4 key developments regarding sustainability and ESG

1. Deforestation: corporate obligations officially postponed for one year

A new regulation dated 19 December 2025 postpones the entry into force of European legislation aimed at combating deforestation for a further year. As a result, the obligations will not apply until:

• 30 December 2026 for large operators and traders;

• 30 June 2027 for SMEs.

As a reminder, this regulation on deforestation aims to ensure that certain commodities – beef, cocoa, coffee, palm oil, rubber, soy, timber – and their derivatives placed on the EU market (or exported from the EU) have not caused deforestation or forest degradation. To this end, operators must produce a due diligence declaration (DDR).

The regulation of 19 December introduces two important changes:

• Certain products are excluded from the scope of application, such as books and newspapers;

• Companies that process products or intervene after a product already covered by a DDR has been placed on the European market are no longer required to draw up a new one.

2. Green taxonomy: simplification announced for the 2025 financial year

Companies required to publish a sustainability report in 2026 will have to include their EU green taxonomy declaration (share of sustainable activities as defined by environmental criteria). A new regulation, published on 8 January, simplifies this regime from the 2025 financial year onwards (via a delegated regulation amending the existing texts).

Important point: companies may choose to retain the old regime for the 2025 financial year.

The new regulation is based on the principle of financial materiality derived from IFRS standards, with a view to reducing the administrative burden on large companies.

In concrete terms, the aim is to allow companies to avoid assessing the compliance of insignificant economic activities with the detailed technical criteria of the taxonomy.

To this end:

• The key performance indicators (KPIs) to be reported – in particular opex and capex – are reviewed in light of thresholds below which an activity, asset or product is considered financially insignificant;

• This simplification does not exempt companies (financial and non-financial) from all reporting requirements: they will still have to report their non-significant activities separately, at both the aggregate and individual levels.

3. In brief – Climate: China publishes its reporting standard

On 25 December, the Chinese Ministry of Finance published its climate reporting standard, reports AEF Info.

Some highlights:

• The framework is based on the ISSB structure;

• It also incorporates the dual materiality concept from the ESRS standards;

• For the time being, implementation is voluntary, with a gradual and differentiated roll-out.

4. CBAM: the mechanism is now fully in force

The Carbon Border Adjustment Mechanism (CBAM) came into full effect on 1 January 2026, marking the end of the transitional period.

Since that date:

• Companies importing goods subject to the CBAM into the European Union must hold the status of "authorised CBAM declarant";

• This status is issued by the competent customs authorities;

• The reporting obligations cover:

  • the quantity of goods imported,

  • the associated intrinsic carbon emissions (direct and indirect),

  • and any carbon price already paid for these emissions.

If you work in sustainability, ESG or CSR, these four regulatory developments are worth incorporating into your 2026 roadmaps now:

• anticipating new deforestation deadlines;

• adjust your taxonomy processes to the new materiality logic;

• monitor developments in reporting standards outside the EU, particularly in China;

• secure your status and processes as an authorised MACF reporter.