Sustainability reporting and due diligence update – November 2025

Sustainability reporting and due diligence requirements have continued to be at the forefront of the legislative agenda, both at EU and domestic level, since our last sustainability reporting and due diligence update. In this article, we have set out a brief overview of some of the key developments that companies should be aware of since our last update.

Irish sustainability reporting updates

1. Ireland implements the Stop-the-Clock Directive

On 11 July 2025, the European Union (Corporate Reporting) Regulations 2025 were published. The Regulations:

• implement the provisions of the Stop-the-Clock Directive ensuring that those Irish companies required to report for the first time in respect of their 2025 or 2026 financial years have their sustainability reporting obligations pushed out by two years, to 2027 and 2028 respectively;
• introduce amendments to the Companies Act 2014, as amended, to clarify certain of the provisions introduced by the European Union (Corporate Sustainability Reporting) Regulations 2024.

Further information can be found in our 16 July update.

European sustainability reporting updates

1. EFRAG publishes Progress Report on ESRS

On 20 June 2025, the European Financial Reporting Advisory Group (EFRAG) published its Progress Report on the execution of the specific mandate it received to provide technical advice to the European Commission on revised and simplified European Sustainability Reporting Standards (ESRS) by 31 October 2025. The Progress Report follows EFRAG’s ESRS revision document which includes the work plan and timeline associated with the revisions to the ESRS. In the Progress Report, EFRAG outlined six ‘strategic levers’ to simplify the ESRS and also requested that the duration of the public consultation and the deadline set for the delivery of EFRAG’s technical advice be extended to offer more time and comfort for stakeholders to provide meaningful feedback.

2. European Council agrees on its position on sustainability reporting and due diligence requirements

On 23 June 2025, Member States’ representatives in the Committee of Permanent Representatives approved the Council’s negotiating position under the Omnibus I package. The proposal focuses on streamlining the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD). Its aim is to reduce the administrative burden on European companies while boosting EU competitiveness.

Key positions on changes to the CSRD include:

• the employee threshold is to be raised to 1,000 and listed SMEs removed from scope, as per the Commission’s proposal.
• the Council added a new net turnover threshold of over €450m and embedded a review clause to revisit scope extension based on data needs for Green Deal financing and corporate readiness.

Key positions on changes to CSDDD include:

• the scope of the CSDDD to be narrowed to firms with 5,000+ employees or €1.5bn turnover. Due diligence requirements changed from entity-based mapping to a risk-based focus on “tier 1” partners using reasonably available information.
• obligations beyond tier 1 are to apply only when objective, verifiable evidence of adverse impacts arises.
• a delay to the transposition deadline by one year to 26 July 2028, and the postponement of the first application date.

3. Deadline for EFRAG to provide technical advice on ESRS simplification is extended

On 2 July 2025, the European Commission confirmed that the deadline for EFRAG to deliver technical advice on the revision and simplification of the ESRS had been extended from 31 October 2025 to 30 November 2025. EFRAG’s Sustainability Reporting Board extended the duration of the public consultation in line with this timeline. The public consultation relating to this advice period ran for 60 days from the end of July until the end of September 2025.

4. ISSB launches exposure drafts to strengthen SASB Standards

On 3 July 2025, the International Sustainability Standards Board (ISSB) published two exposure drafts proposing amendments to the Sustainability Accounting Standards Board (SASB) standards and consequential amendments to the Industry-based Guidance on Implementing International Sustainability Disclosure Standards 2 (IFRS S2). The first draft presents a review of nine high-priority industries, consisting of eight extractives & minerals processing sectors and also processed foods. The second draft aligns specific metrics across a further 41 industries on topics like water management and workforce health and safety. Both drafts also amend the Industry-Based Guidance on Implementing IFRS S2 to keep climate-related content in line with the SASB metrics. These exposure drafts are open for comment until 30 November 2025. The ISSB aims to finalise and issue the enhancements in 2026.

5. European Commission adopted Taxonomy delegated act

On 4 July 2025, the European Commission adopted a proposed Delegated Act amending the Taxonomy Disclosures, Climate and Environmental Delegated Acts. The proposed delegated act seeks to introduce a set of measures to simplify the application of EU Taxonomy and reduce the administrative burden for European companies and enhance EU competitiveness while preserving core climate and environmental goals.

The main simplification measures include:

1. financial and non-financial companies are exempt from assessing Taxonomy-eligibility and alignment for economic activities that are not financially material for their business.
2. non-financial companies are exempt from assessing Taxonomy alignment for their entire operational expenditure when it is considered non-material for their business model.
3. for financial companies, key performance indicators, like the green asset ratio (GAR), for banks are simplified, and they have an option not to report detailed Taxonomy KPIs for two years.
4. taxonomy reporting templates are streamlined by cutting the number of reported data points by 64% for non-financial companies and by 89% for financial companies.

It is planned that the simplification measures laid out in this delegated act will apply as of 1 January 2026 and will cover the 2025 financial year. However, companies are given the option to apply the measures starting with the 2026 financial year. This delegated act is still working its way through the EU’s legislative process with the scrutiny period due to end in early January 2026. 

6. “Quick fix” delegated act adopted

On 11 July 2025, the European Commission announced the adoption of a delegated act which introduces “quick fix” amendments to the ESRS. These amendments will apply to those companies that had to start reporting sustainability information under the CSRD for the 2024 financial year (“wave one” companies) and who were permitted to omit certain information for their year one reporting. These companies will be able to continue omitting such information for their 2025 and 2026 financial years.

The delegated act was published in the Official Journal of the European Union on 10 November 2025 and enters into force on 13 November 2025.

Further information can be found in our 16 July update.

7. European Commission presents voluntary sustainability reporting standards for SMEs

On 30 July 2025, the European Commission adopted a recommendation introducing a voluntary sustainability reporting standard for small and medium-sized enterprises (SMEs). Developed by EFRAG, this standard aims to ease the reporting burden for companies not covered by the CSRD. It provides a simplified framework for responding to sustainability information requests from large companies and financial institutions. The recommendation serves as an interim solution ahead of a formal delegated act and is part of the broader Omnibus I package. SMEs may use the standard to improve access to sustainable finance and monitor their own performance. The Commission’s recommendation was published in the Official Journal of the EU on 5 August 2025.

8. EFRAG publishes revised ESRS Exposure Drafts

On 31 July 2025, EFRAG published the revised and simplified Exposure Drafts of the ESRS and launched a 60 day consultation process. EFRAG published 12 draft standards including environmental, social, governance and cross-cutting standards. A basis for conclusions document has also been provided explaining the rationale and methodology behind the amendments for the 12 Exposure Drafts as well as an FAQ document.

The drafts have been influenced by feedback from companies already reporting under the CSRD as well as those preparing to do so. EFRAG focused on ‘cutting complexity and improving usability’. Amendments include streamlining the double materiality assessment, reducing overlaps across standards, clarifying language and structure, and removing all voluntary disclosures. New relief mechanisms have also been introduced, such as exemptions where reporting would cause undue cost or effort.

9. European Commission delays Level 2 delegated acts in sustainable finance legislation

On 6 October 2025, the European Commission published a letter (and annex) that it sent to the EBA, EIOPA, ESMA and the AMLA, which sets out certain “non-essential” Level 2 delegated acts relating to financial services that it is deprioritising until 1 October 2027. Level 2 delegated acts are intended to provide technical and implementation details for Level 1 legislation. Key sustainability related delegated acts that have been categorised as “non-essential” include:

ESRS under the CSRD

• delegated acts on sector-specific ESRS under the CSRD. Notably, under the Omnibus I proposals, the requirement to introduce these sector-specific ESRS is removed.
• ESRS for listed small and medium-sized enterprises. Under the Omnibus I proposals, listed small and medium-sized enterprises will fall outside the scope of the CSRD.  
• ESRS for non-EU companies (NESRS). Under the CSRD, non-EU companies are required to start reporting in 2029. The delegated act on the NESRS should be adopted by the Commission by 30 June 2026. This deadline remains unchanged in the Commission’s Omnibus I proposal. Unless the Omnibus I proposal is amended further by the European Parliament or the Council during the Omnibus trilogues (negotiations), the Commission would need to propose additional changes to the CSRD to postpone this deadline. 
• review of the first set of (non-sector specific) ESRS: Under the CSRD, the Commission must review the ESRS at least every three years from the date of their application, taking into account the technical advice of the EFRAG and where necessary, amend such delegated acts to reflect relevant developments, including international standards. 

Transparency Directive

• an implementing act on equivalence decisions for third-country sustainability reporting standards, as well as delegated acts on general criteria on equivalence for third-country sustainability reporting.

Sustainable Finance Disclosures Regulation

• Ten revised regulatory technical standards under the SFDR are due to be delaye

10. European Parliament rejects JURI position on the CSRD and CSDDD

On 22 October 2025, the European Parliament narrowly voted against adopting the proposed amendments to the CSRD and CSDDD put forward by its Legal Affairs Committee (JURI) as the Parliament’s negotiating position.  

The consequence of the vote is that the legislative proposals will be considered by the full Parliament. MEPs from all political groups may propose new changes and potentially rewrite the Parliament's negotiating position. A fresh vote is scheduled for 13 November 2025. 

11.European Commission launches Call for Evidence in relation the Taxonomy climate and environmental delegated acts

On 7 November 2025, the European Commission launched a Call for Evidence in relation to the Taxonomy climate and environmental delegated acts.  This call for evidence responds to the legal obligation under the Taxonomy Regulation to regularly review and, where appropriate, amend the technical screening criteria for activities contributing to the six environmental objectives set out in the Taxonomy Regulation: climate change mitigation; climate change adaptation; sustainable use and protection of water and marine resources; circular economy; pollution prevention and control; and biodiversity. The Call for Evidence will close on 5 December 2025.

Irish Due Diligence Update

1. EU Deforestation Regulation Bill included in the Autumn 2025 Legislation programme

The EU Deforestation Regulation Bill has been included in the Autumn 2025 Government Legislation Programme. This bill is in early stages of preparation. Once it goes through the legislative process and is enacted, it will give effect (as required) to the Regulation on Deforestation-free products (EUDR) in Irish law.

European Due Diligence Update

1. “Stop-the-clock” legislation on due diligence rules for batteries

On 30 July 2025 the “Stop the Clock” Battery Due Diligence Regulation was published in the Official Journal of the EU, coming into force on 31 July 2025. This Regulation postpones the due diligence requirements for operators established under the EU Batteries Regulation (EUBR). These due diligence obligations were initially scheduled to apply from 18 August 2025. Additionally, the European Commission was obliged to publish guidelines outlining the due diligence requirements by 18 February 2025. The “Stop the Clock” Battery Due Diligence Regulation postpones the application of the due diligence obligations until 18 August 2027. In addition, the deadline for publication of the guidelines has been extended to 26 July 2026

2. European Commission publishes proposal with targeting amendments to EUDR

On 21 October 2025, the European Commission published proposed targeted amendments to the EUDR seeking to reduce regulatory obligations on smaller operators and on the downstream part of the value chain. The proposed changes include:

• delayed application for micro and small operators.
• a six-month grace period in enforcement for large and medium sized in-scope companies.
• new exemptions for non-SME “downstream” operators and traders.
• simplified requirements for a new category of micro and small primary operators.

The European Parliament and the Council will now discuss the Commission’s proposal under the ordinary legislative procedure. As the EUDR is scheduled to apply from 30 December 2025, the Commission has called the Parliament and Council to prioritise this proposal.

With thanks to Niamh Walshe for her assistance in the preparation of this article.

For further information on any of these updates, please contact Jill Shaw, ESG & Sustainability Lead or any other member of the ALG ESG & Sustainability team.

Date published: 11 November 2025