Sustainable Transformation

The EU’s Carbon Border Adjustment Mechanism (CBAM), launched in October 2023. The legislation targets imports of carbon-intensive goods like steel, cement, and aluminium to prevent carbon leakage and support climate goals. During the transitional phase (until end of 2025), importers must submit quarterly emissions reports, with penalties for non-compliance, though some flexibilities apply early on. From 2026, importers must purchase CBAM certificates based on EU carbon prices. 

The UK plans a similar system by 2027, covering additional goods like ceramics and glass. CBAM is expected to reshape global trade and drive cleaner, more sustainable supply chains.

The EU Carbon Border Adjustment Mechanism

The UK Carbon Border Adjustment Mechanism

The EU’s CSRD has emerged as a global, transformative force in the environmental, social, and governance (ESG) regulatory context. It was passed by the European Commission in December 2022, replacing and significantly extending the existing Non-Financial Reporting Directive (NFRD). 

Under the new legislation, approximately 50,000 companies based in the EU and an estimated 10,000+ non-EU based companies will be required to start reporting on the sustainability-related impacts, risks and opportunities material to them over the next 5 years. This means that companies will need to have understood their company ESG footprint, conducted a double materiality assessment, and developed a report. 

Corporate Sustainability Reporting Directive

The ESPR was made effective on 18 July 2024. It is the EU’s key policy to make products more sustainable and circular, replacing the 2009 Ecodesign Directive, and expanding its scope beyond energy-related products to nearly all physical goods. 

The regulation sets ecodesign requirements to improve product durability, reparability, energy/resource efficiency, and recyclability. It aims to reduce environmental impact, support circular economy goals, and strengthen the EU single market by harmonising rules and fostering innovation, jobs, and sustainable business models. This may be achieved with the Digital Product Passports (DPP) concept: a way store product data to boost sustainability, circularity, and compliance.

Ecodesign for Sustainable Products Regulation

The UK SRS aims to align UK corporate sustainability reporting with global standards set by the International Sustainability Standards Board (ISSB). It builds on  International Financial Reporting Standards (IFRS) S1 and S2, covering general sustainability and climate-related disclosures. The UK government is consulting on UK-adapted versions (UK SRS S1 and S2), with a consultation open until the end of Q3 2025. These standards aim to improve transparency, comparability, and investor decision-making, supporting the UK’s ambition to lead in sustainable finance.

UK Sustainability Reporting Standards

The Corporate Sustainability Due Diligence Directive, effective from 25 July 2024, requires large EU and non-EU companies to identify, prevent, and address human rights and environmental harms across their operations and supply chains. It mandates climate transition plans aligned with the Paris Agreement and promotes responsible business conduct. 

The directive aims to protect people and the planet, ensure legal certainty, and foster sustainable investment, innovation, and competitiveness. CSDDD applies globally, affecting EU and non-EU businesses, and introduces legal accountability for non-compliance.

Corporate Sustainability Due Diligence Directive