European Union Regulation

The EU Corporate Sustainability Reporting Directive (CSRD, 2022/2464) entered into force on 5 January 2023. This directive requires companies in scope to publish regular reports on the social and environmental risks they face, and on how their activities impact people and the environment.

In practice, the directive would be implemented in several stages, with the first entities starting to report on the 2024 financial year in 2025. Overall, the following passing schedule was initially agreed:

·         Wave 1, for financial years starting on or after 1 January 2024 (i.e. with publication in 2025): large undertakings which are public-interest entities (PIEs) with more than 500 employees;

·         Wave 2, for financial years starting on or after 1 January 2025 (i.e. with publication in 2026): other large undertakings (as defined under the Accounting Directive size criteria);

·         Wave 3, for financial years starting on or after 1 January 2026 (i.e. with publication in 2027):

·         SMEs (excluding micro-undertakings) with transferable securities admitted to trading on an EU-regulated market;

·         Small and non-complex institutions, provided they are either large undertakings or SMEs (excluding micro-undertakings) with transferable securities admitted to trading on an EU-regulated market;

·         Captive insurance undertakings and captive reinsurance undertakings provided that they are either large undertakings or SMEs (excluding micro-undertakings) with transferable securities admitted to trading on an EU-regulated market.

The CSRD envisages a double materiality approach. That is, companies in scope must report both on how environmental and social issues can affect their performance (financial materiality) and on how the company’s activities impact the environment and society. In addition, the original CSRD text required mandatory ‘limited assurance’ on their material sustainability reporting from the first year of CSRD coming into force; the requirements were expected to expand to ‘reasonable assurance’ at an unspecified date in the future. 

However, following the EU elections in June 2024, a new EU Commission has been formed, which is taking a different look at the CSRD. With the Omnibus I proposal (COM 2025/80), the Commission in February 2025 proposed a two-year delay for the reporting requirements of wave 2 and 3 companies and a reduction in the scope of the CSRD. In April 2025, the EU Parliament adopted the EU Commission's ‘Stop-the-clock’ Directive as part of the Omnibus I package, delaying the application of the CSRD for Wave 2 and Wave 3 companies by two years.

In December 2025, the EU Parliament officially adopted a final version of Omnibus I. The Council of the EU is expected to approve this text in early 2026, with no substantial changes anticipated at this stage. The amendments will significantly narrow the scope of the rules, excluding around 90% of the companies previously covered. They will apply only to companies with more than 1,000 employees and a net turnover above €450 million; companies from third countries will be included only if the ultimate parent generated a net turnover of more than €450 million in the EU and its EU subsidiary or branch has a net turnover above €200 million. Listed SMEs and financial holding companies will no longer be covered. The Commission would no longer develop mandatory sector-specific reporting standards, and subsidiaries may use the subsidiary exemption when sustainability information is included in the parent's consolidated report. Moreover, the step from ‘limited assurance’ to ‘reasonable assurance’ would be removed (limited assurance remaining).

The EU Corporate Sustainability Due Diligence Directive (CSDDD, 2024/1760) entered into force on 25 July 2024. The key objective of this legislation is to ‘foster sustainable and responsible corporate behaviour in companies’ operations and across their global value chains’. The rationale is to tackle the social and environmental impacts of major companies both in the EU and outside the Union, particularly in the Global South.

Obligations foreseen under the original text involved identifying and addressing both potential and actual negative impacts on the environment and human rights within the company's own operations, its subsidiaries, and, when relevant, the operations of its business partners in the value chain. Furthermore, the Directive required large companies to develop and implement climate transition plans. Such plans must align with the Paris Agreement's goal of achieving climate neutrality by 2050 and comply with interim targets set under the European Climate Law.

Companies were expected to bear the costs associated with CSDDD implementation, including establishing and maintaining the due diligence system, adapting business activities along the value chain to the due diligence obligations, and implementing transition plans. In addition, Member States were expected to ensure that ‘victims get compensation for damages resulting from an intentional or negligent failure to carry out due diligence.’

Several types of companies were included in the initial CSDDD scope:

·         Large EU limited liability companies & partnerships: +/- 6,000 companies with more than 1000 employees and above €450 million net turnover worldwide.

·         Large non–EU companies: +/- 900 companies with more than €450 million net turnover in the EU, with provisions to facilitate compliance and limit the burden on companies, both in scope and in the value chain.

·         SMEs and micro companies: excluded under the proposed rules; supporting and protective measures for SMEs that could be indirectly affected as business partners in value chains.

The Directive was originally meant to be transposed by Member States by July 2026 and start to apply one year later, with a staggered approach until July 2029. However, in February 2025, the EU Commission introduced the Omnibus I Package, and on 3 April 2025, the European Parliament adopted the connected ‘Stop-the-clock’ Directive to postpone the CSDDD by one year.

In December 2025, the EU Parliament officially adopted a final version of Omnibus I. The Council of the EU is expected to approve this text in early 2026, with no substantial changes anticipated at this stage. Under the Omnibus I amendments as adopted by the EU Parliament in December 2025, the transposition deadline will be further postponed to 26 July 2028, and companies in scope will have to comply from 26 July 2029. Key changes to CSDDD requirements include a significant reduction in the number of companies required to carry out due diligence to reduce social and environmental impacts. The rules will apply only to large EU companies with more than 5,000 employees and a net annual turnover above €1.5 billion and to non-EU corporations above the same threshold. The requirement to develop transition plans for a shift to a sustainable economy will be removed. The EU-harmonised civil liability regime will be removed, and penalties will be capped at 3% of net worldwide turnover.

The EU Whistleblower Protection Directive  (2019/1937) entered into force on 16 December 2019 and had to be transposed into the national law of the Member States by 17 December 2021.

The key objective of this directive is to protect workers who report corporate misconduct, including tax fraud and workers’ rights violations. The rationale behind this Directive is that employees possess first-hand information regarding any form of misconduct in their workplace and should receive sufficient protection upon reporting these unlawful activities. By safeguarding the protection of the whistleblower, this Directive aims to strengthen the effectiveness of European Union law. 

Member States are required to ensure that:

• Whistleblowers have access to effective communication channels, both with national and EU authorities

• Whistleblowers’ reports are seriously considered and adequate actions are undertaken both within and outside of the organisation

• Whistleblowers are protected from any form of retaliation or repercussions for having reported misconduct. 

The EU Directive on Transparent and Predictable Working Conditions (2019/1152) entered into force on 20 June 2019 and had to be transposed into Member States' national law by 1 August 2022.

The key objective of this legislation is to offer more extensive and updated rights for all workers in the EU, with a particular focus on vulnerable groups of workers employed in precarious sectors.  This directive requires employers to provide clear employment contracts and fair working conditions.

The Directive guarantees that all workers in the EU have a right to:

• receive clear and timely written information about key aspects of their job;

• undertake additional employment if they wish to do so, with any restrictions requiring objective justification;

• workers with unpredictable or on-demand schedules must be informed about their work hours in advance;

• obtain cost-free mandatory training related to their job provided by the employer.

The Directive aims to ensure more transparent and predictable working conditions for over 182 million workers in Europe, with an emphasis on secure and adaptable working conditions and information about employment conditions. The Directive is part of a broader framework - the European Pillar of Social Rights - aiming to foster justice in the labour market and welfare system.

The EU Directive on Adequate Minimum Wages (2022/2041) entered into force on 19 October 2022. It aims to ensure that workers in the EU have access to fair and adequate wages. It highlights that fair minimum wages are beneficial for both workers and employers in the European Union. Fair minimum wages stimulate labour-market competition and foster economic and social advancement. This Directive also addressed the issue of the gender pay gap—statistically, more women than men work for a minimum wage.

The European Commission aims to strengthen the enforcement and monitoring of minimum wage protection across all Member States. For Member States with an established statutory minimum wage, the Directive proposes to ensure regular updates on the minimum wage quota, minimise possibilities for minimum wage deduction, and include social partners in the decision-making process. For Member States without statutory minimum wages, the Directive respects the principle of subsidiarity of the Treaty on European Union; foreseeing a framework for minimum standards with respect to Member States’ competences and social partners’ autonomy and contractual freedom in the field of wages.

Member States are obliged to report their minimum wage protection standards annually to the European Commission.

The EU Posted Workers Directive (96/71/EC & 2018/957) was first implemented in 1996 and revised on 28 June 2018. Its key objective is to prevent companies from undercutting labour standards by paying posted workers less than local employees.

The term ‘’posted worker’’ refers to an employee who is delegated by their employer to provide services in another EU Member State on a temporary basis. The employment protection for posted workers begins with the understanding that they remain employed by the sending company and are typically governed by the laws of their home Member State, which apply to their employment contract. However, the Posted Workers Directive sets out essential terms and conditions of employment, which are applied based on the regulations of the host Member State. This principle applies only if terms of employment in that Member State are more favourable than those provided by the employment laws of the home State (or the applicable law of the employment contract).

This Directive protects Posted Workers from business malpractice. It also aims to ensure that a posted worker has the right to terms and conditions of employment in the Host Member States, defining maximum work periods, annual leave, occupational health and safety, accommodation and reimbursement of travel costs.

The EU Energy Efficiency Directive (EED) was adopted in 2023 (EU/2023/1791), establishing a legally binding target to reduce the EU’s final energy consumption by 11.7% by 2030 (relative to the 2020 reference scenario). First adopted in 2012, the directive was updated in 2018 and 2023. Specifically, EED obliges Member States to:

• prioritise vulnerable customers and social housing within the scope of their energy savings measures;

• introduce an annual energy consumption reduction target of 1.9% for the public sector;

• extend the annual 3% building renovation obligation to all levels of public administration;

• demand businesses to have an energy management system or to carry out an energy efficiency audit;

• promote local heating & cooling plans in larger municipalities;

• and progressively increase the efficient energy consumption in heat or cold supply, also in district heating.

The deadline for the transposition of the EED into national law for the Member States is 11 October 2025.

Closely linked to the EED is the EU Energy Performance of Buildings Directive (EPBD). The first version of the EPBD was published in 2002 (Directive 2002/91/EC). It was recast in 2010 as Directive 2010/31/EU, and amended in 2018 as part of the “Clean energy for all Europeans package”. The key aim of this Directive is to achieve a highly energy-efficient and decarbonised building stock by 2050 and create a stable investment environment in which consumers and businesses can make informed choices.

The fourth version of the EPBD was officially adopted in April 2024 and published in the official journal on 8 May 2024. Among its key elements, the new EPBD sets a goal of achieving a zero-emission building stock by 2050. To this end, the directive sets stricter energy and climate requirements for new buildings. The biggest difference from the old EPBD is that the new EPBD also sets targets for renovating existing buildings. The directive also establishes a process ensuring that all Member States must develop new, more ambitious National Building Renovation Plans (NBRPs) every five years. 

New buildings

For new buildings, the directive sets a new standard of Zero Emission Building (ZEB). Meaning buildings with “very low” energy demand and zero on-site carbon emissions. By 2028 all new public buildings should be ZEB. By 2030 all new buildings should be ZEB. The exact meaning of “very low” energy demand will be determined later. It must at least achieve cost-optimal levels, and Member States must at least review their energy performance requirements for new buildings every five years. To be classified as ZEB, the heating and cooling of the building must have no on-site fossil emissions. It can be fulfilled by:

• Renewable energy (with particular focus on optimizing on-site solar generation)

• District heating or cooling (even if it is not renewable)

• Energy from “carbon-free sources” (supposedly including nuclear energy)

• Energy from the grid (if the above options are not feasible) 

A solar mandate affecting new public and non-residential buildings larger than 250m2 will support the focus on on-site solar generation from 2027.  

The directive also begins calculating the life-cycle Global Warming Potential (GWP). By 2028, all new buildings larger than 1000 m² must calculate the GWP. By 2030, the GWP calculations will be mandatory for all new buildings. The directive sets no upper limit for the GWP of buildings. However, by 2027, Member States must submit proposals for introducing national thresholds for the whole lifecycle GHG of new buildings by 2030.

Renovation of existing buildings

For existing buildings, the directive introduces a new Minimum Energy Performance Standard (MEPS):

• Existing non-residential buildings: The EPBD requires Member States first to set a 2020 baseline to identify the energy consumption (kW/m²/year) of all existing non-residential buildings. Based on this baseline, Member States must ensure that the worst 16% of the non-residential buildings are renovated by 2030 and the worst 26% are renovated by 2033. Later renovation targets will be set in the National Roadmaps, which Member States will make as part of their National Building Renovation Plans.

• Existing residential buildings: The EPBD seems significantly less ambitious in regard to the residential buildings. All residential buildings must be ZEB by 2050. However, in the short term, the EPBD only requires that the combined energy demand from residential buildings must be reduced by 16% by 2030 and 20-22% by 2035. This reduction trajectory, achieving 20-22% in ten years, is clearly not in line with the goal of achieving 100% zero emissions within 25 years. 55% of this reduction must be achieved by renovation of the worst 43% of the residential building stock. New targets will subsequently be established for 2040 and 2045.

To implement this renovation process, Member States shall, every five years, prepare and submit a National Building Renovation Plan (NBRP). The first draft NBRP plans are due in December 2025. When preparing the NBRP, the Member States must consult with stakeholders. The draft NBRP will be assessed by the European Commission, which, within six months, can submit written recommendations to each NBRP. Taking account of the Commission’s recommendations, the Member States must then submit their final NBRPs by December 2026.

This NBRP process will be integrated into the existing process, demanding each Member State develop a National Energy and Climate Plan (NECP). This has been required since 2018 under Regulation on the governance of the energy union and climate action (Governance Regulation, 2018/1999). By 30 June 2023, Member States were due to submit their draft updated NECPs, which were then reviewed by the Commission. On 28 December 2023, the Commission published its EU-wide assessment with country-specific recommendations for the Member States. The Member States submitted their final NECPs by 30 June 2024, and the Commission published its final assessment on 28 May 2025.

The EU Waste Framework Directive (2008/98/EC) establishes the foundational legal structure for waste management across the European Union. The Directive was updated and entered into force on 4 July 2018 ((EU) 2018/851), with a deadline for implementation for Member States of 5 July 2020, with tighter requirements for recycling, extended producer responsibility and waste prevention and reporting obligations.

The Directive’s primary objective is to safeguard both the environment and public health by minimising the negative effects associated with waste generation and handling. Additionally, the Directive seeks to lessen the environmental footprint of resource use and enhance the efficiency with which resources are utilised.

Central to the Directive is the establishment of a waste hierarchy, which serves as a guiding principle for Member States in developing waste prevention and management strategies. This hierarchy prioritises actions in the following order:

1. Prevention: reducing the creation of waste at its source, for instance by minimising packaging or selecting durable, long-lasting products;

2. Preparation for Re-use: extending the life of products by repairing or repurposing them for further use;

3. Recycling: processing waste materials into new products or raw materials.

4. Recovery: harnessing value from waste, typically through energy recovery methods such as incineration with energy capture or composting;

5. Disposal: the final elimination of waste, usually via landfill or incineration without energy recovery.

This hierarchical approach emphasises waste prevention as the most favourable option and regards disposal as a last resort.

In relation to the construction sector, the Directive mandates that Member States ensure at least 70% (measured by weight) of non-hazardous construction and demolition waste is prepared for re-use, recycled, or otherwise recovered.

Additionally, the Directive encourages the practice of selective demolition to enable the safe removal and handling of hazardous substances, while also promoting the recovery of high-quality materials. By prioritising the selective removal of materials and the implementation of efficient sorting systems, the Directive aims to minimise waste generation and enhance resource efficiency.