Monday Morning Briefing CW 19, 2025

May 5, 2025

Regulatory News

ESRS Simplification Package Coming This Month

The European Commission has announced that its long-awaited ESRS simplification proposal will be released by May 31. The reform aims to reduce the compliance burden for SMEs, which have expressed concern about the scope and cost of double materiality assessments. The changes are likely to include clearer scoping thresholds and phased disclosure requirements for smaller entities. This is part of a broader EU strategy to balance transparency with competitiveness under the CSRD.

EU Green Finance Taxonomy Faces New Additions

Brussels is considering expanding the EU Taxonomy to include defense, nuclear, and critical mineral activities, all previously excluded due to controversy over their environmental credentials. A new draft framework proposes “low-impact” eligibility criteria for select military and extractive sectors. The goal is to align capital flows with evolving geopolitical realities and energy transition demands. Final approval is expected in Q2, pending stakeholder consultations and review.

EFRAG Launches New Working Group for Voluntary Sector Standards

EFRAG has launched a new working group to develop voluntary, sector-specific CSRD guidance for companies preparing for 2026 and beyond. Initial priority sectors include textiles, transport, and extractives, reflecting their high materiality risk. The group will consult with industry stakeholders to draft tailored indicators, metrics, and disclosure templates. This complements the core ESRS and addresses sector diversity in sustainability impacts.

European ESG Funds Continue to Shrink

Sustainable investment funds in Europe saw $2.1 billion in net outflows in April, following a record $8.6 billion in Q1. Analysts attribute this to regulatory uncertainty, political backlash, and shifting ESG definitions. Investors are becoming more selective, favoring thematic or climate-focused products over general ESG indices. Some asset managers are now quietly rebranding ESG funds to avoid scrutiny.

Green Compliance Costs Rise for Energy-Intensive Sectors

The European Chemical Industry Council (CEFIC) reports that green compliance now costs the sector over €20 billion annually. Regulatory burdens from CSRD, CBAM, and Fit-for-55 are pushing operational costs to historic highs. Companies are struggling with overlapping disclosure regimes, prompting some to rethink future investment in the region. Industry groups warn of increasing fragmentation and competitiveness risk.

Enel Doubles Down on Renewables

Enel has revised its 2025–2028 plan, boosting renewable investments to €16 billion annually—a 10% increase from earlier projections. The Italian utility will expand solar, wind, and battery storage, while modernizing the grid. This reflects confidence in EU policy support and the long-term economics of green energy. Enel is also exploring cross-border partnerships to scale operations.

SAP Sets CSRD Benchmark

SAP has become one of the first DAX 40 firms to publish a CSRD-compliant report, setting a high standard for upcoming disclosures. The report includes a robust double materiality assessment, ESRS-aligned metrics, and clear KPIs. This move is seen as a signal to peers still navigating scoping and data gaps. SAP’s report is emerging as a reference model across industries.

IKEA Pilots Product Passports

IKEA has joined an EU-backed pilot testing Digital Product Passports (DPPs) ahead of 2026 ESPR regulations. Select furniture items now include over 100 sustainability data points, covering sourcing, emissions, and recyclability. The trial supports circularity and transparency at scale, and IKEA’s involvement could help set industry-wide norms.

Heineken Launches Water Positive Strategy

Heineken has committed to becoming water positive by 2030, pledging to replenish more water than it uses in high-stress areas. The strategy includes watershed restoration, advanced water treatment, and zero wastewater discharge. This initiative underscores growing material risks in water-intensive industries, and aligns with Heineken’s broader sustainability and climate goals.

The European Commission is expected to publish its next list of CSRD sector priorities.
EFRAG’s May 9 webinar will focus on ESRS implementation challenges and stakeholder input.
Corporate sustainability results are due from BMW Group, Unilever, and Vestas, offering early signals on CSRD preparedness.

Sources:

European Commission press release – May 2025

EFRAG Sector Standards Announcement

SAP Sustainability Report

Heineken Water Strategy

[Reuters, ICIS, Vogue Business]

This article was created with the assistance of AI and carefully reviewed, edited, and refined to ensure accuracy and clarity.