ESG Knowledge Update | January 2025

Legal and regulatory news 

European Union 

On 16 December 2024, the Council of the EU formally adopted the Packaging and Packaging Waste Regulation (PPWR), marking the end of its legislative journey. The regulation will now be published in the EU’s Official Journal and will enter into force. The regulation will be applied 18 months after the date of entry into force. The PPWR introduces several significant changes to packaging regulations, including, by 2030, all packaging must be recyclable, a harmonised labelling system will be introduced to simplify sorting and disposal, and plastic packaging must contain a minimum percentage of recycled content. 

The Official Journal of the EU has now published the proposal to delay the implementation of the EU Deforestation Regulation by one year has now been meaning the regulation will take effect on 30 December 2025 (and 30 June 2026 for micro- and small enterprises). 

The first reports under the Corporate Sustainability Reporting Directive (CSRD) for the financial year 2024 are to be published in 2025 by those companies in scope. The first companies to report are those EU public interest entities already subject to the existing reporting requirements under the Non-Financial Reporting Directive. 

As previously reported, the European Commission is expected to introduce an omnibus regulation to bring together the CSRD, EU Taxonomy Regulation and the Corporate Sustainability Due Diligence Directive. This has been listed on the European Commission College of Commissioners agenda for 26 February 2025 and is now called the "Omnibus package: Chapeau communication & omnibus proposal". A joint statement on the omnibus proposal was signed by 160-plus organisations calling on the Commission to clarify that it will not reopen negotiations on already agreed and adopted texts. The joint statement also advocates maintaining the regulations as drafted. 

United Kingdom 

The Financial Reporting Council's new UK Corporate Governance Code, published last year, will apply to all companies listed in the commercial companies category or the closed-ended investment funds category on the London Stock Exchange for financial years beginning on or after 1 January 2025. The only exception is the new requirements to report annually on the effectiveness of risk management and internal controls (provision 29) which will apply to financial years beginning on or after 1 January 2026. See our Insight for more details. 

The government has published its response to the consultation on reforming the producer responsibility system for waste electricals. The consultation sought views on a range of proposals, including a producer-financed household collection system for waste electrical and electronic equipment (WEEE), enhanced retailer obligations for free collection on delivery and in-store "take back" schemes. Other areas of consultation included designating online marketplaces as producers with similar obligations to UK manufacturers and importers, creating a new category for vapes with costs borne by those placing them on the market and establishing a new WEEE scheme administrator. The devolved nations will fully respond to these proposals in 2025 but will implement the following immediate changes, new obligations for online marketplaces to contribute to WEEE collection and recycling costs and a new category for vapes requiring producers to report product weight. Regulations will be amended in 2025, with obligations starting in 2026. 

The Producer Responsibility Obligations (Packaging and Packaging Waste) Regulations 2024 introducing the extended producer responsibility regime (EPR) for packaging waste were made on 11 December 2024 and came into force on 1 January 2025. The EPR scheme obligates producers of household packaging waste to pay the full cost of the disposal of this waste. Throughout 2024, businesses in scope of the EPR scheme have been collecting and reporting relevant data. The first fees under the EPR scheme are due from October 2025 using the data collected from 2024. Businesses within scope must ensure that they pay any related fees. Businesses in scope should also be aware that from January 2025, the data for 1 July to 31 December 2024 needs to be reported. The deadline to report this data by is 1 April 2025. 

A further requirement under the EPR regulations is that as of 1 January 2025, liable producers who supply household packaging must assess the recyclability of that packaging and report the results of the assessment to the relevant environmental regulator. Only large producers must report their recyclability assessment data. The first reports must be submitted on or before 1 October 2025, for the period 1 January to 30 June 2025. The government has published guidance to assist businesses assess the recyclability of packaging.

At the end of last year, the government published its consultation response on the future regulatory regime for ESG ratings providers, which was accompanied by draft regulations for implementing the regime. The government will finalise the legislation in 2025 and the Financial Conduct Authority will then consult on the specific requirements. ESG rating providers should follow the developments of this reform closely in order to start preparing for compliance when necessary. 

A call for evidence on Ofgem powers has been issued by Department for Energy Security and Net Zero (DESNZ), with the aim of introducing reforms to help the regulator adapt to the changing energy market and ensure it is fit for purpose in the current regulatory landscape. The call for evidence is the first step in the review of Ofgem's mandate and duties, its remit and its role in supporting economic growth. As part of the review, DESNZ is exploring increases in Ofgem's enforcement and investigation powers and heightening of the consequences for energy sector operators in the event of a breach of obligations. The consultation is open for responses until 28 February 2025. 

The consultation on UK Green Taxonomy, which forms part of the wider sustainable finance network and aims to facilitate an increase in sustainable investment, closes on 6 February 2025. The consultation is looking to see whether a UK Taxonomy would complement existing policies and support the government's sustainability objectives. 

On 16 December 2024, the government published its response to the House of Lords select committee's report on the impact and effectiveness of the Modern Slavery Act (MSA) 2015. Notwithstanding the report's criticism of the UK's approach to modern slavery, the government's response indicates that significant substantive reform of the MSA is not a short-term priority. However, it will review measures to tackle forced labour and increase supply chain transparency "in due course," and is considering the scope of the section 54 reporting obligation, including its potential application to public sector organisations.

International

Donald Trump was inaugurated as the 47th President of the United States on 20 January 2025. On his first day in office, he signed a number of executive orders with implications for the ESG agenda, including withdrawing the US from the Paris Agreement on climate change, declaring a "national energy emergency", promoting oil and gas developments, easing environmental restrictions and speeding up permissions for power plants, suspending offshore wind developments, and reversing executive orders made by President Biden targeting EV adoption and discrimination on grounds of sexual orientation and gender identity. Further policy actions that will impact the ESG agenda are likely to follow. 

Market news 

BlackRock has withdrawn from the Net Zero Asset Managers (NZAM) initiative amid backlash from public officials. As a result, the NZAM has paused its activities while it conducts a review of the initiative… Penn State research into causes, spread and solutions for California's wildfire crisis… Apollo Global Management enters into a $3 billion strategic partnership to accelerate financing for infrastructure and renewable energy projects worldwide… Procter & Gamble is facing a class action lawsuit in Washington for allegedly misleading consumers about the environmental impact of Charmin toilet paper. 

Recent ESG Insights from Osborne Clarke

• Environmental, social and governance | UK Regulatory Outlook January 2025
• Environment | UK Regulatory Outlook January 2025
• Modern Slavery | UK Regulatory Outlook January 2025
• The Energy Transition | Grid connections reform continues at pace
• What legal developments are on the horizon for the built environment in England in 2025?