Welcome to our latest ESG highlights – your snapshot of the most important sustainability updates from the Baltics and the EU.
In Lithuania, new draft guidelines target misleading green claims in advertising, while a fresh legislative package aims to close the gender pay gap through stronger transparency rules.
Latvia is reshaping its climate framework with sweeping reforms to emissions trading and a new Economic Sustainability Law that charts the path to climate neutrality.
Estonia launched a practical ESG Tool to help companies assess sustainability risks and performance across key areas.
At the EU level, the Parliament’s rejection of the “Omnibus I” compromise has stirred uncertainty around future sustainability reporting rules, while new proposals ease the rollout of the Deforestation Regulation and tighten circular economy standards for the automotive sector. The newly announced Pact for the Mediterranean and a heated UK debate over climate policy round out a busy ESG landscape.
News from Lithuania
1. The State Consumer Rights Protection Authority prepared draft guidelines on green claims in advertising which aim to ensure that statements about the environment used in marketing are truthful, clear and not misleading.
The guidelines establish key principles for the use of environmental or sustainability-related claims. For example, businesses are not allowed to emphasise minor environmental benefits while concealing major environmental harms – for instance, advertising that a product’s packaging is recyclable even though the product itself is highly polluting. Alongside highlighting positive impacts, any significant negative impacts must also be disclosed, if they exist. In addition, claims such as “climate-neutral” are permissible only if that neutrality is achieved through emission reductions. Offsetting or compensation mechanisms can only be used as supplementary tools, not as a substitute for genuine emission reduction efforts.
2. A package of draft laws has been registered to ensure the effective implementation of Directive (EU) 2023/970 of the European Parliament and of the Council, adopted on 10 May 2023. These legislative amendments aim to address persistent disparities in remuneration between men and women by strengthening the principle of equal pay for equal or equivalent work and strengthening the legal prohibition of gender-based discrimination in the workplace and the prohibition of discrimination, primarily through greater pay transparency and stronger enforcement mechanisms.
News from Latvia
1. The amendments to the Law “On Pollution” came into force on 18 October 2025, with their primary aim being to align national legislation with updated EU directives on greenhouse gas (GHG) emissions trading and climate policy. The changes transpose key provisions from EU Directives 2003/87/EC (as amended), 2023/958 (aviation), and 2023/959 (general ETS enhancements), and extend the scope of the EU Emissions Trading System to additional sectors such as maritime transport, in line with Regulation (EU) 2015/757.
These changes introduce new definitions, responsibilities for operators, and monitoring requirements to ensure compliance with EU climate policy, while addressing Latvia’s delayed implementation, which has already triggered infringement procedures.
2. The new draft law “Economic Sustainability Law” establishes a comprehensive framework for Latvia’s transition to climate neutrality by 2050, integrating greenhouse gas reduction, CO₂ sequestration, climate adaptation, and financial instruments into national and regional planning. The draft law constitutes a comprehensive national transposition of core EU climate directives within the “Fit for 55” framework.
The legislation establishes a dedicated emissions trading regime for the building and road transport sectors, imposes binding renewable fuel blending obligations on suppliers, and operationalises the Carbon Border Adjustment Mechanism to protect domestic producers from carbon leakage. By superseding obsolete provisions of the Law on Pollution, the draft seeks to eliminate the risk of infringement penalties in excess of EUR 300 million while unlocking capital for renewable energy, energy efficiency, and circular economy projects. It also mandates sectoral coordination and introduces monitoring, reporting, and funding mechanisms to support sustainable development.
News from Estonia
A new ESG Tool, managed by the Estonian Ministry of Economic Affairs and Communications, is now freely available to support businesses in assessing sustainability risks, impacts and reporting across key environmental, social and governance areas.
Since early September, a new ESG Tool has been available to all companies, offering practical support for sustainability efforts, risk assessment, and reporting. The tool enables businesses to evaluate the environmental, social and economic impact of their operations and provides a structured overview of their position across ten key sustainability areas, including climate change, pollution, biodiversity, circular economy, labour practices, and business conduct. It serves as a valuable resource for identifying strengths and gaps in sustainability performance.
The ESG Tool was developed in close cooperation between public authorities and business associations from Estonia, Latvia, Lithuania and Finland. It is available in all four national languages, as well as in English.
EU-level news
EU Parliament rejects compromise on OMNIBUS I, leaving future of sustainability rules uncertain
On 22 October, 2025, the European Parliament rejected the mandate adopted by the Legal Affairs Committee on 13 October on simplified rules for sustainability, which suggested significant reductions in the EU’s sustainability reporting and due diligence regulations. The vote, in which the proposal was narrowly defeated, with 318 against and 309 in favour, sends the proposal back to negotiations, creating uncertainty for businesses.
The Omnibus package was part of the EU’s plan to ease compliance burdens, and features major revisions to laws such as the CSRD and CSDDD, including significantly higher company size thresholds. The rejected compromise sought to limit CSRD reporting to firms with over 1,000 employees and to add a threshold of EUR 450 million in revenue, while sharply raising the CSDDD threshold to 5,000 employees and EUR 1.5 billion in revenue. The parliament will decide its position on simpler sustainability requirements ahead of talks with EU governments at the next plenary session in Brussels on 13 November.
Commission proposes targeted adjustments to ease implementation of EU Deforestation Regulation
The European Commission has proposed a set of targeted measures to ensure the smooth and timely implementation of the EU Deforestation Regulation (EUDR). The EUDR is a key initiative for fighting deforestation. The proposal aims to make the EUDR’s IT system fully operational, while easing reporting requirements, especially for micro and small operators from low-risk countries. Under the new approach, only the first operator or trader placing products on the EU market would need to submit due diligence statements, reducing duplication and simplifying compliance across the supply chain. Small and micro operators would only submit a simple, one-off declaration instead of regular statements. The proposal also introduces a phased process of implementation: large and medium companies will need to comply by 30 December 2025 (with a six-month grace period), while smaller firms will have until 30 December 2026. These changes are designed to reduce administrative burdens, strengthen the IT system, and support a more efficient rollout of the regulation.
EU Parliament backs new rules to boost vehicle design, reuse and recycling
In September the European Parliament approved new EU circular economy rules for the automotive sector, covering the entire vehicle lifecycle – from design to end-of-life treatment. The proposal aims to reduce the environmental impact of vehicle production and disposal, while promoting reuse and recycling. Under the new rules, vehicles must be designed to allow easier removal and reuse of parts, and plastics in new cars must include at least 20% recycled content within six years of the rules’ entry into force. rising to 25% within ten years if enough recycled plastic is available at prices that are not excessive. The regulation also introduces extended producer responsibility, requiring manufacturers to cover the costs of collecting and processing end-of-life vehicles, and sets stricter rules to prevent the export of cars that are no longer roadworthy. The reform balances sustainability goals with realistic industry targets.
EU launches “Pact for the Mediterranean” to strengthen jobs, energy, and regional security
The European Commission and the High Representtive have unveiled the Pact for the Mediterranean, a new initiative aimed at deepening cooperation and economic integration across the Mediterranean Sea. Building on long-standing cultural and economic ties, the Pact seeks to establish a Common Mediterranean Space that is connected, resilient and secure.
Its main goals include promoting clean energy production, stimulating private investment, and supporting regional projects that create opportunities, particularly for youth, women and small businesses. Cooperation will focus on three key pillars: empowering people through education, skills and mobility; fostering stronger and more sustainable economies through energy, technology and digital connectivity; and enhancing security, disaster preparedness, and migration management. The Pact also envisions broader engagement with partners beyond the southern Mediterranean, including the Gulf, sub-Saharan Africa, the Western Balkans, and Türkiye. Political endorsement is expected in November 2025, after which an Action Plan will guide its implementation.
UK Conservatives propose replacing Climate Change Act, sparking political and environmental backlash
UK Conservative leader Kemi Badenoch announced plans to scrap the Climate Change Act 2008 if her party wins the next election, replacing it with a new framework focused on “cheap and reliable energy.” The landmark law, which set legally binding carbon reduction targets and established the Climate Change Committee, underpins the UK’s net zero by 2050 goal. Kemi Badenoch argued that current climate policies have increased costs and bureaucracy without significantly reducing global emissions, pledging instead to boost North Sea oil and gas extraction and prioritise economic growth.
The proposal has provoked fierce criticism from environmental groups, Labour, and senior Conservatives, including former prime minister Theresa May, who warned it would reverse decades of progress and damage the UK’s global climate leadership. Environmental groups consider that the plan would be “economic disaster,” while supporters claim it will ease pressure on households and businesses. The announcement has deepened political divisions over net zero, signalling a major shift in the UK’s long-standing cross-party consensus on climate policy.
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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
