As the year draws to a close and the holiday season approaches, it is a natural moment to reflect on progress made – and on the regulatory signals that will shape the year ahead. In this final ESG update of 2025, we bring together the most significant sustainability, climate and governance developments from across the Baltics and the EU, offering a clear snapshot of where policy is heading as businesses prepare for 2026.
This edition covers major steps toward climate-neutral economies in Latvia and Estonia, strengthened consumer and anti-greenwashing protections in Lithuania, and a busy EU agenda ranging from climate targets and transport emissions to far-reaching efforts to simplify sustainability reporting and environmental legislation. Against the backdrop of COP30 and ongoing debates on ambition versus implementation, the message is clear: ESG remains high on the regulatory agenda, even as lawmakers seek to reduce complexity and administrative burden.
News from Lithuania
The parliament has adopted amendments to the Law on the Protection of Consumers against Unfair Commercial Practices and the Civil Code of the Republic of Lithuania, transposing Directive (EU) 2024/825.
The amendments to the Civil Code introduce new information requirements aimed at empowering consumers to make more sustainable choices. Sellers will be required to provide clearer information on the durability and reparability of goods, and, where possible, on environmentally friendly delivery options.
The amendments to the Law on the Protection of Consumers against Unfair Commercial Practices strengthen protections against unfair commercial practices, with a particular focus on misleading environmental claims (“greenwashing”), unreliable sustainability labels.
News from Latvia
Latvia’s Economic, Agricultural, Environmental and Regional Policy Committee approved for final reading the Climate Resilience and Economic Sustainability Law, designed to establish a clear framework for transitioning to a climate-neutral economy. The law sets binding climate goals, defines responsibilities for ministries and municipalities, and ensures coordinated use of support funding, including funds from the EU Social Climate Fund. This funding will be targeted at vulnerable households, transport users, and micro-enterprises at risk of energy or transport poverty; as well as financing building renovations, energy efficiency upgrades, improved public transport access, and development of social housing. The legislation also includes provisions for auctions of emissions quotas, as well as resilience measures, complementing earlier laws on transport energy and pollution control. It is now awaiting final approval from the parliament in order to enter into force.
News from Estonia
New Climate Resilient Economy Act moved to cabinet discussion On 13 November, the Ministry of Climate’s draft of the Climate Resilient Economy Act reached the government cabinet for discussion. The proposed legislation, among other provisions, sets specific climate targets for each sector, sets out greenhouse gas reduction targets, ensures legal certainty for the fulfilment of national climate goals and outlines the prerequisites for achieving them.
Initial plans indicated that the draft law would be submitted to the parliament in the first quarter of 2026, with entry into force expected in the second quarter, subject to parliamentary timelines.
EU-level news
Transport emissions: deal on a single calculation method
The European Parliament and Council have reached a preliminary agreement on a unified EU methodology for calculating greenhouse gas (GHG) emissions from transport services. This joint approach will make it easier to compare the environmental performance of different transport modes, helping consumers and businesses make informed choices while reducing the risk of greenwashing. Although companies are not obliged to calculate emissions, those that do, whether for reporting, marketing or compliance, 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 manual. While the current methodology focuses on emissions during transport operations, the agreement sets the stage for future inclusion of life-cycle emissions, such as those from vehicle manufacturing and energy production. The Commission will assess this expansion within four years, ensuring the framework evolves toward more comprehensive and transparent climate reporting. The deal now awaits formal approval by the parliament and Council, with most provisions starting to apply four and a half years after their entry into force.
Parliament calls for an ambitious gender equality strategy
The European Parliament has adopted a report calling on the Commission to present an ambitious 2026–2030 gender equality strategy with concrete legislative and non-legislative actions. Key priorities include making gender-based violence an EU crime, introducing a consent-based definition of rape in EU law, and ensuring full implementation of existing equality legislation. MEPs also urge universal access to gender-responsive healthcare, including sexual and reproductive services, and call for the right to safe and legal abortion care to be enshrined in the EU Charter of Fundamental Rights.
The report highlights the need to close gender gaps in employment, pay and pensions, and demands timely implementation of directives on minimum wages, pay transparency, women on boards and work-life balance. It also calls for stronger mechanisms to counter democratic backsliding and attacks on women’s and LGBTIQ+ rights, as well as integrating the women, peace and security agenda into EU foreign policy.
EU 2040 climate target: MEPs want 90% emissions reduction in EU Climate Law
The European Parliament has backed a binding target to reduce net greenhouse gas emissions by 90% by 2040 compared to 1990 levels, reinforcing the EU’s path to climate neutrality by 2050. MEPs support flexibility for member states, including the use of up to five percentage points of reductions from high-quality international carbon credits starting from 2036, and postponing ETS2, which covers emissions from buildings and road transport, until 2028. Progress will be reviewed every two years, with the possibility of adjusting the target based on scientific data, technological advances, and economic impact. The proposal was adopted by 379 votes to 248, and the focus now moves to negotiations with member states.
Comission takes action to ensure complete and timely transportation of EU directives
The European Commission has launched infringement procedures against several member states for failing to fully transpose three key EU directives into national law by the required deadlines. These include the recast Energy Efficiency Directive, amendments to the Renewable Energy Directive on feedstocks for biofuels and biogas, and the amended Directive on markets in financial instruments. 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 for reducing EU energy consumption by 11.7% by 2030 and requires public sector leadership through annual consumption cuts and building renovations. The Renewable Energy Directive update introduces new feedstocks for advanced biofuels and biogas to promote greener transport fuels. The amended Directive on markets in financial instruments ensures alignment with MiFIR rules and supports the launch of consolidated tapes for transparent financial data.
COP30 agreement reaffirms 1.5 °C goal, but global action still falls short
At COP30 in Belém, Brazil, the EU worked with partners to secure an agreement reaffirming the need to keep temperature rises to 1.5 °C limit within reach and accelerate the transition away from fossil fuels. Key outcomes include the launch of the Global Implementation Accelerator to close the emissions gap, commitments to triple adaptation finance by 2035, and initiatives on carbon markets, forest protection, gender equality and methane reduction. The EU also endorsed pledges to triple renewable energy capacity and double energy efficiency improvements by 2030.
Despite these steps, MEPs expressed disappointment that the final deal lacked the urgency needed to address the climate crisis. Resistance from major oil-producing states and shifting geopolitical dynamics limited progress on phasing out fossil fuels, leaving a significant gap between ambition and concrete emission cuts. While multilateralism held and some advances were made on adaptation and finance, the EU delegation warned that global momentum remains too slow and called for stronger coalitions to prevent Europe from becoming isolated in future negotiations.
Comission proposes simplification of transparency rules for sustainable financial products
The European Commission has proposed amendments to the Sustainable Finance Disclosure Regulation (SFDR) to simplify and improve transparency rules for financial products with environmental or social objectives. The changes aim to address issues such as overly complex disclosures and confusion caused by the regulation’s use as a de facto labelling system, which has hindered investor understanding and increased greenwashing risks. The revised framework will provide clearer, more concise information for investors.
EFRAG provides technical advice on draft simplified ESRS to the European Commission
As one of the milestones for the reduction of burden for companies in the context of the European Commission’s 2025 Omnibus initiative, according to the EFRAG press release, the draft simplified European Sustainability Reporting Standards (ESRS) foresee, among other things, simplified materiality assessment; elimination of the preference for direct data in the value chain and reducing the pressure for data collection; substantial reliefs, proportionality mechanisms and ad hoc phasing-in for challenging disclosures; principles-based standards for narrative disclosure particularly for policies, actions and targets; flexibility on how to present the information required; and greater focus on how sustainability matters are managed. The proposed amendments aim to make ESRS shorter, clearer, easier to understand and to implement.
European Commission proposes measures to simplify environmental legislation
The European Commission has proposed measures to simplify environmental legislation in areas like industrial emissions, the circular economy, environmental assessments, and geospatial data. These changes aim to cut administrative burdens for businesses while maintaining strong environmental and health protections. Streamlined permitting processes, especially 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 regulations for industrial emissions, and reduced reporting for farmers. Other measures involve replacing costly databases with digital tools, easing extended producer responsibility requirements, and improving access to geospatial data. These could save businesses EUR 1 billion annually, contributing to the EU’s goal of EUR 37.5 billion in cost reductions by 2029. Further simplification efforts are planned for upcoming legislation, including the Circular Economy Act and water-related directives.
EU to simplify sustainability reporting and due diligence rules
EU lawmakers have reached a provisional agreement to simplify sustainability reporting and due diligence rules under the Omnibus I package. Under the deal, only companies with over 1,000 employees and an annual turnover above EUR 450 million will need to report on social and environmental impacts, while sector-specific reporting will become voluntary. Due diligence obligations will apply only to very large corporations with more than 5,000 employees and a turnover exceeding EUR 1.5 billion, focusing on risk-based approaches without requiring Paris Agreement transition plans. A new digital portal will provide templates and guidance, and non-compliance will be sanctioned at the national level with fines of up to 3% of global turnover. The changes aim to cut administrative burdens, while maintaining accountability for major businesses.
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Contact the authors:
Co-head of Sorainen ESG team, Counsel, Lithuania
vitalija.impoleviciene@sorainen.com
Counsel, Latvia
Associate at Sorainen Estonia
carolin.simona.laurits@sorainen.com
