At the end of each month, the SAFE Regulatory Radar highlights a selection of important news and developments on financial regulation at the national and EU level.
Sustainable Finance: Updates on reporting standards and simplification and ESMA’s climate transition plan
On 11 July 2025, the European Commission adopted a targeted amendment, referred to as a "quick fix", through a Delegated Regulation and an Annex to the European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD).
This modification aims to ease the immediate reporting burden for companies already preparing sustainability disclosures, without altering the core ambitions of the CSRD. It reflects the Commission’s response to early feedback from businesses and stakeholders, highlighting challenges in applying specific requirements of the first set of ESRS, adopted in 2023.
The quick fix introduces limited but important adjustments designed to improve clarity, reduce complexity, and facilitate smoother implementation. These changes focus primarily on the first wave of companies required to report under the CSRD as of 2025, particularly large EU-listed firms already subject to non-financial reporting obligations. Among the key modifications are more explicit guidance on the materiality assessment process, allowing companies greater flexibility in determining which sustainability topics are relevant to their business.
Additionally, certain data point disclosures have been made voluntary, especially in areas where metrics are not yet well-defined or where data collection is disproportionately burdensome. The Commission emphasizes that this flexibility does not compromise transparency but instead supports the principle of focusing on material information, as already embedded in the CSRD. The quick fix also refines the language of selected provisions to ensure consistency with existing EU law and reduce interpretative uncertainty. While the scope of the ESRS remains unchanged, these adjustments are intended to ensure that companies can comply more efficiently, particularly in the early stages of reporting.
The amendment is structured as a Delegated Act. The European Parliament and the Council will now review it during a standard scrutiny period of four months, extended by two months. If no objections are raised, the revised provisions will enter into force in time to apply to 2025 reporting. The Commission underlines that this quick fix is not a signal of lowering ambition, but a pragmatic step to facilitate high-quality, decision-useful sustainability reporting across the EU. It ensures that the CSRD continues to advance corporate transparency and support the EU’s green and social objectives while being realistic and responsive to the needs of preparers navigating the transition to the new reporting regime. An example of smart regulatory reform to reporting standards is in the recent SAFE’s Policy Letter No. 109 “From Deletion to Substitution: A Smart Regulatory Path for EU Securitisation Reform” by Vincent R. Lindner and Max Riedel.
On 4 July 2025, the European Commission adopted a Delegated Act amending the Taxonomy Disclosures, Climate and Environmental Delegated Acts (and their Annex), introducing targeted simplifications aimed at reducing the administrative burden on companies while maintaining the integrity of the EU’s sustainable finance framework.
The Taxonomy is a central element of the EU Green Deal, designed to direct investments toward environmentally sustainable activities by providing a standard classification system. This latest update responds to concerns from stakeholders, particularly non-financial companies and SMEs, regarding the complexity and operational challenges of applying the original rules.
The Delegated Act introduces several key changes to improve the usability and proportionality of the reporting requirements. Notably, it allows companies to group similar economic activities when disclosing Taxonomy-aligned operations, replacing the previous requirement to report each activity separately. This change is intended to streamline disclosures and reduce duplication, particularly for firms operating multiple assets or sites within the same category.
The Act also enhances the clarity of technical screening criteria and simplifies interpretative guidance, making it easier for businesses to assess whether their activities meet the Taxonomy’s environmental objectives.
These adjustments are especially relevant for the manufacturing, construction, and transport sectors, which previously faced difficulties in interpreting and implementing the criteria. Although the EU Taxonomy primarily applies to large, listed companies under the CSRD, the Commission has also provided voluntary guidance tailored for SMEs. This guidance encourages SME participation in the sustainable finance ecosystem without imposing binding obligations. The new rules aim to maintain the environmental robustness of the Taxonomy while ensuring it is practical and accessible to a broader range of market participants.
The Commission emphasizes that improving the framework’s is essential for mobilizing private investment in sustainable activities and ensuring consistent, high-quality data for investors and regulators.
The Delegated Act is now subject to a scrutiny period by the European Parliament and the Council, which have four months - extendable by two - to approve or reject the text. If no objections are raised, the revised rules will enter into force, marking a significant evolution in how sustainability is measured and reported across the EU economy.
This update reinforces the Commission’s dual objective of accelerating the green transition while reducing unnecessary red tape for companies, ensuring that Europe’s sustainability agenda remains ambitious and implementable.
On 8 July 2025, the European Securities and Markets Authority (ESMA) published its first Climate Transition Plan, outlining how the authority intends to reduce the environmental impact of its operations and align with the EU’s climate goals. This initiative forms part of ESMAs broader commitment to sustainability and its role in promoting responsible environmental practices within the European financial system. The Climate Transition Plan establishes ESMA’s roadmap to achieving net-zero greenhouse gas emissions by 2050. It details key measures, targets, and timelines to guide the authority’s internal efforts to reduce emissions across energy consumption, travel, procurement, and waste management. The plan uses a science-based approach, incorporating emissions data and climate risk assessments to inform operational decisions.
The plan identifies five main pillars of action: (i) reducing energy use in ESMA’s facilities, (ii) minimizing emissions from business travel, (iii) integrating environmental criteria in procurement policies, (iv) reducing and recycling office waste, and (v) fostering sustainable behaviors among staff. Each area is supported by specific targets and monitoring mechanisms, ensuring accountability and transparency in implementation.
Although not legally binding, the plan reflects ESMA’s leadership by example, aiming to influence market participants and EU institutions to take similar steps. It demonstrates how financial regulators can embed sustainability into their operations, while reinforcing the EU’s overarching climate strategy under the European Green Deal. It signals a shift toward climate-conscious governance within the EU’s financial supervisory framework and highlights ESMA’s commitment to operational sustainability and long-term environmental responsibility.
DORA: Guide on oversight activities
On 15 July 2025, the European Supervisory Authorities (ESAs) published a Guide on oversight activities under the Digital Operational Resilience Act (DORA). This guide outlines how the ESAs will supervise critical information and communication technology (ICT) third-party service providers (CTPPs) that deliver essential digital services to the EU’s financial sector.
The guide introduces the oversight framework implemented through Joint Examination Teams (JETs), multidisciplinary groups tasked with evaluating and monitoring CTPPs. It details the governance structure, oversight procedures, foundational principles, and tools available to ensure consistent supervision across the EU. This includes ongoing monitoring and in-depth assessments of providers that are crucial to the operational resilience of financial entities.
Although the guide is not legally binding, it complements the DORA Regulation by providing clarity to stakeholders. It is a practical resource for financial entities and third-party ICT providers, helping them understand expectations and prepare for formal oversight activities.
The ESAs emphasize that this publication supports transparency and early engagement with affected stakeholders, especially as DORA enforcement moves forward. The document also explains the criteria and process for designating a service provider as ‘critical’, a key step that subjects them to direct EU-level supervision under DORA.
This guide marks an important step in implementing DORA, which aims to strengthen the EU financial sector's digital resilience by ensuring that critical third-party technology providers are adequately supervised. It reinforces the ESAs’ role in safeguarding financial stability through robust ICT risk management.
Updates:
- On 18 June 2025, ESMA published new Q&As on the Markets in Crypto-Assets Regulation and on the Undertakings for Collective Investment in Transferable Securities Directive.
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Pietro Chiarelli is Financial Policy Analyst at the SAFE Policy Center.
