Key ESG developments across the EU and the Baltics: Q1 2026 update

Publication / 24 March 2026 / Vitalija Impolevičienė, Agita Sprūde, Carolin Simona Laurits, Eva Berlaus

In the ESG update for this quarter, we share several key developments in sustainability policy across the Baltic region and Europe more widely. This edition covers important EU regulatory changes, including the Omnibus I Directive and new climate-related initiatives, alongside updates on ESG developments in Latvia, Estonia and Lithuania.

We hope these insights help you stay informed about the evolving ESG landscape. As always, our team remains available to support you with practical guidance and tailored solutions for your sustainability initiatives.

Legislative news and ESG initiatives in the Baltics

LITHUANIA

Lithuania’s Minister of the Environment amended the requirements for the green public procurements.

The amendments will apply from 11 May 2026 and include, among other things, a requirement to purchase organic food products as a priority; stricter requirements for computers, tablets, and mobile phones; minimum environmental protection criteria for new product groups, such as cleaning products and indoor cleaning services; repair work on buildings; repair work on roads, and laminate and parquet flooring.

The State Consumer Rights Protection Authority has approved the Guidelines for Green Claims in Advertising.

Consumers are increasingly looking for goods and services that are less harmful to the environment or which contribute to its protection. In response to these expectations, companies have been making claims about naturalness, eco-friendliness, or sustainability, which have become an important competitive factor and could help drive positive change in the market. When green claims are made without justification or are misleading, consumers lose the opportunity to make informed decisions, and honest companies face unfair competition. For this reason, in accordance with the Law on the Prohibition of Unfair Commercial Practices against Consumers of the Republic of Lithuania and the Law on Advertising of the Republic of Lithuania the State Consumer Rights Protection Authority has provided recommendations on the use of green claims in advertising.

LATVIA

The Latvian Cabinet of Ministers approved an initiative by the Ministry of Culture to implement the requirements of the EU European Media Freedom Act in national legislation by amending two media laws: the Law On the Press and Other Mass Media and the Electronic Mass Media Law.

The changes aim to strengthen media pluralism, independence, and transparency, particularly regarding public funding allocated to the media for state advertising. The amendments will introduce new definitions, clarify the authorities responsible for applying the regulation, and expand obligations for media service providers and public institutions. The Enterprise Register will publish self-declared data on the total annual public funding media receive for state advertising, while the National Electronic Mass Media Council will assess media market concentration and monitor and report annually on public funding for state advertising. The reforms also include replacing the European Regulators Group for Audiovisual Media Services with the European Board for Media Services. These amendments are the first step in the gradual implementation of the EU regulation.

The Latvian Parliament has approved on a first reading amendments to the Competition Law that would introduce personal liability for company officials involved in illegal agreements relating to public procurement.

Under the proposed changes, the Competition Council would be able to prohibit the responsible decision-makers from holding management positions for one to three years if they participate in or knowingly fail to prevent such violations. The amendments also introduce incentives for officials to cooperate with the Competition Council in uncovering breaches, and clarify certain institutional powers to ensure the authority’s continuous operation. From an ESG standpoint, these amendments reinforce governance standards by strengthening anti-corruption safeguards and promoting ethical conduct in public procurement.

ESTONIA

While Estonia has recently announced notable ESG-related updates, our review shows that no additional legislative developments have emerged this quarter.

We are continuing to monitor expected initiatives and will report as soon as new changes take place.

EU-level news

EU OMNIBUS DIRECTIVE OFFICIALLY PUBLISHED

The European Union has taken a significant step to reshape its sustainability regulatory framework through the adoption of the Omnibus I Directive, which revises key corporate sustainability laws, including the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD).

The directive was formally published in The Official Journal of the European Union on 26 February 2026, marking the final stage before its implementation across member states. The directive will enter into force on 18 March 2026.

One of the most notable changes introduced by the Omnibus package is the narrowing of the scope of sustainability reporting requirements. Under the revised rules, the CSRD will now apply only to companies with more than 1,000 employees and at least EUR 450 million in annual revenue, a much higher threshold than previously applied. As a result, an estimated 90% of companies that were originally expected to report under CSRD will fall outside the regulation’s scope.

The due diligence rules set out under the CSDDD have been narrowed even further. The revised directive now applies only to companies with more than 5,000 employees and EUR 1.5 billion in turnover threshold, substantially reducing the number of businesses required to conduct environmental and human rights due diligence across their value chains.

Beyond reducing the number of companies covered, the Omnibus reforms also scale back several key obligations within the sustainability framework. The requirement for companies to prepare dedicated climate transition plans under the CSDDD has been removed, although certain transition disclosures remain under CSRD reporting requirements. In addition, the directive removes the EU-wide civil liability regime originally included in the CSDDD and lowers potential penalties, capping fines at 3% of the net worldwide turnover of the undertaking. Implementation timelines have also been adjusted. The application of the CSDDD has been delayed by one year, with companies expected to comply by 26 July 2029.

EU institutions have framed the Omnibus package as a competitiveness-driven reform. Policymakers argue that the revised framework will reduce complexity, cut red tape, and introduce more proportionate requirements, particularly in light of shifting geopolitical and economic conditions.

EU CLIMATE LAW: A 2040 EMISSIONS REDUCTION TARGET OF 90% FOR THE EU

The European Parliament has approved amendments to the EU Climate Law establishing a binding target to reduce the EU’s net greenhouse gas emissions by 90% by 2040 compared with 1990 levels, paving the way toward climate neutrality by 2050.

The law allows some flexibility for member states, such as limited use of international carbon credits from 2036 and carbon removals to offset hard-to-abate emissions. It delays the ETS2 emissions trading system for buildings and road transport until 2028. The European Commission will also review progress every two years and may propose adjustments to the 2040 target or supporting policies based on scientific, economic and technological developments. EU States have also given their final approval regarding the amendments.

NEW EU RULES TO STOP THE DESTRUCTION OF UNSOLD CLOTHES AND SHOES

The European Commission adopted new measures under the Ecodesign for Sustainable Products Regulation (ESPR) to prevent companies from destroying unsold clothing, accessories and footwear, aiming to reduce waste and environmental harm and encouraging a more circular economy.

An estimated 4–9% of unsold textiles in Europe are destroyed each year, generating about 5.6 million tonnes of CO2 emissions; the new rules introduce a ban on destroying unsold apparel and footwear, which will apply to large companies from 19 July 2026 and medium-sized companies by 2030. Companies will also be required to disclose how many unsold goods they discard, with standardised reporting beginning in February 2027, while limited exemptions will apply in cases such as where there are safety risks or product damage.

EU SETS WORLD’S FIRST VOLUNTARY STANDARD FOR PERMANENT CARBON REMOVALS

The European Commission has adopted the world’s first voluntary certification standards for permanent carbon removals, establishing clear rules for how CO2 removal projects can be certified in the EU.

The framework covers three carbon removal activities: direct air capture with carbon storage (DACCS), biogenic emissions capture and storage (BioCCS) and biochar carbon removal (BCR), and aims to support investment and innovation, and to prevent greenwashing.

With the certification framework now in place, projects using these technologies will be able to begin applying for EU certification in the coming months. The Commission also plans to introduce additional methodologies for carbon farming and carbon storage in bio-based construction products.

COMMISSION PROPOSES INDUSTRIAL ACCELERATOR ACT TO STRENGTHEN INDUSTRY AND CREATE JOBS IN EUROPE

The European Commission has proposed the passing of the Industrial Accelerator Act (IAA) to strengthen Europe’s industrial base, increase demand for low-carbon and “Made in EU” technologies, and support job creation and economic growth.

The proposal would introduce preferences for European-made and low-carbon products in public procurement and public support schemes, particularly in strategic sectors such as steel, cement, aluminium, automotives, and net-zero technologies, i.e. batteries, solar, wind, and heat pumps. The aim is to boost EU manufacturing, reduce dependence on foreign suppliers, and increase the manufacturing sector’s share of EU GDP to 20% by 2035.

The proposal also includes measures to simplify permitting for industrial projects through a single digital system, to encourage industrial clusters for clean manufacturing, and to set conditions for foreign investments above EUR 100 million in strategic sectors in order to ensure they create jobs, transfer technology and add value within the EU.

Recent reports indicate that the previously proposed inclusion of an EU label for steel emissions has been removed from the latest draft of the Industrial Accelerator Act. The label was intended to indicate the carbon intensity of steel products and help buyers identify low-carbon steel. According to the draft reviewed by Reuters, the European Commission removed the measure due to concerns about creating additional administrative burdens and because a broader EU product-labelling framework is already under development.

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