliance with Articles 15, 23, 24 and 32–37.
  • A small ESG ratings provider requires at least audited annual financial statements and personnel records, although projected figures (foundational accounts, projections and estimates "in good faith" with management approval) are accepted for the temporary registration of a small ESG rating provider.
  • Consequences if a small provider of ESG ratings under the temporary regime no longer meets the criteria (it is subject to the full Regulation and must apply for authorisation from ESMA within six months).

  All these issues are accessible in English through this link.

• "Landing" ESG communication through a topic note
  
  In one of its first thematic notes of 2026, published on January 14 and available only in English at this link, ESMA offers an operational guide to design sustainability marketing strategies. The note is articulated in four principles – statements must be precise, accessible, substantiated and up-to-date – and expressly advises against practices such as cherry-picking, exaggeration, selective omission, vagueness, insignificant comparisons or the use of images and sounds that distort the message.
  
  The focus is on two common strategies: ESG integration and ESG exclusions. ESMA asks to explain in clear language what they mean in each product, if they are binding, what thresholds or criteria apply and what their real impact on the portfolio is. The note includes good and bad practices (do's & don'ts) of a practical nature. Among the advisable strategies are to define the terms precisely, clarify whether the integration is binding and at what level it operates (selection, weighting, asset allocation), specify the materiality approach (single or double) and detail thresholds and effects of exclusions. Among the practices to avoid, the note mentions using "integration" as a wildcard label, making entity-level statements without nuances, or magnifying differences when the overlap with the non-ESG strategy is high.
  
  ​Without creating new disclosure requirements, this issue note reinforces the responsibility that any sustainability claim is clear, fair and not misleading, well-supported, understandable and verifiable, and updated in the face of material changes.

11. ESAs publish Joint Guidelines on ESG Stress Testing: What Changes and How to Prepare

The European Supervising Authorities (EBA, EIOPA and ESMA) have published the "Final report on Joint Guidelines on ESG stress testing" (JC 2025 78, 8 January 2026, available in English at this link). These guidelines, aimed at competent authorities, seek to consistently integrate environmental, social and governance risks into supervisory stress tests, with application from 1 January 2027. The text emphasizes methodological consistency, proportionality and a long-term approach, initially prioritizing environmental and climate risks, and incorporates guidelines on scenario design, time horizons (at least 10 years for strategic resilience) and topdown, bottomup or hybrid options. They do not impose new direct obligations on banks, but guide how authorities will incorporate ESG risks into their stress exercises and supervisory processes.

In practice, banks should anticipate increased data and internal governance requirements to respond to requirements from authorities: materiality mapping by portfolios, sectors and geographies, ESG and IT data capabilities, and preparation for physical and transition risk scenarios, including static/dynamic balance sheet scenarios with credible management actions. Proportionality will allow for adjustments based on size and risk, but greater granularity is expected in sensitive exposures (e.g., real estate, carbon-intensive sectors). The authorities will set schedules, give entities time to prepare, and may publish aggregated results according to sectoral practice.

The next step is for these Guidelines to be officially translated and for national authorities to notify two months later whether they plan to comply with them.