Navigating Recent Updates to the EU Deforestation Regulation and ESG Frameworks: Essential Insights for Businesses
The EU is actively refining its environmental and sustainability regulations to combat issues like deforestation and promote responsible business practices. Recently, the EU provided clarity on potential delays and simplifications to the EU Deforestation Regulation (EUDR), giving companies more time to prepare. However, efforts to simplify other key directives—the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) Omnibus were rejected by Parliament, increasing legal uncertainty. This article breaks down these developments, explaining what they mean for businesses and why they matter.
CSRD and CSDDD Simplification
On October 22nd, 2025, the EU Parliament rejected a compromise proposal from its Legal Affairs Committee (JURI) intended to simplify these directives. As a result, the omnibus will return for another vote in the next plenary session in November. In the meantime, a new deadline for amendments has been set, which could lead to further change or reopening parts of the compromise.
The legal uncertainty continues, even though a “stop-the-clock” mechanism was previously approved, businesses must continue preparing amid ongoing discussions.
Progress on the EUDR
On October 23, 2025, the EU Commission released its much-anticipated proposal to delay and simplify parts of the EUDR. Here's what it includes:
Adjusted timelines to comply
Large and medium-sized companies: the original start date of December 30, 2025, remains in place. However, they'll receive a 6-month grace period during which enforcement and checks will be lenient, allowing time to adapt.
Micro and small companies: These get a full 6-month delay, pushing their compliance date to December 30, 2026.
Simplification
Due Diligence Statements (DDS): Only "upstream" operators—the first ones placing EUDR-covered products on the EU market—must submit a DDS. This is a formal declaration confirming compliance.
Downstream operators: Those further along the supply chain (like retailers) no longer need to submit a DDS, easing their administrative load.
Low-risk countries: Micro and small primary operators (e.g., farmers or growers) in areas deemed low-risk for deforestation can submit a one-time simplified declaration. Instead of providing exact geolocations, they can use a postal address.
These changes still need approval from the EU Council and Parliament. If passed, they'll take effect 20 days after publication in the EU Official Journal.
Other important ESG updates
Beyond the EUDR and CSRD/CSDDD, several other regulations have advanced, focusing on carbon emissions, waste reduction, product safety, and more. These aim to foster sustainable practices across industries.
EU Carbon Border Adjustment Mechanism (CBAM) Simplification
The CBAM imposes fees on carbon-intensive imports (like steel or cement) to level the playing field for EU producers facing stricter environmental rules. A simplification package was published in the EU Official Journal, including:
Increasing the minimum threshold to 50 tons of imported CBAM goods per year per importer (excluding hydrogen and electricity).
Extending the annual submission deadline to 30 September.
Reducing the quarterly advance purchase of certificates from 80% to 50%.
Delaying CBAM certificate sales until February 2027.
Allowing the use of default values for easier calculations.
EU Waste Framework Directive takes effect
Effective October 16, 2025, this directive targets waste reduction in food and textiles. EU member states have until June 27, 2027, to incorporate it into national laws. Key focuses include:
Food waste reduction: Aims for a 10% cut in processing and manufacturing waste, and a 30% per capita reduction in retail, restaurants, food services, and households by December 31, 2030. This spans the entire supply chain, from farms to consumers.
Extended Producer Responsibility for textiles: Producers of clothing, accessories, footwear, bedding, and similar items must cover costs for collection, sorting, and recycling. This applies to all EU sellers, including online ones, with new schemes required by April 17, 2028.
EU Toy Safety Regulation
Approved by the EU Council, this regulation strengthens protections for children by:
Banning or restricting harmful chemicals in toys, including endocrine disruptors (which can interfere with hormones), skin sensitizers, biocides, and PFAS (persistent "forever chemicals").
Introducing a Digital Product Passport (DPP), a digital record of toy’s materials and compliance for easier tracking.
The regulation now needs to be approved by Parliament.
New Category for Small and Mid-Cap Companies (Omnibus IV)
The EU Council approved Omnibus IV, creating a "small and mid-cap company" (SMC) category between small/medium enterprises (SMEs) and large firms. This extends SME-like benefits (e.g., lighter regulations) to growing companies. Proposals differ slightly:
| Commission proposal | Council proposal |
|---|---|
| Enterprises with fewer than 750 employees and either up to €150 million in turnover or up to €129 million in annual balance sheet total | Enterprises with fewer than 1000 employees and either an annual turnover of up to €200 millionor up to €172 million in annual balance sheet total |
The Council and Parliament will now enter into negotiations to reach a final text.
France's Environmental Labeling Enters Voluntary Phase
From October 1, 2025, companies can voluntarily display a standardized environmental impact score on textile and apparel products (those with at least 80% textile materials; shoes and accessories are excluded). After one year, it becomes mandatory for companies making environmental claims. This promotes transparency on product sustainability.
USA California Climate Disclosures for 2026
To support companies prepare for their first disclosure, the California Air Resources Board (CARB) has published three documents related to Climate‐Related Financial Risk Act (Health & Safety Code Section 38533/Senate Bill 261) and Climate Corporate Data Accountability Act (SB253):
Climate Related Financial Risk Report Checklist - this guidance is a 5-point checklist for companies to prepare for the first reports due in January 2026.
Preliminary List of Reporting/Covered Entities - this list is based 2022 information and could therefore be missing entities that are covered.
These updates reflect a global push toward sustainability. Businesses should consult experts or official sources for advice, as compliance deadlines approach.
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