ESG Focus: UK/EU/International ESG Regulation Monthly Round-Up – November 2025

November brought a dense slate of developments across the UK, EU and international ESG landscape. In the UK, policymakers advanced work on transition finance and the long-anticipated framework to regulate ESG ratings. In the EU, momentum picked up on a broad simplification package, alongside updates to the EU Deforestation Regulation (EUDR) and the Sustainable Finance Disclosure Regulation (SFDR). Beyond Europe, California adjusted timelines for climate-related financial risk disclosures, while market standards matured further with updates from the Taskforce on Nature-related Financial Disclosures (TNFD) and the International Capital Market Association (ICMA), including a new label for Climate Transition Bonds.

United Kingdom: Transition finance and ESG ratings move forward

The UK’s Transition Finance Council signalled continued progress on tools to channel capital toward credible decarbonisation pathways. The focus remains on helping companies—particularly in hard-to-abate sectors—set robust transition plans and access financing that aligns with economy-wide net zero goals. This dovetails with the country’s broader push to make transition plans decision-useful for lenders and investors.

In parallel, the UK took further steps toward regulating ESG ratings. Greater transparency around methodologies, data sources and governance is central to the agenda, aiming to curb greenwashing risks and improve comparability across providers. For investors and corporates, clearer rules should support better pricing of sustainability risks and opportunities, reduce confusion in the market, and provide a more stable foundation for sustainable investment strategies.

European Union: Simplification, EUDR and SFDR under the spotlight

EU institutions advanced an omnibus simplification package intended to streamline elements of the sustainability reporting rulebook and reduce unnecessary complexity, while preserving decision-useful information for the market. This effort reflects widespread feedback calling for clarity, proportionality and coherence across the EU’s sustainable finance framework.

On the EUDR, policymakers signalled that negotiations among EU bodies will intensify in the coming weeks. The goal is to reach a final agreement well before the regulation becomes applicable on 30 December 2025. The EUDR seeks to ensure certain commodities and products entering or leaving the EU market are deforestation-free and produced in compliance with local laws. As the timeline tightens, companies face a short runway to prepare due diligence systems, traceability protocols and supplier engagement strategies.

Meanwhile, work also continued on the SFDR. Discussions center on clarifying requirements and improving usability for both financial market participants and end-investors. Market participants are watching closely for adjustments that could refine product categorisation, streamline disclosures and reduce interpretative uncertainty.

United States and beyond: California delays and global guidance

In the United States, California’s climate-related financial risk disclosure timelines shifted, with requirements no longer due on 1 January. The change eases immediate pressure on companies preparing to map and report on climate risks and emissions, though momentum toward enhanced climate transparency remains strong. Firms should use the extra time to strengthen governance, data controls and scenario analysis so that future filings are both reliable and decision-useful.

On the nature front, the TNFD continued to refine guidance and tools that help organisations assess dependencies and impacts on nature, integrate nature-related risks and opportunities into governance and strategy, and improve disclosure practices. As biodiversity risk becomes financially material across sectors, these resources are gaining traction with companies and investors seeking to align climate and nature strategies.

Transition finance deepens: ICMA’s Climate Transition Bond label

On 6 November 2025, ICMA unveiled issuance-level guidance that complements entity-level practices recommended in its Climate Transition Finance Handbook. The new Climate Transition Bond Guidelines introduce a standalone “Climate Transition Bond” label, designed to support the financing or refinancing of projects critical to achieving the goals of the Paris Agreement, including those within high-emitting sectors and activities.

The guidelines aim to bring additional rigor and consistency to the market by clarifying expectations for issuers on use of proceeds, transition planning, interim targets, and disclosure. For investors, the label is intended to enhance credibility and comparability, helping capital flow to projects that deliver measurable decarbonisation outcomes. For issuers—particularly those navigating complex transition pathways—the framework offers a clearer route to access sustainable bond markets while evidencing alignment with science-based trajectories.

Why these moves matter

• Market integrity: UK regulation of ESG ratings and ICMA’s new bond label both seek to improve transparency, reduce greenwashing risks and bolster investor confidence.
• Implementation timelines: The EU’s push to finalise EUDR ahead of its December 2025 applicability date underscores the urgency for companies to upgrade supply chain due diligence and traceability.
• Reporting clarity: EU efforts to simplify sustainability reporting and evolving SFDR discussions point toward a more usable, proportionate disclosure ecosystem.
• Nature risk integration: TNFD’s expanding toolkit signals growing recognition that nature and climate are intertwined financial issues.
• Regulatory pacing: California’s revised timetable offers companies time to improve data quality and governance—crucial for credible climate-risk reporting.

What to watch next

• Impending EU negotiations on EUDR and how final texts shape due diligence scope, traceability expectations and enforcement.
• Further UK steps on ESG ratings supervision and how this interfaces with international efforts to harmonise ratings practices.
• Potential updates to SFDR that could reshape product design, labelling and investor communications.
• Market uptake of the Climate Transition Bond label and its influence on financing for high-emitting sectors.
• Clarification of California’s compliance schedules and guidance, and how companies align state requirements with broader climate reporting frameworks.

As 2025 draws to a close, the contours of global sustainable finance are becoming clearer: stronger market standards, more targeted regulatory oversight and a sharper focus on credible transition pathways. The coming months will be decisive for implementation—both for issuers seeking capital and for investors aiming to allocate it with confidence.