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As the end of 2025 approaches, businesses are already planning what should be on their sustainability agendas for 2026 and beyond. In this article, we explore some of key sustainability issues businesses should consider for the year ahead, including:
Background
2025 has been an interesting year for sustainability from a legislative and policy perspective. The European Commission (Commission)’s focus on competitiveness and simplification has led to the publication of a number of omnibus packages, proposing to simplify existing legislation across a number of key areas – sustainability, agriculture, digitalisation, defence and chemicals. An environmental omnibus was also announced and due to be adopted by the Commission before the end of the year. According to the Commission, each package aims to decrease the administrative burden on companies and ultimately increase the ability of European businesses to remain competitive in the current geopolitical and economic landscape.
While intended to reduce the administrative burden on European businesses, these packages have created uncertainty for businesses, at least in the short term. In many cases, this has resulted in increased resources, in terms of people, time and money, being dedicated by businesses to understanding the potential impact of the proposed amendments to their existing obligations. For example, the omnibus package on sustainability (sustainability omnibus) has created uncertainty for businesses around their sustainability reporting and due diligence obligations. Whether this is simply short term pain for long term gain remains to be seen.
Leaving aside any potential obligations under the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), a number of other sustainability related requirements have been introduced across a broad range of topics. These include climate, emissions, nature and biodiversity, energy, circularity, employee protections and sustainable finance that businesses need to be aware of. In this article, we consider four key areas of focus.
Sustainability reporting and disclosures requirements
Starting with the sustainability omnibus itself, the amendments to CSRD and CSDDD have been a key focus for many. However, proposals relating to two other pieces of legislation, the Carbon Border Adjustment Mechanism (CBAM) Regulation and Taxonomy Regulation delegated acts, were also introduced.
The amendments to the CBAM Regulation have already been agreed and they entered into force on 20 October, essentially exempting the majority of those that had originally fallen within scope while still capturing over 99% of relevant emissions. While the remit of these requirements is limited to those that import goods in certain carbon intensive sectors (cement, iron and steel, aluminium, fertilisers, electricity and hydrogen), the amendments reduce the reporting burden on many SMEs and individuals as well as occasional importers of such goods.
The amendments proposed to the Taxonomy Regulation delegated acts focus on streamlining the taxonomy reporting templates and the number of data points that need to be reported. These changes are due to apply from January 2026 to those that are required to report on the taxonomy alignment of their activities.
Turning to the CSRD and CSDDD proposals included in the sustainability omnibus, with the European Parliament recently finalising its negotiating position on the proposed amendments to CSRD, it is expected that the amending legislation will be finalised by the end of 2025.
These are not the only initiatives that Irish businesses should be considering in the context of sustainability reporting requirements.
Businesses with operations outside of the EU, whether that be in the UK, Asia, South America or elsewhere, also need to be aware of the international standards adopted by the International Sustainability Standards Board (ISSB). A number of non-EU countries including the UK, Switzerland, Australia, China, Japan and Brazil intend to make use of these standards and in many cases adopt them into national law. Relevant businesses should be focused on exploring the interoperability between the EU sustainability reporting framework, the ISSB standards and any voluntary sustainability frameworks that they currently report against.
For firms in the financial services sector, there continues to be a focus on disclosing sustainability information sitting alongside the sustainability reporting obligations that apply more broadly. For credit institutions, these take the form of Pillar 3 sustainability disclosure requirements under the Capital Requirements Regulation. For asset managers and certain insurance companies, investment firms and credit institutions, it is the introduction of sustainable financial product labels under the SFDR 2.0 proposals that are of particular relevance.
Sustainability due diligence
As part of the proposed amendments to CSDDD, both the Council of the European Union and European Parliament have sought to increase its thresholds, meaning that the provisions of this legislation may only apply directly to very large companies (those with over 5,000 employees and net turnover exceeding €1.5bn). It is expected that the legislation amending CSDDD will be finalised by the end of 2025. However, the deadline for transposing CSDDD into national law has been delayed until 2027, meaning that businesses have more time to understand how this legislation and these amendments will directly or indirectly impact them.
There are a number of other pieces of legislation that introduce sustainability due diligence obligations. For example the Regulation on Deforestation Free Products (EUDR), Forced Labour Regulation, the Batteries Regulation and the Conflict Minerals Regulation. These will apply much more broadly than CSDDD and businesses should be focusing on whether and to what extent the requirements of these pieces of legislation are going to impact on their operations and how they interact with those they do business with.
In addition, from a consumer law perspective, before making any environmental claims about their business or products, companies need to ensure that they carry out proper due diligence. This process should involve a structured evidence-gathering exercise, ensuring that any claims being made can be substantiated.
Moving beyond a focus on compliance with EU legislation, certain multi-nationals as well as those seeking taxonomy alignment are increasingly focusing on the OECD Guidelines on Responsible Business Conduct as well as the UN Guiding Principles on Business and Human Rights. We expect to see this continue, especially if the thresholds for falling within scope of CSDDD increase substantially.
Litigation risk
From next year, the Green Transition Directive will make it a specific ‘misleading commercial practice’ to mislead consumers about the environmental characteristics of a product or service or to make claims about future environmental performance without clear, publicly available and verifiable commitments. This directive also introduces new ‘prohibited commercial practices’ relating to environmental claims. For example, in relation to the use of generic terms like ‘environmentally friendly’, ‘green’, ‘eco’, ‘energy efficient’ or ‘climate friendly’.
There are number of ways in which a breach of consumer laws can create litigation or regulatory risk. We may see enforcement action in relation to environmental claims at both European and national levels. Engagement is being coordinated at a European level by the Consumer Protection Cooperation Network with the risk of enforcement action being taken by national consumer agencies. From an Irish perspective, such action would be taken by the Competition and Consumer Protection Commission. Misleading environmental claims could also be a basis for litigation from activists or NGOs with the possibility of class actions as the provisions of the Collective Redress Directive are implemented.
Recently, as evidenced by the Coolglass Wind Farm Limited v An Bord Pleanála case, the Irish judiciary has demonstrated a strong appetite to deal expeditiously with important climate litigation. There are a number of key trends in climate litigation that will be of relevance to businesses in all sectors:
Sustainability legislative developments
Since the publication of the sustainability omnibus, we’ve seen a shift with businesses broadening their focus beyond sustainability reporting to the many other sustainability initiatives coming down the track across a wide range of topics, including emissions, sustainable finance, energy, consumer protection, circularity and due diligence.
In terms of areas of focus for 2026, the first step for businesses is to understand what sustainability topics are relevant to their operations and then to identify the potential impacts of related legislation, whether these are direct or less obvious indirect impacts. Even indirect impacts can have cost and resource implications. For example, the due diligence requirements being introduced by EUDR or the Forced Labour Regulation or the obligations set out in the Energy Performance of Buildings legislation.
Tracking of legislation may sit across different teams within a business and as a result end up being siloed. For example, an operations team tracking requirements relating to emissions and building performance; a marketing team keeping track of developments around sustainability claims and greenwashing or even a HR team focusing on employment related obligations that will apply to the workforce. Bringing this information together and making it available across all business functions helps with identifying opportunities, assessing risk and planning for new obligations that may have a direct or indirect impact on your business.
While it’s difficult to narrow down the areas of focus for businesses as this will very much depend on the sector they are in, the publication of the Clean Industrial Deal on the same day as the sustainability omnibus seems quite telling in terms of direction of travel. This focuses in particular on decarbonisation and circularity initiatives, areas where there is an opportunity for the EU to gain a competitive advantage. We expect to see the EU pushing ahead with developments in these areas in 2026 and beyond. As such, these are areas that businesses should be thinking about.
Next steps
Uncertainty has been prevalent when it comes to sustainability legislative initiatives. This has presented difficulties for businesses trying to understand the potential impact of these initiatives on their operations and to allocate resources accordingly.
As part of the process for setting sustainability agendas for 2026 and beyond, businesses should be clear on the sustainability matters that are relevant to their business. This isn’t something that one function within an organisation, whether it’s legal, compliance or sustainability, is going to be able to answer on its own. Input is going to be needed from teams across the business to take advantage of the opportunities and steps to mitigate the associated risks. As with the implementation of the sustainability agenda, collaboration is going to be key. As a first step, we would suggest considering how each of the topics discussed in this article are relevant to your business and what their potential impacts might be.
We recently launched a timeline of key ESG developments which is available to clients through KnowledgePlus. This tool is designed to assist in keeping track of the key dates relating to sustainability initiatives relevant to businesses across a broad range of sectors. If you are interested in getting access to this tool, please contact Jill Shaw.
Other articles
For further information in relation to these topics, please contact Jill Shaw, Denise Daly Byrne, Alan Roberts, Lorena Dunne, Laura Mulleady or any other member of the ALG ESG & Sustainability team.
With thanks to Erin Ward for her assistance in the preparation of this article.
Date published: 26 November 2025
