The year is drawing to a close and the festive season is upon us, so the moment has come to reflect on the progress made and on the regulatory signals that will shape the year ahead. In this final ESG update for 2025, we bring together the most significant developments in sustainability, climate and governance across the Baltic states and the EU, offering a clear overview of the direction policy is taking as companies prepare for 2026.
This edition looks at the key steps on the road to a climate-neutral economy in Latvia and Estonia, stronger consumer and anti-greenwashing protection in Lithuania and a busy EU agenda covering climate targets and transport emissions as well as far-reaching efforts to simplify sustainability reporting and environmental legislation. With COP30 and the ongoing debates about the ambition of targets and their implementation, the message is clear: ESG remains one of the central issues on the regulatory agenda, even as legislators seek to reduce complexity and administrative burden.
News from Lithuania
Parliament has adopted amendments to the https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/7ed039d0ca0811f0a842b0e89767e3dc and the https://e-seimas.lrs.lt/portal/legalAct/lt/TAD/41d0d6c0ca0811f0a842b0e89767e3dc, transposing Directive (EU) 2024/825.
The amendments to the Civil Code introduce new information requirements designed to enable consumers to make more sustainable choices. Sellers will have to provide clearer information about the durability and reparability of goods and, where possible, about environmentally friendly delivery options.
The amendments to the Law on Consumer Protection against Unfair Commercial Practices strengthen protection against unfair commercial practices, with particular attention to misleading claims about environmental impact (“greenwashing”) and unreliable sustainability labels.
News from Latvia
Latvia's Committee on Economics, Agriculture, Environment and Regional Policy approved at final reading the Law on Climate Resilience and Economic Sustainability, drawn up to establish a clear framework for the transition to a climate-neutral economy. The law sets binding climate targets, defines the responsibilities of ministries and local authorities, and ensures the coordinated use of support funding, including money from the EU Social Climate Fund. This funding will be directed to vulnerable households, transport users and micro-enterprises at risk of energy or transport poverty, as well as to building renovation, energy efficiency improvements, better access to public transport and the development of social housing. The law also includes provisions on emission allowance auctions and on resilience measures, complementing earlier laws on transport energy and pollution control. It now awaits final approval in parliament in order to enter into force.
News from Estonia
The new Climate-Resilient Economy Act has been submitted for discussion by the Cabinet of Ministers. On 13 November, the draft Climate-Resilient Economy Act prepared by the Ministry of Climate was submitted for discussion by the Cabinet of Ministers. The proposed law sets, among other things, specific climate targets for each sector, establishes greenhouse gas reduction goals, provides legal certainty for meeting the country's climate targets and sets out the preconditions for achieving them.
Initial plans indicated that the bill would be submitted to parliament in the first quarter of 2026 and, given parliament's schedule, its entry into force was expected in the second quarter.
News at EU level
Transport emissions: agreement on a single calculation method
The European Parliament and the Council have reached a provisional agreement on a single EU methodology for calculating greenhouse gas (GHG) emissions from transport services. This common approach will make it easier to compare the environmental impact of different modes of transport, helping consumers and businesses to make informed decisions while reducing the risk of “greenwashing”. Although companies are under no obligation to calculate emissions, those that do so, whether for reporting, marketing or compliance purposes, must use the standardised EU method.
To ease the burden on small and medium-sized enterprises, the Commission will develop a free, user-friendly calculation tool within four years, accompanied by a practical handbook. While the current methodology focuses on emissions during transport operations, the agreement lays the groundwork for including life-cycle emissions in future, for example from vehicle manufacturing and energy production. The Commission will assess this extension within four years, ensuring that the system evolves towards more comprehensive and transparent climate reporting. The agreement now awaits formal approval in parliament and the Council, and most of its provisions will start to apply four and a half years after they enter into force.
European Parliament calls for an ambitious gender equality strategy
The European Parliament has adopted a report calling on the Commission to put forward an ambitious gender equality strategy for 2026–2030 with concrete legislative and non-legislative measures. Key priorities include recognising gender-based violence as an EU crime, introducing a consent-based definition of rape into EU law and fully implementing existing equality legislation. MEPs also urge universal access to gender-sensitive healthcare, including sexual and reproductive health services, and call for the right to safe and legal abortion care to be included in the EU Charter of Fundamental Rights.
The report stresses the need to tackle gender inequality in employment, pay and pensions, and calls for the timely implementation of the directives on minimum wages, pay transparency, women's representation on company boards and work-life balance. It also calls for stronger mechanisms to counter democratic backsliding and attacks on women's and LGBTIQ+ rights, and for the integration of women, peace and security issues into EU foreign policy.
The EU's 2040 climate target: MEPs want a 90% emissions reduction written into the EU Climate Law
The European Parliament has backed a binding target to cut net greenhouse gas emissions by 90% by 2040 compared with 1990 levels, thereby strengthening the EU's path towards climate neutrality by 2050. MEPs support flexibility for member states, including the use from 2036 of up to five percentage points of reductions from high-quality international carbon credits, and postponing ETS2, which covers emissions from buildings and road transport, until 2028. Progress will be reviewed every two years, with the option of adjusting the target on the basis of scientific data, technological progress and economic impact. The proposal was adopted by 379 votes to 248, and attention now turns to negotiations with member states.
Commission takes steps to ensure the full and timely transposition of EU directives
The European Commission has launched infringement procedures against several member states that have failed to fully transpose three important EU directives into their national law by the deadline. These are the recast Energy Efficiency Directive, the amendments to the Renewable Energy Directive concerning feedstocks for biofuels and biogas, and the amended Markets in Financial Instruments Directive. Letters of formal notice have been sent, giving these countries two months to respond and complete transposition. If they fail to comply, the Commission may escalate the cases by issuing reasoned opinions.
The Energy Efficiency Directive sets binding targets to reduce EU energy consumption by 11.7% by 2030 and requires the public sector to lead by example by cutting consumption annually and renovating buildings. The updated Renewable Energy Directive introduces new feedstocks for advanced biofuels and biogas in order to promote the use of greener transport fuels. The amended Markets in Financial Instruments Directive ensures alignment with the MiFIR rules and supports the introduction of consolidated data feeds to ensure transparency of financial data.
The COP30 agreement reaffirms the 1.5 °C target, but global action still falls short
At the COP30 conference in Belém, Brazil, the EU worked with partners to reach an agreement confirming the need to limit the temperature rise to 1.5 °C and to accelerate the transition away from fossil fuels. The main outcomes include the launch of a Global Implementation Accelerator to close the emissions gap, a commitment to triple adaptation finance by 2035, and initiatives on carbon markets, forest protection, gender equality and methane reduction. The EU also confirmed pledges to triple renewable energy capacity and double energy efficiency improvements by 2030.
Despite these measures, Members of the European Parliament expressed disappointment that the final agreement lacked the urgency needed to address the climate crisis. Resistance from the largest oil-producing countries and shifting geopolitical dynamics limited progress on phasing out fossil fuels, leaving a considerable gap between targets and concrete emission reductions. Although multilateral relations were preserved and some improvements were achieved on adaptation and finance, the EU delegation warned that the global pace remains too slow and called for stronger coalitions to be built in order to prevent Europe from becoming isolated in future negotiations.
Commission proposes simplifying transparency rules for sustainable financial products
https://finance.ec.europa.eu/publications/commission-simplifies-transparency-rules-sustainable-financial-products_en in order to simplify and improve the transparency rules for financial products with environmental or social objectives. The changes aim to address problems such as overly complex disclosures and the confusion created by the use of the regulation as a de facto labelling system, which makes it harder for investors to understand and increases the risk of greenwashing. The revised system will give investors clearer and more specific information.
EFRAG provides technical advice to the European Commission on drafting the simplified ESRS
As one of the turning points in reducing the burden on companies in connection with the European Commission's 2025 Omnibus initiative, according to an EFRAG press release, the draft simplified European Sustainability Reporting Standards (ESRS) provides, among other things, for a simplified materiality assessment; the removal of the preference for direct data in the value chain and a reduction in the data collection burden; substantial reliefs, proportionality mechanisms and ad hoc phasing-in for complex disclosures; principles-based standards for narrative disclosures, particularly in relation to policies, actions and targets; flexibility as to how the required information is provided; and greater attention to the governance of sustainability matters. The proposed amendments aim to make the ESRS shorter, clearer, easier to understand and easier to apply.
European Commission proposes measures to simplify environmental legislation
The European Commission has proposed measures to simplify environmental legislation in areas such as industrial emissions, the circular economy, environmental assessments and geospatial data. These changes aim to reduce the administrative burden on businesses while maintaining strong environmental and health protection. Simplified permitting processes, particularly for strategic projects such as digital infrastructure and affordable housing, will help accelerate the EU's transition to a clean and digital economy and boost competitiveness.
The package includes six legislative proposals, such as faster environmental assessments, simplified rules on industrial emissions and reduced reporting for farmers. Other measures include replacing costly databases with digital tools, easing extended producer responsibility requirements and improving access to geospatial data. This could save businesses EUR 1 billion a year, contributing to the EU's goal of cutting costs by EUR 37.5 billion by 2029. Further simplification measures are planned in forthcoming legislation, including the Circular Economy Act and the water-related directives.
The EU will simplify sustainability reporting and due diligence rules
EU legislators have reached a provisional agreement on simplifying sustainability reporting and due diligence rules under the Omnibus I package. Under the agreement, only companies with more than 1,000 employees and annual turnover above EUR 450 million will have to report on their social and environmental impact, while sector-specific reporting will become voluntary. Due diligence obligations will apply only to very large companies with more than 5,000 employees and turnover exceeding EUR 1.5 billion, focusing on a risk-based approach and without requiring Paris Agreement transition plans. A new digital portal will provide templates and guidance, and non-compliance will be penalised at national level with fines of up to 3% of global turnover. The changes aim to reduce the administrative burden while maintaining accountability for large companies.