In February 2025, the EU Commission introduced the Omnibus Simplification Package to streamline sustainability regulations. This package includes two proposed Directives: the “Stop-the-clock” Directive, which proposes delaying the CSRD and CSDDD compliance timelines, and a second Directive that suggests substantive changes to both the CSRD and CSDDD. The “Stop-the-clock” Directive is now close to being approved, giving businesses more certainty on the timeline for compliance.

On 26 February 2025, the European Commission published multiple policy documents and legislative proposals, following through on its commitment to improve the EU’s competitiveness under the European Commission’s Competitiveness Compass published on 29 January 2025.

The European Commission’s Competitiveness Compass was published on 29 January 2025. It sets forth the European Commission’s priorities for the next five years with a clear ambition to make Europe a leader in future technologies, services, and clean products. The policy priorities are defined around three pillars: (i) Innovation, (ii) Decarbonization and (iii) Security.

The EU Corporate Sustainability Due Diligence Directive exempts financial institutions from due diligence to identify, mitigate and remedy potential adverse impacts, whether human rights or environmental, in their downstream “chain of activities”. In practice, however, it will be hard to escape entirely, not least as the sector will still need to adopt and implement transition plans.

Financial institutions face growing exposure over greenwashing. Sustainability-related communications range from the publication of nonfinancial statements to the referencing of such terms in financial product names. This guide considers what is greenwashing, the developing legal landscape and how financial institutions may mitigate the risk of reputational damage.

As another year of uncertainty and disruption draws to a close, our Baker McKenzie Financial Institutions lawyers look ahead at the potential disruptors impacting the industry in 2024, all against a background of economic and geopolitical risk.
Our report, 2024: What’s on the Radar for Financial Institutions?, gives an overview of the challenges facing the sector, drawing on our three risk radars, one for each of the forces that are transforming the financial sector.

The European Commission has published practical advice in the form of recommendations explaining that the EU Taxonomy can be used not only to disclose taxonomy-aligned activities and capital expenditures, but to define transition targets and to identify the finance needed to meet them. In this way, the Commission considers that the EU Taxonomy can be used as “forward-looking tool using its criteria as reference points for setting targets.”
In this latest instalment of our Demystifying ESG series, besides considering the Commission’s recommendations generally, we’ll discuss how this “tool” will work in practice across a range of economic activities and how it can be used to compare current with planned environmental performance, as well as a communication tool to articulate transition finance needs.

As background, green and sustainability-linked bonds and loans have been the pioneer products in this space. Following their evolution over a number of recent years, they are now well-established financing products commonly used to finance the energy transition. However, transition finance is emerging as the requirements for green and sustainability-linked financing products are often not met in the context of high-emitting, hard-to-abate sectors looking to reduce emissions

At the Ahead of Tax & Legal Conference 2023, taking place on 1 June 2023, Baker McKenzie tax and legal experts will highlight three important themes: race to net zero, innovation and the international business climate.

Financial institutions are critical players in the transition to a carbon-neutral economy and, because of their role in allocating capital, they can act as a catalyst in achieving better environmental, social and governance outcomes in society generally. Baker McKenzie’s updated Sustainability Risk Radar analyzes the most pressing sustainability risks that FIs need to consider in 2023.