What's Happening in Sustainability & ESG (Week Recap 17.06 - 23.06) 🌎

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Welcome to this edition of Green Digest, where you will get updated about everything happening in the Sustainability & ESG space in less than 10 minutes. 🌎

We go through tons of articles and data from the most reliable sources, filter & simplify them, and serve them to you in bite-sized chunks every week. 🍀

In this edition, we’ll cover:

• EU pauses negotiations on law targeting companies’ misleading green claims & EU Council formally adopts its position on the Omnibus package 🇪🇺

• The Science Based Targets initiative (SBTi) is inviting companies of all sizes to pilot its draft Corporate Net-Zero Standard V2 📑

• Britain unveiled its first industrial strategy in eight years, a decade-long plan aimed at cutting energy bills for over 7,000 electricity-intensive companies 🇬🇧

• British Airways, Stripe, and Shopify have purchased the first independently verified ocean carbon removal credits 🌊

• The US SEC withdrew its proposed rule requiring ESG fund disclosures 🇺🇸

• and other news 🌍

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THIS WEEK’S TOP NEWS

Regulatory Oversight & Industry Insights

🇪🇺 The EU has paused negotiations on its proposed Green Claims Directive, a law aimed at curbing corporate greenwashing by requiring companies to substantiate environmental product claims such as “climate neutral” or “recycled content.” The proposal, introduced in 2023, was intended to combat misleading sustainability labels after an EU review found that half of such claims were vague or unfounded. However, mounting pressure from member states—particularly over its potential burden on 30 million small businesses—has led the European Commission to signal plans to withdraw the directive, citing conflicts with its regulatory simplification agenda. The directive’s preapproval requirement for environmental claims and the lack of a clear impact assessment also drew strong opposition from the European People’s Party (EPP), the EU Parliament’s largest group, which recently declared it would not support the directive in upcoming negotiations. Without EPP backing and amid fragmented political support, the Green Claims Directive is now considered unlikely to be enacted, highlighting the broader political pushback against green regulations.

The EU Council has also formally adopted its position on simplifying sustainability reporting and due diligence rules under the ‘Omnibus I’ package. The Council’s mandate raises thresholds for the CSRD to 1,000 employees and adds a €450 million turnover requirement, while listed SMEs are removed from the scope. For the CSDDD, thresholds are increased to 5,000 employees and €1.5 billion in turnover, significantly narrowing the scope to only the largest companies. The due diligence approach shifts from an entity-based to a risk-based model, with requirements largely limited to direct business partners (‘tier 1’), unless there is objective and verifiable evidence of broader risks.

Climate transition plan obligations are also weakened - companies are now only required to adopt, not implement, such plans, and the adoption deadline is delayed by two years. The Council maintains the removal of a harmonized EU liability regime and postpones the CSDDD transposition deadline to 26 July 2028. The council declared that these changes are part of the EU’s broader effort to simplify regulations, following calls from leaders like Enrico Letta and Mario Draghi, and align with the Budapest declaration’s push for a “simplification revolution.” Negotiations with the European Parliament will begin once it adopts its own position.

The fast-moving Omnibus proposal is drawing strong legal criticism, with experts warning it could lead to years of uncertainty and potential annulment by the EU Court of Justice. Critics argue the Commission failed to conduct required proportionality and necessity tests, violating the legal principle of non-regression on human and environmental rights. Legal experts warn that this rushed deregulation—intended to simplify rules—could instead create legal chaos, expose companies to fragmented liability across jurisdictions, and ultimately undermine both EU competitiveness and its climate goals.

🇪🇺 In other EU news:

EFRAG announced plans to cut more than 50% of required datapoints in the upcoming revision of the EU’s sustainability reporting standards (ESRS). The move aims to reduce reporting burdens under the CSRD while preserving the directive’s core objectives. The revision is also part of the EU’s Omnibus I package. EFRAG’s simplification efforts include reducing overly granular narrative disclosures, eliminating less relevant datapoints, and improving double materiality assessments, readability, and alignment with IFRS standards. Exposure drafts are expected in July, with final advice due by October 31, 2025.

EU lawmakers reached a deal to amend the Carbon Border Adjustment Mechanism (CBAM), introducing a 50-tonne import threshold that exempts 90% of importers (mostly SMEs) from compliance, while retaining 99% of emissions from carbon-intensive imports within scope.

MORE INTERESTING NEWS

Latest developments, reports, insights, and trends

📑 The Science Based Targets initiative (SBTi) is inviting companies of all sizes to pilot its draft Corporate Net-Zero Standard V2, aiming to ensure the updated framework is both scientifically robust and practical for business. The pilot, open globally, will unfold in two phases: a broad survey (Phase One) running from June 16 to August 15, 2025, and a hands-on trial using real company data (Phase Two) scheduled for Q3. This follows SBTi’s receipt of over 850 stakeholder responses, with key feedback focusing on carbon removals and indirect mitigation strategies, including book-and-claim systems. Stakeholders urged greater clarity on high-durability removals from 2030 and recognition of emissions reductions in complex supply chains. The finalized standard is expected by late 2026 and will become mandatory for new targets in 2027, though companies can still use current criteria through 2026. Despite political and investor pushback, corporate commitment remains strong—submissions to SBTi are up 30% this year.

🇬🇧 Britain unveiled its first industrial strategy in eight years, a decade-long plan (2025–2035) aimed at cutting energy bills for over 7,000 electricity-intensive companies by up to 25% from 2027 and boosting key sectors through targeted investment and reform. The strategy tackles high energy costs—long seen as a barrier to industrial growth—by reducing green levies and exempting the most energy-intensive firms. Highlights include £2.8 billion for advanced manufacturing R&D, a goal to double clean energy investment to over £30 billion annually by 2035, and £150 million to support creative industries. The strategy expands the British Business Bank, increases skills funding by £1.2 billion annually by 2028–29, and includes closer cooperation with the EU on energy and carbon pricing to streamline trade and boost investment. While widely welcomed by manufacturers, some service sectors criticized the plan for its narrow scope.

📑 The IFRS Foundation released new guidance to help companies disclose high-quality information about their climate-related transition plans in line with IFRS S2. The document, building on materials from the Transition Plan Taskforce (TPT), offers practical support for disclosing strategies, targets, actions, and resource allocation related to climate mitigation and adaptation. While IFRS S2 doesn’t require a transition plan, it mandates disclosure of material climate-related risks and opportunities that could impact a company’s outlook. The guidance aims to reduce fragmentation in transition disclosures, support global consistency, and allow jurisdictions to tailor additional requirements as needed. The IFRS Foundation also launched a new e-learning course to support companies in understanding and implementing the ISSB’s sustainability and climate disclosure standards. Available through the IFRS Sustainability Knowledge Hub, the course includes four modules introducing IFRS S1, IFRS S2, integrated disclosures, and organizational considerations. Designed for preparers and stakeholders beginning sustainability reporting, the course offers optional assessments and certificates, with CPD/CPE credits for eligible professionals.

📊 The Global Reporting Initiative (GRI) launched a new Sustainability Taxonomy to make its reporting standards machine-readable and digitally accessible. The taxonomy, based on XBRL, covers all GRI standards—Universal, Sector, and Topic—and aims to accelerate data collection, enhance comparability, and streamline digital submissions. It’s designed for interoperability with the ISSB and ESRS taxonomies, strengthening alignment across global reporting frameworks. GRI will also offer training and filing tools in 2025 to help organizations and third-party providers adopt the new system.

🤝🏻 Norway and Switzerland announced the first-ever international carbon removal deal under Article 6.2 of the Paris Agreement, establishing a legal framework for cross-border CO₂ transport and storage. The agreement aims to support high-integrity carbon markets by enabling the transfer of carbon mitigation outcomes between countries, while fostering regulatory clarity, transparency, and long-term investment in CCS and durable CDR technologies. Pilot projects under the deal involve leading companies such as Climeworks, Neustark, Carbonfuture, and major Swiss firms like SwissRe and UBS.

WHAT ARE COMPANIES DOING?

Corporate sustainability, new tools and services & companies in the news

🌊 British Airways, Stripe, and Shopify have purchased the first independently verified ocean carbon removal credits, marking a key milestone for the emerging carbon sequestration method. The credits, issued by registry Isometric, were generated by a Planetary project in Halifax, Canada, which added alkaline minerals to power plant discharge water, triggering chemical reactions that permanently lock away CO₂ as bicarbonate. Though the initial removal was modest (625 credits shared), the approach has gigaton-scale potential if globally expanded. First-mover companies aim to help developers gain expertise and lower verification costs. As models and trust improve, proponents believe ocean carbon removal could scale significantly as a cost-effective climate solution.

⏪ ArcelorMittal abandoned plans to convert two German steel plants to hydrogen-powered green steel production, rejecting €1.3 billion in subsidies due to high energy costs and uncertainty over Germany’s energy future. The move is a setback for Germany’s industrial decarbonization efforts and raises doubts about its green hydrogen strategy. While the German government expressed regret, it noted that no funds had been disbursed. Other steelmakers like Thyssenkrupp and Salzgitter are continuing with their green steel projects but are urging better market conditions. ArcelorMittal cited cheaper and more predictable electricity in countries like France and called on the EU to address the surge in steel imports that threaten European producers.

🟢 Climeworks announced a strategic partnership with SAP to integrate carbon removal into enterprise carbon management and SAP’s own net zero roadmap. The collaboration involves co-developing ERP-based carbon management tools via SAP’s Sustainability Control Tower and Store, enabling businesses to measure, manage, and mitigate emissions more effectively. As part of the deal, SAP will purchase 37,000 tons of carbon removal credits from Climeworks by 2034, using solutions such as Direct Air Capture, Biochar, and Enhanced Rock Weathering.

🛩️ Neste announced a new agreement to supply Amazon with 7,500 metric tons (2.5 million gallons) of sustainable aviation fuel (SAF) through 2025 for use at San Francisco and Ontario International Airports. The SAF, produced from renewable waste like used cooking oil, will be blended with conventional jet fuel and delivered via pipeline and renewable diesel-powered trucks.

📊 Datamaran launched Datamaran Core, a streamlined ESG solution designed to help companies identify, manage, and disclose sustainability-related risks and opportunities. Aimed at sustainability, legal, and risk teams, Core offers key tools like materiality assessments, a double materiality evaluation module, regulatory monitoring, and audit-ready data exports—all without the cost or complexity of a full governance platform. It also includes access to Harbor+, Datamaran’s peer networking and insight-sharing community.

EVERYTHING FINANCE

Sustainable finance, funding rounds, acquisitions & private equity deals

🇺🇸 The US SEC withdrew its proposed rule requiring ESG fund disclosures, halting efforts to standardize information and reduce greenwashing risks. Originally introduced in 2022 under former Chair Gary Gensler, the rule aimed to improve transparency for investors by mandating ESG strategy disclosures, GHG emissions data, and standardized reporting formats for ESG-focused funds. This withdrawal follows a broader rollback of climate and ESG initiatives under the new Trump administration, including scrapping related shareholder proposal rules and ending the legal defense of the SEC’s climate disclosure regulations. The SEC stated it may revisit the issue with a new proposal in the future.

🇪🇺 The European Central Bank (ECB) reported a 38% drop in the carbon intensity of its €331 billion corporate bond portfolio from 2021 to 2024 and set a new target to cut emissions intensity by 7% annually. The ECB’s latest climate-related disclosures, part of its broader climate action plan, also introduce a nature-related risk metric, revealing that 30% of its bond holdings are concentrated in high nature-impact sectors like utilities and food. While tilting investments toward greener firms drove part of the reduction, most of the emissions decline stemmed from issuers’ own decarbonization efforts. President Lagarde emphasized that understanding climate risks is essential for price stability and economic resilience.

🇦🇺 The Australian Sustainable Finance Institute (ASFI) released the country’s first sustainable finance taxonomy to guide green and transition investments and support Australia’s net zero goals. Developed under the Treasury’s 2023 Sustainable Finance Roadmap, the voluntary taxonomy classifies economic activities as green or transitional across six key sectors, including mining, agriculture, and transport. It aligns with international standards while incorporating unique local elements like First Nations engagement. ASFI will pilot the taxonomy with major financial institutions, while the Climate Bonds Initiative will integrate it into its certification framework to boost investor confidence and global convergence.

⚡️ Ares Management’s alternative credit funds signed a €2 billion agreement to acquire a 20% stake in Eni’s renewables and EV unit, Plenitude. Founded in 2021, Plenitude now operates 4 GW of renewables with a target of 10 GW by 2028, serves over 10 million customers, and manages 21,500 EV charging points. Ares joins as a strategic investor to help scale Plenitude’s integrated, sustainability-driven growth.

📈 Volkswagen Bank raised €1.5 billion in its first-ever green bond issuance to support financing for battery electric vehicles from Volkswagen Group brands. The offering, split between 3- and 6-year tranches, attracted strong demand with €6.6 billion in orders from over 170 investors. The proceeds align with VW’s Mobility2030 strategy, integrating sustainability into its funding model.

⚡️ KKR announced its acquisition of Australian independent power producer Zenith Energy, a leading provider of hybrid power solutions for off-grid mining and urban microgrids. With over 710MW of contracted capacity across 15+ sites, Zenith recently completed a A$1.9 billion refinancing to support future growth.

Funding rounds:

⚡️ TerraPower closed a $650 million funding round, backed by investors including NVIDIA’s NVentures, to advance its Natrium nuclear plant—the first commercial advanced nuclear facility in the US. Founded by Bill Gates, TerraPower develops innovative nuclear technologies to provide reliable, carbon-free energy and support economic development. The Natrium system combines a sodium-cooled fast reactor with large-scale energy storage, enabling flexible integration with wind and solar.

🟢 Morgan Stanley Investment Management invested $30 million in methane detection firm Insight M. Insight M uses aircraft-mounted sensors to detect and quantify fugitive methane emissions from oil and gas infrastructure, helping operators reduce emissions and recover lost gas value.

🧱 Fiber Global raised $20 million in a Series A round to scale its platform that transforms landfill-bound waste into sustainable building materials. Founded in 2023, the Indiana-based startup produces low-emission, high-performance products like Forged Fiber Board (FFB) made from reclaimed cardboard for use in construction and furniture. The materials offer environmental benefits including reduced water and energy use, lower emissions, and zero harmful chemicals.

🟢 Carbon Upcycling raised $18 million in a new funding round led to scale its carbon capture and utilization technology for the construction industry. The Calgary-based company transforms CO₂ emissions and industrial waste into low-carbon cement materials using its “CUT CO₂” solution, which is installed at production sites to upcycle byproducts from coal, steel, and glass industries.

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