ESG matters | July 2025

In this July edition of ESG Matters, our Highlight discusses EU greenwashing rules. Our Spotlight section provides updates on recent developments in ESG governance, disclosure, financial regulation, and litigation.

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Highlight

EU greenwashing framework
While the ESG legislative space is focused on Omnibus, this Highlight focuses on a topic that has constantly remained high on the ESG agenda: greenwashing.
Withdrawal of the EU Green Claims Directive?
Last month, important news came out regarding the proposal for a Green Claims Directive (GCD). The proposed GCD aims to regulate sustainability claims in the EU. Among other things, it would require third-party verification of sustainability claims before any such claims are made. Just before the start of the trialogue negotiations on the GCD, a Commission spokesperson announced the withdrawal of the Green Claims Directive (GCD) proposal. Other sources later challenged this announcement, leaving the political fate of the GCD proposal uncertain.
Regardless of the political fate of the GCD, existing EU rules on sustainability claims still apply. From 27 September 2026, organisations must also comply with stricter anti-greenwashing standards under the Empowering Consumers for the Green Transition Directive. These existing and new rules will be discussed below.
Existing EU anti-greenwashing rules
Business-to-consumer communications are currently regulated by the Unfair Commercial Practices Directive (UCPD). The UCPD aims to prevent unfair commercial practices towards consumers, including misleading statements. In short, a statement is misleading if it is likely to materially distort the economic behaviour of the average consumer regarding a product or service, and is likely to cause a different economic decision. Statements that are factually correct can still be misleading, for instance if they omit material information or if they contain overly vague and general language. In addition to the UCPD, organisations should adhere to sector-specific legislation on B2C communications and labels, such as relating to buildings, cars, or organic products.
The UCPD’s rules for sustainability claims are specified in the European Commission’s Guidance on the UCPD. Sustainability claims are defined as statements in commercial communication, marketing or advertising, which create the impression that a good or service has a positive or reduced sustainability impact. This includes green imagery, overall presentation, and omitted information. In short, sustainability claims must be correct, clear, and evidence-based. Greenwashing occurs if a good or service is presented as more sustainable than it actually is, for instance due to vague or generic sustainability statements. Additionally, national supervisors such as Dutch supervisors AFM and ACM have issued useful guidelines for financial institutions and corporates on making green statements.
Litigation and supervision
Across Europe, various greenwashing cases based on the UCPD have been brought at national courts over the past years. Sustainability statements were often found misleading, with courts finding that sustainability information is important to the average consumer and therefore likely to materially influence their purchasing decisions. A common pitfall is that commercial statements relating to sustainability are formulated too vaguely and generically, without sufficient context on the overall sustainability impact of the product or company. Under Dutch civil law, a breach of the UCPD can entitle consumers to seek a declaration for law, claim any monetary damages, or attempt to nullify the contract.
Next to civil litigation, national supervisors regularly take enforcement action on greenwashing. Dutch supervisor ACM is particularly active, usually engaging in a ‘normative conversation’ with organisations on potentially misleading sustainability statements and subsequently publishing a press release announcing the removal of certain sustainability claims.
Why additional rules?
Despite the current anti-greenwashing framework and ongoing greenwashing litigation and supervision, a 2020 study by the Commission found that 53.3% of environmental claims investigated in the EU were vague, misleading or unfound, and 40% of the claims were insufficiently substantiated. This is considered to create an uneven playing field in the EU to the detriment of truly sustainable companies. It would also hinder consumers to make sustainable choices. The EU intends to change this with the Empowering Consumers for the Green Transition Directive (ECGT), which will amend the UCPD. It will apply in EU Member States from 27 September 2026. We discuss three key rules of the ECGT.
ECGT: generic sustainability statements
Firstly, the ECGT regulates generic sustainability statements, which are defined as statements that are not specified in clear and prominent terms on the same medium. Examples include: ‘Environmentally friendly’, ‘climate friendly, ‘gentle on the environment’, ‘energy efficient’, ‘biodegradable’, and ‘biobased’. Such statements will always qualify as misleading, except if the trader holds an EU-recognised ecolabel for the relevant product or service.
ECGT: claims on future environmental performance
Secondly, claims relating to future environmental performance must meet the following criteria:
It contains clear, objective, publicly available, and verifiable commitments, set out in a detailed and realistic implementation plan;
The plan includes measurable and time-bound targets and other relevant elements necessary to support its implementation, such as allocation of resources;
The plan is regularly verified by an independent third-party expert, whose findings are made available to consumers.
ECGT: blacklist of sustainability statements
Thirdly, the ECGT introduces a ‘blacklist’ of communications that always qualify as misleading. These include:
Using a sustainability label that is not based on a transparent third-party certification scheme or not established by public authorities.
Making an environmental claim about the entire product or the company’s entire business, while in fact it concerns only a certain aspect of the product or a specific activity of the company’s business.
Based on the offsetting of greenhouse gas emissions, claiming that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions.
Presenting requirements imposed by law as a distinctive feature of the company’s offer.
What it means for you
As of 27 September 2026, B2C communications must meet stricter anti-greenwashing rules. Non-compliance exposes the organisation to litigation and supervisory enforcement risks, with potentially significant reputational impacts.
To ensure compliance, organisations should review existing communications on all media, including websites, social media, billboards, in writing, and audiovisual commercials.
Organisations may need to revise their communication policies, and provide training to relevant personnel involved in communications.
Companies should monitor the proposal for a Green Claims Directive, which could further regulate sustainability claims. If formally revoked, the other greenwashing regulations remain in place and must be complied with.

Spotlight on ESG developments

Governance & transition
MEPs propose amendments to EP draft report on substantive Omnibus proposal
On 27 June, Members of European Parliament (MEPs) proposed 106 amendments to the EP draft report on the substantive Omnibus proposal. On CSRD, the amendments include:
Application threshold of >500 employees and either >EUR 50m turnover or > EUR 25m balance sheet total (instead of EP draft report proposal of >3000 employees and >450 million turnover);
Introduction of a ‘light regime’ based on simplified ESRS for medium-large undertakings (500-1000 employees);
Value chain cap for companies with <500 employees;
Postponement of sector-specific ESRS by three years (instead of removal);
Application threshold for non-EU companies of >EUR 150 million EU turnover;
Introduction of reasonable assurance standards after 1 October 2030.
On CSDDD, the amendments include introduction of a three-staged due diligence approach:
Maintaining the obligations to ‘put into effect’ the climate transition plan and compatibility with Paris Agreement.
Maintaining the harmonised civil liability regime.
And a requirement for the commission to review the limited applicability of due diligence requirements to financial undertakings.
On Taxonomy, the application threshold for Taxonomy-reporting under CSRD would not be amended. Only OpEx disclosures would become voluntary.
EC adopts Clean Industrial Deal State Aid Framework
On 25 June, the EC adopted the Clean Industrial Deal State Aid Framework (CISAF) that accompanies the Clean Industrial Deal. It enables Member States to more easily support the development of clean energy, support for electricity costs for energy-intensive users, industrial decarbonisation, sufficient manufacturing capacity in clean technologies, and de-risking of private investments. CISAF applies from 25 June 2025 and remains in force until 31 December 2030.
Read more updates on Governance & transition:
EP adopts InvestEU programme
Council adopts position on substantive Sustainability Omnibus proposal
SDSN publishes 2025 Sustainable Development Report
EC classifies country risks under Deforestation Regulation
Political unclarity on Green Claims Directive proposal
EC publishes guidance on application of CSRD, CSDDD, EU Taxonomy, SFDR to defence sector
SBTN publishes validation mechanism for nature materiality assessments
SBTi launches pilot on draft corporate net-zero standard v2
EP and Council agree on CBAM revision under Omnibus
SBTi launches consultation on net zero standards for automative industry
EC launches consultation on disclosure requirements under Ecodesign Regulation
IEA publishes world energy investment report 2025
EC adopts water resilience strategy
EC launches consultation on carbon removals certification framework
Disclosure
ICMA publishes updates on green, social, and sustainability bond principles
On 26 June, the International Capital Market Association (ICMA) published guidance on its Green, Social, Sustainability and Sustainability-Linked Bond Principles. The key publication is the practitioner’s guide on Sustainable Bonds for Nature. Links to other guidance documents and updates can be found here.
GRI publishes updated reporting standards on climate change and energy
On 26 June, the Global Reporting Initiative (GRI) published updated voluntary reporting standards on climate change and energy (available at the bottom of this page as GRI 102 and GRI 103, including FAQs). The update incorporates recent developments and intergovernmental instruments. The climate change reporting standards aim to incorporate reporting on just transition principles, climate change mitigation and adaptation strategies, emissions reduction targets and progress, GHG removals within the value chain, and the use of carbon credits. The energy reporting standards include a management disclosure on energy policies and commitments, as well as reporting on topics such as energy consumption and generation by the own organisation and the upstream and downstream value chain, energy intensity, and reduction of energy consumption. On 23 June, GRI also published the Sustainability Taxonomy, which is a machine-readable version of the GRI standards based on the XBRL.
Read more updates on ESG dicslosure:
ICMA publishes updates on green, social, and sustainability bond principles
GRI publishes updated reporting standards on climate change and energy
IFRS Foundation publishes guidance on climate transition plan disclosures
EFRAG targets 50% reduction in ESRS datapoints to ease CSRD reporting burden
ESMA issues statement on first-time application of ESRS and supervisory expectation
EU accounting boards jointly call for simplification of sustainability reporting standards
EP committee publishes study on EU sustainability reporting rules and Omnibus
TNFD publishes final guidance for ocean sectors and launches consultation on metrics
Financial institutions & regulations
AFM publishes report on ESG engagement by Dutch asset managers
On 30 June, the Dutch Authority for Financial Markets (AFM) published an occasional paper (also in Dutch) on the role of engagement on ESG topics by Dutch asset managers. It finds that the effectiveness of engagement is difficult to demonstrate. Engagement can nevertheless be a valuable tool within a sustainable investment strategy. Engagement aimed at strengthening governance or providing information about a company's sustainability performance are useful steps forward. More specific reporting on engagement efforts can strengthen insight into the value case for engagement. A success factor is limiting engagement efforts to a select group of companies and ESG, as engagement across the entire portfolio is often not realistic. Other success factors include a credible threat of escalation and entering into partnerships with other shareholders.
ESMA publishes report on sustainability risks and disclosures in investment fund sector
On 30 June, the European Securities and Markets Authority (ESMA) published a report on its Common Supervisory Action (CSA) in 2023 and 2024 with national authorities on the integration of sustainability risks and disclosures in the investment fund sector. The CSA focused on compliance with (i) requirements on the integration of sustainability risks under the AIFMD and UCITS Directive; (ii) the Sustainable Finance Disclosure Regulation (SFDR), including disclosure of Taxonomy-aligned investments; and (iii) the ESMA Supervisory briefing on sustainably risks and disclosures for investment management. While the overall level of compliance was satisfactory, national supervisory authorities found several vulnerabilities. These were addressed through bilateral letters and other supervisory orders. Going forward, improvement is needed on the integration of sustainability risks, and SFDR disclosures on the entity and product level. ESMA encourages national authorities to continue proactive engagement with market participants and follow up where vulnerabilities were detected, including enforcement where appropriate.
Read more updates on Financial institutions & ESG:
AFM publishes report on ESG engagement by Dutch asset managers
ESMA publishes report on sustainability risks and disclosures in investment fund sector
EIOPA publishes report on biodiversity risk management in the insurance sector
ESAs launches consultation on guidelines for supervisory stress testing of ESG risks
ESMA outlines supervisory approach to first-time ESRS sustainability reporting
Basel Committee releases voluntary climate risk disclosure framework for banks
SEC withdraws proposed ESG disclosure rules for US investment firms
ECB publishes climate-related financial disclosures on ECB portfolios
Speech by ECB’s Claudia Burch: simplification without deregulation
AFM calls for clearer, enforceable product categories in SFDR review
Litigation

Global trends in climate change litigation: 2025 snapshot
On 25 June, LSE has published the report ‘Global trends in climate change litigation: 2025 snapshot’. The report describes key developments in global climate change litigation in 2024 and the beginning of 2025. Key findings include that: (i) over 226 new climate cases were filed in 2024, of which 80% can be considered strategic; (ii) more than 80% of cases involve government defendants; (iii) more attention is being paid to the implementation of judgments in favour of claimants.
Paris Court of Appeal upholds French postal company’s breach of due diligence requirement
On 17 June, the Paris Court of Appeal upheld a 2023 ruling against La Poste for failing to meet its obligations under the French Duty of Vigilance Law (see also the French press release). This law requires large companies to draft and implement diligence plans to identify, prevent and mitigate the risks of serious violations of human rights and fundamental freedoms, the health and safety of individuals and the environment resulting from their business activities and supply chains. The Paris Court of Appeal found La Poste’s 2021 vigilance plan insufficiently detailed, notably lacking risk prioritisation and meaningful stakeholder consultation. It ordered La Poste to revise its vigilance plan. This marks the first time a French appeals court has upheld a ruling concerning the substantive obligations of the Vigilance Law.
Read more on ESG & Litigation

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