Sustainability update

• Commission announces members for the Platform on Sustainable Finance
• EU Deforestation Regulation postponed by one year
• ESMA outlines principles to follow to address greenwashing risks
• EFRAG shares first insights into VSME market acceptance

Commission announces members for the Platform on Sustainable Finance

The European Commission (EC) has appointed 28 members and 16 observers for the third mandate of the Platform on Sustainable Finance, which will run from February 2026 to the end of 2027. Imran Raja, Accountancy Europe EU Taxonomy Task Force Member and Senior Manager at KPMG has been selected to represent the accountancy profession. Ms Helena Viñes Fiestas has been re-appointed as Chair of the Platform.

The Platform will advise on the EU Taxonomy, revision of existing Taxonomy criteria and the development of criteria for new activities as well as simplification efforts in sustainable finance and monitoring and reporting on capital flows into sustainable investments.

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Commission seeks feedback on draft delegated acts on ESG ratings

The EC published two draft delegated acts related to Environmental, Social and Governance (ESG) ratings for public feedback by 13 February:

• the first initiative sets rules on the supervisory fees charged by ESMA to rating providers
• the second initiative sets out the rules on the procedure for ESMA to impose fines and periodic penalty payments on rating providers

Commission’s notice on interpretation and implementation of EU Taxonomy Omnibus DA rules

The EC issued a new set of Frequently Asked Questions (FAQs) relating to the EU Taxonomy Omnibus Delegated Act (DA) which amends Climate, Environment and Disclosures DAs.

These FAQs provide guidance on the implementation and legal interpretation of the Taxonomy Article 8 disclosure rules as amended by the EU Taxonomy Omnibus DA. They will help stakeholders to prepare their annual Taxonomy reporting under the simplified rules, due to be published in 2026 for the financial year 2025.

Formal adoption of the FAQs in all EU languages is expected in the first quarter of 2026, following the publication of the Omnibus DA in the EU Official Journal. The DA was published in the EU Official Journal on 8 January 2026.

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Environmental Omnibus package to simplify administrative burdens in EU environmental rules

The EC’s Environmental Omnibus package introduced targeted amendments to several EU environmental legislations to simplify implementation and reduce administrative burden.

The package:

• amends key legislation on waste, batteries, industrial emissions and environmental data and reporting obligations (including packaging and producer responsibility elements), and
• streamline environmental assessments and permitting procedures to support strategic energy, industrial and circular economy investments

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EU Deforestation Regulation postponed by one year

The EU has formally agreed to push back the start date of its regulation on deforestation-free products. Following approval by the European Parliament (EP) and final adoption by the Council in mid-December 2025, the rules will now apply from 30 December 2026, with an extra six-month grace period for micro and small businesses.

The revised text also narrows the scope of the regulation by excluding certain printed goods, such as books and newspapers, citing their low deforestation risk.

In addition, the EC is required to review the administrative impact of the legislation and report on possible simplifications by 30 April 2026.

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ESMA’s regulatory timeline for sustainable finance

The European Securities and Markets Authority (ESMA) updated the regulatory timeline on sustainable finance-related legislation from 2026 on. Key dates for this year:

• from 1 January 2026, financial undertakings disclose KPIs on Taxonomy alignment under the Taxonomy Regulation Disclosures DA
• from 21 June 2026, the transition period ends for the European Green Bonds Regulation (EuGBR) external reviewers
• from 2 July 2026, the ESG Ratings Regulation (ESGRR) applies

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ESMA outlines principles to follow to address greenwashing risks

ESMA published a thematic note focusing on ESG strategies to ensure clear and non-misleading sustainability-related claims by market participants. ESMA outlines four principles to follow; sustainability claims should be:  1) accurate 2) accessible 3) substantiated, and 4) up to date. Also, market participants should:

• present information fairly, reflecting both positive and negative aspects
• provide clear methodologies
• update claims when material changes occur
• provide understandable and detailed communications with further explanation available where needed

Following these principles supports transparency, informed investment decisions, and trust in sustainable financial markets.

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EFRAG’s additional documents to Amended ESRS

EFRAG released five complementary documents following the delivery of amended European Sustainability Reporting Standards (ESRS) to the EC:

• basis for conclusions
• cost–benefit analysis
• logs of amendments
• comparative table of texts, and
• explanatory note on Article 29b

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EFRAG shares first insights into VSME market acceptance

EFRAG published a report assessing the level of awareness and acceptance of the Voluntary Sustainability Reporting Standard for Small and Medium-sized enterprises (VSME). Among the report’s takeaways:

• growing awareness of the VSME Standard and generally positive market acceptance
• widespread use of the VSME by users as a guiding framework for sustainability information collection, with improved access to finance, cost optimisation and strategic advantages for SMEs

Among the identified challenges:

• limited training, unclear methodologies and insufficient supporting tools
• lack of a centralised digital repository to improve data usability.

EFRAG also outlined areas where support is needed:

• strong demand for additional guidance, including on specific disclosures and sector-specific topics
• call for awareness-raising initiatives, such as examples of completed VSME reports, training sessions and best-practice cases
• interest in free, accessible tools and a potential certification mechanism for VSME completion
• development of digital solutions

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EFRAG invites feedback on its discussion paper on the connectivity of financial and sustainability reporting

EFRAG published a discussion paper on the connectivity of financial and sustainability reporting, setting out key concepts, forms and mechanisms for linking reported information. It underlines that:

• connectivity goes beyond linking sustainability statements to the financial statements or addressing only sustainability-related matters
• while practices are improving, most companies remain at early stages of applying this concept
• there are gaps, including inconsistent terminology and possible underreporting of sustainability information in segment disclosures

As next steps, EFRAG suggests clarifying disclosure boundaries and developing guidance on assessing qualitative material information in the financial statements. EFRAG stresses that progress will require coordinated action by preparers, standard setters, auditors and enforcers. It welcomes comments by 30 June 2026.

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EFRAG responds to SASB consultation

EFRAG has responded to the Sustainability Accounting Standards Board’s (SASB) amendments consultation. It suggested:

• clearer positioning of SASB as optional guidance to support materiality assessments
• stronger interoperability with the European Sustainability Reporting Standard (ESRS) and EU requirements
• proportionate, implementable and decision-useful datapoints
• greater clarity on the role of SASB in relation to IFRS S1 and S2

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European Central Bank strengthens action on climate and nature risks

The European Central Bank (ECB) has further embedded climate and nature-related risks across its operations, completing its 2024–2025 plan. Over the past two years, the ECB has enhanced how these risks shape monetary policy, banking supervision, and its own portfolios.

Looking forward, the ECB will focus on three priorities: supporting the green transition, addressing the physical impacts of climate change, and assessing nature-related risks, especially water. These efforts strengthen the resilience of the euro area economy and banking system, helping the ECB fulfil its mandate amid growing environmental and financial challenges.

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Inefficiency of the Green Deal: high costs, minimal results

• Question by MEP Claudiu-Richard Târziu (Romania/ECR)
• Reply by Commissioner Roswall