The first half of 2025 brought significant changes to global sustainability reporting. International bodies, regional institutions and national legislations are working intensively to simplify, harmonise and implement standards for more transparent and comprehensive reporting. This overview summarizes key events and initiatives from this period.

The International Sustainability Standards Board (ISSB) and its IFRS S1 and IFRS S2 standards

ISSB actively supports the implementation of its standards IFRS S1 (General requirements for disclosure of financial information related to sustainability) a IFRS S2 (Climate-related Disclosures), which serve as a global foundation for sustainability disclosure. To promote adoption and use, it has issued educational materials, jurisdictional profiles and e-learning modulesA new Jurisdictional Roadmap Development Tool has been launched to help states plan and design strategies for adopting ISSB standards. As many as 36 jurisdictions have already advanced towards adopting or integrating them into their regulatory frameworks.

An important step is also integration of industry-specific approach from SASB standards (Sustainability Accounting Standards Board) to IFRS S1 and S2. Companies should refer to the SASB standards and consider them when identifying sustainability-related risks and opportunities. The ISSB also issued guidelines on the publication of transition plans (transition plans) to support the implementation of IFRS S2, aimed at providing high-quality information on climate-related efforts. It was also issued educational materials regarding the requirements for measuring and disclosing greenhouse gas (GHG) emissions in IFRS S2, which clarify the context, use of GHG Protocol materials and specific aspects of the requirements.

The ISSB is also looking ahead. As part of its work plan for 2024-2026, it examines risks and opportunities related to sustainability topics beyond climate, such as: Biodiversity, Ecosystems and Ecosystem Services (BEES) and Human CapitalThe aim is to determine whether there is a need to establish disclosure requirements in these areas. At the same time, the ISSB proposed targeted amendments to IFRS S2to facilitate the application of GHG disclosure requirements, for example by allowing an exemption for measuring Scope 3 Category 15 emissions related to derivatives or clarifying the use of measurement methods other than the GHG Protocol. The deadline for comments on these amendments was 27 June 2025 and final amendments are expected by the end of 2025. The ISSB also issues regular podcasts and webinars about its activities and implementation of standards.

European Sustainability Reporting Standards (ESRS) and EFRAG initiatives

The first half of 2025 was marked in Europe The European Commission (EC) Omnibus Package, published in February 2025, which proposes to simplify the CSRD (Corporate Sustainability Reporting Directive), the CSDDD (Corporate Sustainability Due Diligence Directive) and the EU Taxonomy Regulation. The European Financial Reporting Advisory Group (EFRAG) plays a key role in this effort, which has been tasked with simplify ESRS standards. The proposed revisions aim to reduce the number of mandatory data points, clarify materiality provisions and guidance, simplify the structure and presentation of the standards, and increase interoperability with global sustainability standards. A public consultation on the proposed changes is scheduled from late July to late September 2025, with a final technical opinion by 30 November 2025.

EFRAG and CDP (Carbon Disclosure Project) jointly published comprehensive link between the CDP and ESRS E1 question sets (Climate Change), highlighting the high level of interoperability in climate information disclosure. Similarly, a link was issued between the voluntary the EMAS scheme (Eco-Management and Audit Scheme) and ESRS, making it easier for EMAS-registered companies to meet the ESRS requirements. EFRAG has also expanded its educational videos for the voluntary sustainability standard for micro, small and medium-sized enterprises (MSMEs) that are not listed on a stock exchange (VSME), in 15 languages, increasing their availability across Europe. A video demonstrating the VSME digital template and a tool to convert the template to XBRL format for digitizing sustainability reports were also released.

The European Securities and Markets Authority (ESMA) has issued guidelines for promoting sustainability information and stressed the need for proportionate supervision during the implementation of the ESRS, particularly given the uncertainties caused by the parallel implementation and legislative proposals of the Omnibus.

US Legislation and State Legislation

In the US, the SEC (Securities and Exchange Commission) announced in March 2025 that will not actively advocate for climate disclosure rules, which means the rules are currently “suspended.” They are not yet repealed, but they are not actively enforced either.

At the state level, it is California leads the way with new legislative requirementsAB-1305, effective January 1, 2025, requires companies selling voluntary carbon offsets, or businesses operating in California that purchase them and make “net zero” claims, to disclose detailed information about the projects generating those credits.

Two other key California climate laws, SB-253 (Climate Corporate Data Accountability Act) and SB-261 (Greenhouse Gases: Climate-Related Risk), apply to large companies that do business in the state and exceed certain revenue limits.

• SB-253: Requires public and private U.S. companies with total annual revenues of over $1 billion and operating in California to reported Scope 1, Scope 2 and Scope 3 emissions dataThe data must be calculated in accordance with the GHG Protocol and is required independent third-party verificationThe first report on Scope 1 and 2 emissions is due in 2026 (for 2025 data), while the Scope 3 report is due in 2027 (for 2026 data). Penalties for non-compliance can be up to $500,000. The California Air Resources Board (CARB) has issued an enforcement notice stating that it will not impose penalties in the first reporting cycle on companies that demonstrate a bona fide effort to comply with the law.
• SB-261: Applies to public and private U.S. companies with total annual revenues of over $500 million and operating in California. Requires climate-related financial risk reports, which are in line with the TCFD (Task Force on Climate-related Financial Disclosures) framework. The reports must be published every two years on the companies' websites, with the first report due January 1, 2026. Fines for non-compliance are up to $50,000.

Overall, the first half of 2025 highlighted dynamic developments in the area of sustainable reporting, with efforts towards harmonisation and simplification at the forefront of the agenda of both global and regional regulators. JRi

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