2025 Sustainability Legislation Around the World

Canada

In Canada, new sustainability standards will necessitate alignment with transparency and reporting frameworks with a particular focus on avoiding greenwashing.

Canadian Sustainability Disclosure Standards (CSDS)

Last month, the Canadian Sustainability Standards Board (CSSB) released its inaugural sustainability disclosure standards:

• CSDS 1: General Requirements for Disclosure of Sustainability-related Financial Information
• CSDS 2: Climate-related Disclosures

These standards aim to enhance consistency and comparability in sustainability reporting across Canada. They are now included in the CPA Canada Handbook – Sustainability, which is available for free until March 31, 2025. The CSSB has also published the Criteria for Modification Framework, detailing how it may adapt international standards to reflect Canadian priorities.

Canadian Securities Administrators (CSA)

The Canadian Securities Administrators (CSA) plans to incorporate developments from the International Sustainability Standards Board (ISSB) and other US regulations. The CSA’s decisions, along with the CSSB's ongoing work, will shape future sustainability reporting requirements, aligning Canadian standards with global frameworks.

Boards should also enhance internal audit and compliance capabilities to handle increased transparency requirements effectively, ensuring they are equipped to meet both Canadian and international expectations.

Canadian Competition Act

Recent amendments to Canada’s Competition Act will require businesses to substantiate any environmental claims used in promoting their products or services, underscoring Canada’s increasing emphasis on transparency in environmental reporting and claims.

This means ensuring all green claims are backed by verifiable data and transparently documented to avoid allegations of greenwashing. Boards can lead by setting up rigorous review processes for environmental marketing, training teams to understand and comply with the substantiation requirements and establishing accountability mechanisms for sustainable messaging.

European Union

Several new sustainability regulations will be enforced in the EU in 2025. Boards should be aware of when the regulation requires transposition into national laws by EU member states. Across the EU, many boards of larger companies are setting up sustainability subcommittees to ensure there is sufficient knowledge and focus.

Ecodesign for Sustainable Products Regulation (ESPR)

The Ecodesign for Sustainable Products Regulation (ESPR), effective from July 18, 2024, aims to transform product sustainability across the EU. Products sold in the EU market must now be designed with environmental considerations at their core, focusing on durability, repairability, and recyclability.

Boards will need to oversee the integration of sustainable materials and design principles into product development, aligning operations with ESPR’s environmental goals. Boards can ensure compliance by setting measurable sustainability targets, auditing existing product lines, and adapting supply chain partnerships to prioritize eco-friendly practices. 

Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) is set to replace the Non-Financial Reporting Directive (NFRD) and will require companies to disclose detailed information about their sustainability practices. By 2027, large and medium-sized companies will need to report on their environmental impact, social responsibility, and governance practices. 

EU Taxonomy Regulation

The EU Taxonomy Regulation establishes a framework for determining which economic activities can be considered environmentally sustainable. By 2027, large and medium-sized companies will need to align their operations with the taxonomy criteria to qualify for sustainable financing and investment. 

To align with the EU Taxonomy Regulation, boards should focus on mapping business activities to meet the criteria defining environmentally sustainable operations. Boards can lead by integrating taxonomy criteria into strategic planning, setting clear sustainability objectives, and ensuring rigorous reporting standards to attract green investment.

Australia

Australia’s forthcoming standards emphasize alignment with global frameworks, particularly in emissions reporting and climate risk disclosures.

The Australian Accounting Standards Board (AASB) will implement new standards aligned with global frameworks from the ISSB, incorporating climate-focused financial risks, governance, and strategy disclosures. This legislation mandates Scope 1 and 2 emissions reporting from year one, with Scope 3 emissions phased in later for larger companies.

International Sustainability Standards Board (ISSB)

Australia's integration with ISSB standards means a broad alignment with global practices, emphasizing transparency and comparability. However, specific modifications reflect Australia's national priorities, such as climate scenario analyses tailored to the country’s legal and environmental context.

Boards can facilitate compliance by refining reporting structures to incorporate these scenario analyses, equipping leadership with training on ISSB standards, and integrating disclosures across governance and strategy. The aim should be to establish robust transparency and comparability in climate-related financial reporting.

We have also taken a deeper dive into how Australian boards can prepare for these regulations.

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