Damian Regan

Sustainability Services Leader

Middle East

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Damian Regan

Damian has over 25 years’ experience in sustainability reporting and assurance, shaping global standards including the Climate Bond Standard, Green Bond assurance, and ICV certification. He has advised asset managers and private equity firms on responsible investment and ESG compliance.

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Table of Contents

• What are the ISSB standards?
• Who is required to report?
• What are the assurance requirements?
• What to include in the Sustainability Report?
• How Anthesis can help

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The Middle East is joining other global markets in driving greater transparency on climate risks and opportunities by introducing mandatory sustainability and climate reporting aligned with the International Sustainability Standards Board (ISSB). These requirements are being phased in across jurisdictions such as the UAE, Oman, Jordan, Qatar, and Kuwait, while Saudi Arabia and Bahrain are encouraging adoption through regulatory guidance.

This signals a clear shift from voluntary ESG disclosures toward regulated, investor-grade climate reporting, aligning corporate practices with global standards and strengthening market resilience. Whether your organisation operates in a jurisdiction with mandatory timelines, or is voluntarily aligning to meet investor and supply chain expectations, the ISSB standards will likely affect you.

This article answers the most common questions on how to prepare for mandatory climate reporting in the Middle East, helping you understand the requirements and take your next steps toward ISSB-aligned disclosures.

What are the ISSB standards for climate and sustainability reporting?

In 2023, the ISSB, established by the IFRS Foundation, published two sustainability disclosure standards to create a global baseline for transparent and comparable sustainability reporting:

• IFRS S1 – General Requirements: Sustainability-related disclosures covering governance, strategy, risk management, and metrics/targets.
• IFRS S2 – Climate-related Disclosures: Specific requirements for climate risk and opportunity disclosures, building on the Task Force on Climate-related Financial Disclosures (TCFD).

The four core disclosure areas remain:

• Governance – Board and management oversight of sustainability risks and opportunities.
• Strategy – How climate and sustainability considerations affect business models and financial planning.
• Risk Management – How risks are identified, assessed, and managed.
• Metrics and Targets – GHG emissions disclosure (Scopes 1, 2, and 3) and progress against sustainability performance goals.

Several Middle Eastern regulators are moving to adopt or align with these standards, reflecting a wider global push for consistent, decision-useful disclosures.

Who is required to report?

United Arab Emirates (UAE)

From May 2025, companies subject to Federal Decree-Law No. 11 must disclose climate-related risks and Scope 1–3 GHG emissions. Non-compliance carries penalties ranging from AED 50,000 to AED 2 million.

Oman

The Muscat Stock Exchange requires listed companies to publish ESG reports aligned with GRI and GCC metrics starting January 2025.

Jordan

The Amman Stock Exchange has mandated ISSB-aligned climate disclosures (IFRS S2) for its top 20 listed companies beginning January 2027, with fines for non-compliance.

Qatar

The Qatar Financial Centre has proposed ISSB-aligned reporting beginning January 2026, with phased guidance and transitional relief.

Kuwait

Premier Market-listed companies must disclose ESG information for FY2025, with the first reports due in June 2026.

Bahrain

The Central Bank of Bahrain requires banks to report in line with TCFD and ISSB guidance, though broader adoption remains voluntary.

Saudi Arabia

The Capital Market Authority and Tadawul encourage ESG disclosures, guided by Vision 2030. While not yet mandatory, alignment with ISSB and TCFD is strongly expected in the coming years.

Are there penalties for non-compliance?

Penalties vary by jurisdiction:

• UAE: Monetary fines for incomplete or inaccurate reporting.
• Jordan: Financial penalties for listed firms that fail to comply.
• Other GCC countries: Enforcement mechanisms are still being developed, but reputational risks, investor pressure, and reduced access to capital remain strong motivators for compliance.

What are the assurance requirements?

• UAE and Oman: Independent assurance of climate data is increasingly encouraged, particularly for Scope 1 and 2 emissions.
• Jordan and Qatar: External assurance requirements are expected as reporting frameworks mature.
• Regional trend: Limited assurance over Scope 1 and 2 GHG emissions is likely to become mandatory across GCC countries by the late 2020s.

Why is the Middle East implementing sustainability reporting?

The move reflects national strategies to diversify economies, attract foreign investment, and align with global climate commitments. Examples include:

• UAE Net Zero 2050 Strategy
• Saudi Arabia’s Vision 2030
• Oman Vision 2040
• Qatar National Environment and Climate Change Strategy

Mandatory sustainability reporting strengthens accountability, improves investor confidence, and accelerates the region’s transition toward a low-carbon economy.

What to include in the Sustainability Report

Companies will need to prepare annual sustainability reports structured around ISSB and TCFD pillars:

• Governance: Board oversight, management responsibilities, and integration into corporate governance.
• Strategy: Business resilience under climate scenarios, transition planning, and long-term financial implications.
• Risk Management: Processes for identifying and mitigating sustainability-related risks.
• Metrics and Targets:
  • Scope 1 and 2 emissions (mandatory across most jurisdictions)
  • Scope 3 emissions (phased in, especially for large or listed firms)
  • Industry-specific indicators (aligned with SASB metrics)
  • Climate targets and transition progress

Preparing for compliance with ISSB-aligned reporting

• Conduct a gap analysis against ISSB (IFRS S1/S2) requirements.
• Strengthen data systems to capture and verify GHG emissions, including Scope 3.
• Enhance governance capacity, ensuring board and executive accountability.
• Build cross-functional teams across finance, sustainability, and risk.
• Pilot scenario analysis to understand climate risks and resilience.
• Seek expert guidance and assurance to build credibility and readiness.

Benefits of ISSB-aligned reporting in the Middle East

• Global credibility: Alignment with international standards improves competitiveness and market access.
• Investor transparency: Provides decision-useful disclosures that attract capital and partnerships.
• Risk management: Embeds climate considerations into strategic planning.
• Operational efficiency: Improves data management and reporting processes.
• Stakeholder trust: Demonstrates accountability to regulators, customers, and communities.

Need support with climate or sustainability reporting in the Middle East?

As global climate and ESG experts, Anthesis supports organisations across the Middle East in preparing for ISSB-aligned disclosures. From gap analysis and data readiness to assurance and strategy, we help companies meet regulatory requirements, enhance resilience, and unlock opportunities in a low-carbon economy.

Zara Plummer

Principal Consultant

Lana Baker-Cowling

Senior Consultant

Table of Contents

• Leveraging the New Guidance
• Climate Ambition
• Climate Reporting
• Private Equity Concerns
• Impact on Financial Institutions
• Contact Us

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In July 2025, the Science Based Targets initiative (SBTi) released its updated Financial Institutions Net Zero (FINZ) guidance, marking a significant step forward for the sector and arriving just as early adopters of the previous guidance reach their 5-year target review horizon. The guidance also presents greater alignment with other frameworks, such as the Net Zero Investment Framework (NZIF).

In this article, we outline how and when companies should leverage this updated guidance for target setting, summarise the key points about the new standard’s requirements for climate ambition and reporting, and outline what this all means for financial institutions.

How and when to leverage the new guidance

Companies are encouraged to start applying the new guidance as soon as practicable, but a phase-in period has been proposed. Either the FINZ v1 or the FINZ v2 guidance may be used for companies looking to set targets until December 2026. SBTi suggests:

	How to Set Targets	Timing
Financial Institutions	Set near and long-term targets using FINZ v1; or set near-term targets only using FINZ v2.	Both versions can be used until at least December 2026.
Financial Institutions with Net-Zero Commitments	Set near and long-term targets using FINZ v1.	Within 24 months of FINZ publication.
Financial Institutions with Existing Near-Term Targets	Existing near-term targets remain valid. Revalidate near-term targets using FINZ v2; or set near and long-term targets using FINZ v1.	Both versions can be used until at least December 2026.

Redefining climate ambition

SBTi has redefined climate ambition in its FINZ guidance, with more stringent requirements on certain sectors, namely the fossil fuel, transport, industry, energy, and real-estate sectors. The latest guidance introduces the concept of portfolio segmentation – four segments are used to define target-setting requirements and climate ambition:

• Segment A: Fossil fuels (coal, oil, gas).
• Segment B: Transport (air, maritime, land); Industrial (steel, cement); Energy (power generation); Real estate (residential and commercial buildings); Forest, land and agriculture (FLAG).
• Segment C: Other sectors (not listed in segments A or B).
• Segment D: Subset of activities in emissions-intensive sectors and other sectors. This includes private equity, venture capital and private debt in non-fossil fuel sectors with <25% ownership or no board seat, as well as funds of funds.

SBTi’s updated guidance introduces clearer criteria for how financial institutions should treat different types of assets on their journey to net zero. Assets are now categorised as either “in transition” (shifting toward lower-carbon operations), “climate solutions” (assets that directly support decarbonisation, such as renewable energy), or already in a “net zero state”.

For “in transition” assets, the guidance includes an Implementation List of approved benchmarks and third-party methodologies that institutions can use. This expands options for demonstrating portfolio alignment, which previously were limited to either using the ITR methodology or having SBTi-validated targets.

Unlike earlier drafts of the guidance, the final version does not require financial institutions to demonstrate that their portfolio is making progress towards the targets they have set. Institutions must still report their own progress annually and renew targets at the end of each near-term cycle (typically five years). However, there is no requirement to show that portfolio companies are delivering on the targets they have set, as is required in NZIF. In practice, this means financial institutions can meet the standard by ensuring companies set targets, without being responsible for how quickly those companies achieve them.

Climate ambition requirements also depend on the location of assets – financial institutions with assets in developing economies have longer timelines to bring those holdings into alignment, recognising regional differences in transition pace.

As with previous guidance, SBTi mandates that companies make certain over-arching strategic commitments to align with climate goals. These have been expanded with the addition of a commitment to monitor and phase out deforestation and land conversion from the portfolio, as well as to conduct and publish a deforestation assessment by 2030. Requirements for ending new finance to fossil fuel assets and divesting from fossil-fuel related assets remain similar to those outlined in the near-term guidance and are in alignment with coal phase-out by 2030 for OECD countries and 2040 for the rest of the world. The guidance also makes clear that offsets or carbon credits cannot be used to meet near- or long-term decarbonisation targets. Only residual emissions at the point of net zero can be neutralised.

Increased climate reporting expectations

Alongside these ambition requirements, SBTi FINZ also raises expectations for climate reporting and transparency. This includes requirements to report:

• Scope 1 & 2 financed emissions for segments A, B, and C. This was previously only required where companies were setting portfolio coverage targets on an emissions coverage basis. Reporting requirements are stricter if targets are set based on the share of emissions covered rather than the share of assets. If setting portfolio coverage based on emissions coverage, investors must also include segment D activities in their financed emissions statement.
• Scope 3 financed emissions for automotive, coal, oil & gas, and real-estate assets, as these are deemed to be “high impact” sectors. From 2030, Scope 3 financed emissions must be included for all assets.
• Exposure to fossil fuel-related activities and related GHG impacts. This includes a new requirement to report a ratio of fossil fuel financing relative to renewable energy financing.

Addressing private equity concerns

During the consultation period, key concerns raised by private equity firms included the need to maintain the 24-month post-investment grace period for portfolio companies to be integrated into targets, as well as the looser requirements around minority investments (<25% ownership or no board seat). SBTi has honoured these concerns by classifying private equity, venture capital, and private debt of private corporates and SMEs in non-fossil fuel sectors with <25% ownership or no board seat as segment D, on which the least stringent requirements are placed. Segment D assets are only required to be included in near-term targets if the target coverage of segment A-C assets is <67%, but it must be phased in to targets from 2040.

What this means for financial institutions

The new FINZ guidance is currently in a period of transition and will take a while to be adopted more widely in the sector. The target-setting tools and associated documentation are not yet published, and there is a generous transition period to prepare key elements of new target-setting requirements, notably portfolio GHG accounting.

The guidance provides increased flexibility in defining climate alignment targets, which is intended to make internal implementation more straightforward. However, this flexibility may also lead to slight discrepancies in target ambition, as it is not always obvious from the standard SBTi target language how ambitious a target really is.

While it will be a few months before the first FINZ-aligned targets start to be validated and published, Anthesis is already supporting clients in navigating the new guidance and the implications for their businesses. The practice of setting SBTs enables companies get on track and future-proof growth, and is one of the best practices for publicly communicating a company’s commitment to limit the effects of climate change. At Anthesis, we view the process of setting Science Based Targets not merely as a checkbox but as a transformative business journey.

Table of contents

• Access to Finance Incentives
• Unmet Demand
• Regulatory Harmonisation
• How Anthesis Can Help

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Emerging markets – nations that are progressing through rapid growth and industrialisation – represent increasingly attractive opportunities for corporate global expansion. At the same time, governments, financial institutions, and consumers across such markets in Latin America, Africa, and Asia are driving a shift toward more sustainable economic models to accelerate growth, respond to growing investor interest, and align with global regulatory developments. Credible environmental, social, and governance (ESG) strategies can therefore be powerful enablers for companies looking to enter these new markets and to grow their business.

This article will explore three ESG-related opportunities in emerging markets:

1. Access to ESG-linked financial instruments
2. Unmet demand for sustainable products and services
3. Regulatory harmonisation

We’ll also examine how companies with robust ESG strategies may be better positioned to successfully enter these markets.

Greater access to sustainable finance incentives

Governments and financial institutions in emerging markets have recently introduced a range of sustainability-linked financial instruments to attract investment and incentivise companies to pursue ambitious sustainability objectives. Among these is the fast-growing sector of sustainability-linked loans (SLLs), offering preferential terms such as potential interest rate reductions or increases, depending on the borrowers’ performance against predefined ESG performance targets (e.g., emissions reduction or gender equity).

The market for SLLs in emerging markets has expanded significantly, growing by nearly 60% between 2017 and 2021, and the adoption of SLLs is expected to continue accelerating, with the Asia-Pacific market leading at a projected compound annual growth rate (CAGR) of 27.8% through 2033. This growth is fueled by heightened awareness of climate risks, expanding public regulations on sustainable finance, and increasing technical assistance and investment from Development Finance Institutions (DFIs).

Notable SLL examples include the International Finance Corporation (IFC)’s $85 million loan to Precious Shipping Limited (PSL) in Thailand, tied to freshwater-use reduction targets for its vessels, and a $30 million loan to the Izmir Water and Sewerage Administration (IZSU) in Turkey, linked to a gender equity target of hiring at least 300 women in industries in which they are underrepresented. Similar financing arrangements have also been rolled out by multi-lateral development banks such as the African Development Bank and the Asian Development Bank.

Companies with robust ESG strategies supported by clear KPIs and measurable sustainability performance targets are best positioned to secure SLLs, as they effectively fulfill the eligibility requirements set by issuers. These strategies not only demonstrate alignment between business and sustainability objectives but also reflect strong internal performance management and mature performance relative to peers. This strategic positioning also supports market entry in regions where sustainable development is a national priority.

Unmet demand for sustainable products

Consumer preferences have long played a pivotal role in emphasising the business value of ESG, particularly in regions like the EU and North America. Recent research indicates that the demand for sustainable products is similarly rising in other parts of the world, especially in emerging markets across Asia, Latin America, and Africa. Consumer segments such as “zero-wasters” are now actively seeking sustainable product alternatives in these regions, signaling a shift toward more conscious consumption.

Additionally, another report found that over 80% of survey respondents in emerging markets indicated they care about the sustainability of products such as leisure travel, laptop computers, and apparel. Companies such as Kärcher are recognising this trend and strategically aligning their business expansion to respond, investing in the growth of sustainable and efficient cleaning technologies and addressing the growing demand for “green cleaning” in countries such as India.

Presently, this growing consumer demand in emerging markets remains unmet, as barriers such as unclear sustainability labelling still deter purchasing behavior. Companies that can identify and address these challenges are well-positioned for growth. For companies who do not yet have clearly articulated products or services related to sustainability, the development of an ESG strategy can help focus effort and investment into product innovation related to ESG that aligns with a company’s values, core competencies, and responds to evolving consumer expectations.

Regulatory harmonisation

Driven by rising investor and trading partner expectations for transparency, country-level ESG regulations in emerging markets have expanded and aligned with leading global frameworks and standards. For example, Brazil’s adoption of the ISSB standards integrates key elements from both the TCFD and SASB, signaling a shift toward internationally harmonised reporting. Similarly, Rwanda’s green taxonomy is deliberately structured to align with the TCFD and GRI frameworks, ensuring consistency in climate-related and broader sustainability disclosures. Aligning with global ESG frameworks is also expected to accelerate in emerging markets as global investors and companies continue to advocate for streamlined standards to reduce reporting and compliance complexity.

Companies with robust ESG strategies are well-positioned to recognise and respond to these shifts. By proactively aligning with foundational frameworks such as ISSB, TCFD, SASB, and GRI, they can embed regulatory readiness into their operations, reducing the cost of compliance that is often tied with expanding into new markets. This forward-thinking approach not only facilitates smoother market entry but also enables companies to meet growing expectations for transparency and performance measurement from regulators, investors, and other key stakeholders. Ultimately, a strong ESG strategy equips businesses to navigate multiple stakeholder demands simultaneously, enhancing trust, reducing regulatory risk, and creating competitive advantage in both domestic and international markets.

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While increasing political and economic shocks have caused markets in North America and Europe to retreat and slow down on their sustainability agendas, some other regions such as Asia and Latin America are viewing these shocks as opportunities to accelerate their sustainability efforts. A recent survey revealed regional differences in attitudes toward sustainability, as 91% and 71% of respondents in North America and Europe, respectively, reported backlash against the sustainability agenda in their countries, while only 38% in Asia reported similar sentiments. Coupled with the continued development of mature financing instruments, unmet consumer demand, and increasing regulatory harmonisation, ESG has evolved beyond a resilience strategy and into an opportunity for business growth and value.

How Anthesis can help

At Anthesis, we specialise in guiding organisations to develop and implement robust ESG strategies or refresh existing strategies to keep pace with change. Our team of global experts can support your company to develop ESG programs and strategies that support entry into emerging markets through regulatory horizon scans, mandatory reporting readiness, materiality assessments, and stakeholder engagement. We are experts at identifying and mitigating ESG-related risks, uncovering opportunities for innovation through ESG, and making the business case for sustainability.

For more information about how our ESG advisory services can support expansion into emerging markets, please get in touch using the form below.

Caroline Gaudreault

Director

Table of Contents

• What are Avoided Emissions?
• Reporting Frameworks
• Who Benefits?
• How Anthesis Can Help
• Contact Us

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In the race to limit global warming to 1.5°C, businesses are under increasing pressure to reduce their greenhouse gas (GHG) emissions. But what if companies could go beyond just shrinking their carbon footprints and actually become part of the climate solution?

Traditional GHG inventories focus solely on the emissions a company causes through its operations and value chain, but they may overlook the positive climate impact of the solutions a company provides. Reporting avoided emissions fills this gap by capturing how a company’s products or services help reduce emissions in society compared to a reference scenario. This enables organisations to demonstrate their contribution to global decarbonisation, prioritise high-impact innovations, and provide a forward-looking metric that reflects their role in enabling a low-carbon future – something GHG inventories alone cannot reveal.

What are avoided emissions?

There are different definitions for avoided emissions but one of the most used is from the World Business Council for Sustainable Development (WBCSD): “The estimated difference in full life cycle GHG emissions that result from a scenario with a solution in place, compared to a reference scenario without the solution when reference scenario emissions are higher” and where the reduction needs to occur in another actors’ direct emissions.

Note that, in contrast, the GHG Protocol currently does not require that emissions reductions are in another party’s direct emissions. Solutions that can generate avoided emissions can be classified in intermediary solutions (or enabling solutions) and end-use solutions.

Accounting approaches for GHG inventories and avoided emissions are fundamentally different. A corporate GHG inventory contains data on the historical GHG emissions of a company’s value chain (Scope 1, Scope 2 and Scope 3 emissions using inventory accounting). Avoided emissions, on the other hand, are calculated as the difference between two scenarios.

In some cases, avoided emissions will overlap with a company’s scope 3 emissions. For instance, a company that introduces a product that is more efficient in the use phase will see a reduction in its scope 3 – category 10 (use of sold products) emissions, but could also claim the difference between the life cycle emissions of the two generations of products as avoided emissions.

Frameworks for credible reporting

To ensure integrity and avoid greenwashing, there are three main guidance documents for accounting and reporting avoided emissions:

• Guidance on Avoided Emissions – Helping business drive innovations and scale solutions toward Net Zero (WBCSD 2025);
• Avoided Emissions & Climate Investing: A Guide for Investors and Businesses (WBCSD 2025); and
• Estimating and Reporting the Comparative Emissions Impacts of Products (The GHG Protocol 2019).

To measure avoided emissions, the GHG Protocol offers a flexible, product-level comparative framework that is based on life cycle assessment (LCA). In contrast, WBCSD proposes a more comprehensive step-by-step calculation framework.  A company should report avoided emissions only under a certain set of criteria defined by the GHG Protocol and WBCSD:

1. Climate Action Credibility: The company must have a comprehensive GHG inventory and a science-based climate strategy.
2. Climate Science Alignment: The solution must align with 1.5°C pathways.
3. Contribution Legitimacy: The solution must have a direct and significant decarbonising impact.

In all cases, avoided emissions must be reported separately from a company’s carbon footprint and cannot be used to claim carbon neutrality. Transparency is key: companies must disclose methodology, third-party verification, overlaps with and any potential rebound, and side effects.

Who benefits from reporting on avoided emissions?

Reporting avoided emissions is most useful to capture positive GHG impacts that are not already captured in a company’s GHG inventory, especially when a company will report higher emissions in their Scope 1 emissions to provide solutions that reduce another party’s direct emissions.

Many companies that report their corporate GHG inventories do so because their operations inherently produce emissions – often as a result of manufacturing, transporting, or selling goods that fulfill a specific function in the global economy. However, there is another category of companies whose primary role is to enable the functioning and transformation of that economy. These are the recyclers, waste management firms, next-generation materials startups, clean tech innovators, digital optimization platforms, and infrastructure providers for renewable energy and electrification. While their own emissions may appear modest or even misleadingly high under traditional Scope 1, 2, and 3 accounting, their true climate value lies in the emissions they help others avoid. These enablers are the backbone of decarbonisation, yet their contributions are often invisible in standard GHG inventories.

Another case where reporting avoided emissions becomes interesting is in cases where a company would see an increase in its reported GHG emissions, despite the net effect of a given change being to reduce total GHG emissions. This can occur, for example, by increasing product longevity. This is where avoided emissions become essential—not just as a metric, but as a recognition of their catalytic role in accelerating the net zero transition.

How Anthesis can help

Anthesis can support organisations in reporting and leveraging avoided emissions by integrating this forward-looking metric into broader decarbonisation and net zero strategies. Recognising that traditional GHG inventories do not capture the positive climate impact of low-carbon solutions, Anthesis can help clients quantify and communicate how their products, services, or projects reduce emissions in society compared to conventional alternatives.

Through tailored consulting, life cycle assessments, and scenario modeling, Anthesis can enable companies to identify high-impact opportunities, validate claims with scientific rigor, and align with frameworks such as the WBCSD guidance. This empowers businesses not only to demonstrate their contribution to global decarbonisation but also to drive innovation, attract investment, and differentiate themselves in a climate-conscious market.

Barbara Chen-Gore

Principal Consultant

Kylee Chang

Principal Consultant

Table of contents

• Reasons for SBTi-Validated Targets
• Reasons against SBTi-Validated Targets
• Other considerations
• The bottom line
• How Anthesis Can Help
• Contact us

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The Science Based Targets initiative’s (SBTi) recent release of the version 2.0 draft of the Corporate Net-Zero Standard adds another layer to the ever-growing stack of sustainability standards, frameworks, and climate nuances that practitioners must navigate.

The rapid and extensive changes transforming the sustainability landscape—including evolving regulations and increasingly complex reporting standards—pose significant challenges, even for the most experienced sustainability professionals striving to uphold their sustainability commitments while maintaining strategic clarity.

Still, SBTi remains a top-tier standard that drives innovation and climate impact reduction within a business while bolstering brand image.

In this article, we explore both the benefits and hurdles of setting SBTi-validated targets to help you decide if they are a strategic fit for your business.

Reasons for SBTi-validated targets

Let’s start with the good. SBTi is still one of the best, if not the best, and most robust emission reduction target-setting standards available for the business sector. Other frameworks, such as Business Ambition for 1.5°C and the Race to Zero campaign, or ISO Net Zero and the Oxford Principles, are either signatory-based or represent a collection of best practices, respectively. They do not serve the function of setting discrete, measurable, time-bound corporate emission reduction targets. SBTi’s standards are one of the only frameworks that serve this niche.  

Key benefits of setting SBTi-validated targets include:

1. Recognised, standardised, comparable targets supported by external validation
2. Reduced target-setting loopholes
3. Holding the line internally
4. Supported by science and industry-specific research
5. Validity across raters and rankers
6. Specific benefits for small and medium-sized enterprises
7. Keeping companies accountable

1. Recognised, standardised, comparable targets supported by external validation

When you set an SBTi-validated target, your customers, peers, investors, and other stakeholders have instant assurance that your target is robust and aligned with the latest climate science and your company has gone the extra step of obtaining SBTi’s seal of approval. Further, by joining the group of 8,500+ companies that have already set SBTi-validated targets, you have the ability to quickly assess how your progress stacks up against your competitors and peers in a standardised and comparable way.

2. Reduced target-setting loopholes

The SBTi framework helps prevent companies from obfuscating emissions growth or focusing on less materially significant emissions sources when setting targets. Specifically, the forthcoming version 2.0 draft standard, although more complex, is purposefully designed to promote a “right action” approach, ensuring that target-setting drives meaningful and high-impact climate outcomes.

3. Holding the line

Choosing to set SBTi-validated targets means that your target ambition (i.e., how much you must reduce and by when) is firmly grounded in the latest scientific consensus.  A common challenge for sustainability practitioners is the progressive dilution of climate commitments during internal negotiations with operational and executive teams. Often, without a starting point or line in the sand, targets are framed solely around what is achievable, rather than what is also aligned with science. Pursuing an SBTi-validated target helps sustainability leaders set this boundary internally and reduce complexity during target implementation.

4. Supported by science and industry-specific research

On a global scale, the science is clear: we must reduce emissions 50% by 2030 and achieve net-zero by 2050 to preserve a habitable planet. Embedded within those overarching targets, however, lie numerous important nuances that shape how we approach climate action on the ground. SBTi has undertaken the laborious work of translating complex climate science into clearly defined standards that account for nuances such as variations in sector-specific approaches, the calibrated role of carbon offsets, and acceptable base years for target setting.  Below, we’ve explored how some of these nuances play out within SBTi’s standards.

• Unique Sectoral Approaches: As an example, the energy sector plays an outsized role in driving the climate transition. Achieving net-zero globally necessitates that the energy sector decarbonise more rapidly than other sectors, thereby serving as a springboard for other sectors to decarbonise.  Likewise, the forestry, land, and agriculture (FLAG) sector holds a distinct responsibility in carbon sequestration and atmospheric regulation. Consequently, target-setting methodologies for the energy sector differ significantly from those applied to the FLAG sector, reflecting their respective climate impacts. Choosing to set a SBTi-validated target ensures that your emission reduction goals are tailored specifically to your business context and industry.
• Carbon Offsets: Similarly, carbon offsets carry specific nuances in how they can be applied within an emission reduction target. Internally, organisations often face significant challenges in achieving consensus on the appropriate role of carbon offsets within their sustainability programs. By choosing to set SBTi-validated targets, companies align their positions with the most recent scientific guidance and best practices regarding the role of carbon offsets.

In sum, SBTi has translated complex climate science into a tangible, explicit standard that incorporates critical nuances, effectively distilling scientific insights into practical frameworks for guiding credible climate action. This means organisations don’t need expert-level climate knowledge to set credible, science-aligned emissions reduction targets.

5. Validity across raters and rankers

An SBTi-validated target often enhances an organisation’s performance across leading disclosure and rating platforms, including CDP, DJSI, and Ecovadis. These programs generally award higher scores to companies that adopt emission reduction targets validated by an independent third party and standardised to a recognised science-based framework, compared to those with unvalidated or internally defined targets. Consequently, setting SBTi-validated targets strengthens credibility and comparability in sustainability reporting and benchmarking.

6. Specific benefits for small and medium-sized enterprises (SMEs)

If you qualify as an SME, there is a reduced fee and reduced complexity in target-setting with SBTi. We strongly recommend SMEs obtain SBTi validation as there is a low barrier to entry to securing the highest seal of approval.

7. Keeping companies accountable to their commitments

With voluntary requirements to disclose emissions progress annually and a database that tracks and denotes current target validation status (as well as companies that have withdrawn their commitments), SBTi validation can help companies stay on track.

Reasons against SBTi validation

Taking all the benefits into account, there may still be some challenges your business may wish to consider before pursuing SBTi-validated targets.

Common hurdles to setting SBTi-validated targets include:

1. Cost to commit
2. Cost to maintain
3. Updates and stricter requirements
4. Regulatory uncertainty

1. Cost to commit 

Securing official SBTi validation typically involves a fee ranging from approximately $10,000 to $25,000 (USD), depending on whether you are submitting near-term targets alone or alongside net-zero targets. Additional expenses frequently arise from engaging external consultants to interpret SBTi standards, ensure full compliance with rigorous criteria, and navigate the diverse methodologies, timelines, and sector-specific requirements integral to an SBTi-aligned target. Depending on the level of internal capacity versus consultant involvement—which can range from light advisory support to comprehensive end-to-end guidance—total costs often range from $15,000 up to $250,000, and are dependent on various factors include company size and unique needs.

2. Cost to maintain

After SBTi validation, ongoing annual maintenance is required. Beyond regularly updating your greenhouse gas inventory and disclosing your progress, which is standard practice for most established sustainability programs, you must also manage base year adjustments. This includes accounting for changes in methodology, mergers, acquisitions, or divestitures that may affect your emissions baseline. For companies with two or more years of GHG Protocol-aligned inventories, this process is typically familiar. However, organisations undergoing frequent structural changes or anticipating significant methodological shifts should be prepared for additional base year maintenance efforts. Furthermore, companies wishing to maintain an active SBT must also conduct a mandatory five-year review to revalidate their target. While reviewing targets regularly is surely good practice, the burden and cost of additional validation could be another potential obstacle.

3. Upping the ante

SBTi regularly updates its standards, requirements, and validation process to enhance rigor and reflect the latest global emissions reduction progress, as well as insights gained from corporate climate action. For example, in July 2022, SBTi discontinued acceptance of Scope 1 and 2 targets aligned with well-below 2°C pathways in order to accelerate decarbonisation efforts and address the stagnation in global emissions reductions. The draft version 2.0 net-zero standard further rules out some target-setting practices that were previously allowed. These changes and shifts can make staying up-to-date and maintaining the business case for SBTi challenging.

4. Regulatory uncertainty

Regulatory uncertainty around disclosing emission reduction targets has become a heightened concern of many organisations in recent years. While most current regulations focus on emissions and climate risk disclosure, some emerging laws – such as New York’s Fashion Sustainability and Social Accountability Act and earlier drafts of the SEC’s climate disclosure rule – also involve the disclosure of emission reduction targets.

Meanwhile, greenwashing lawsuits are increasing, especially in the realm of consumer protection. High-profile lawsuits against companies like H&M, JBS, and Volkswagen underscore legal risks tied to false or misleading environmental claims that misrepresent a company’s or product’s sustainability impact. It’s important to note, however, that there is little evidence to suggest that companies face legal risks solely for voluntarily committing to reduce their emissions –the vast majority of lawsuits in this space pertain to consumer protection and green claims.

Regulatory developments remain in flux, exemplified by the SEC’s March 2025 decision to end its defense of climate disclosure rules, which has left federal climate disclosure regulation in legal limbo, increasing uncertainty for organisations navigating this space.

Other considerations

When designing and implementing sustainability programs, it is essential to consider both the broader environmental context and the evolving expectations for corporate ambition. The following points highlight key factors that can influence the effectiveness and integrity of target setting beyond SBTi-validated targets.  

• Planetary Boundaries: The SBTi focuses on greenhouse gas emissions and atmospheric impacts, not on other critical planetary boundaries like freshwater use, land-system change, or biodiversity loss. Several of these boundaries have already been surpassed or are approaching critical tipping points. When setting emission targets, it’s critical to avoid shifting environmental burdens from one area to another within their decarbonisation roadmaps.
• Ambition Beyond Minimums: The SBTi sets a 42% reduction target for Scope 1 and 2 emissions by 2030, but the Paris Agreement calls for a more aggressive 50% reduction. Many countries have missed their Nationally Determined Contributions, highlighting the urgency for faster cuts. Companies should strive to exceed SBTi targets—especially for emissions directly under their control—to meaningfully contribute to achieving global net-zero goals.

The bottom line

Deciding to pursue SBTi-validated targets is a key step in a company’s sustainability strategy. It’s important to assess how the standard aligns with your business goals and where it may pose limitations. Grounded in science, the SBTi offers a credible, consistent framework aligned with global climate goals. However, the financial costs, ongoing effort, and need to keep up with evolving criteria require careful evaluation of your organisation’s capacity and readiness.

Ultimately, companies must balance the value of external recognition against their internal priorities and capacity. If your company is equipped with the resources and ambition to lead on climate action, SBTi validation can help demonstrate credibility and drive meaningful progress. Alternatively, beginning with science-aligned internal goals and preparing for future validation may be more practical. Target-setting is a driving force for progress rather than a task to complete—start where you can, stay informed, and continuously evaluate the tools and frameworks that best support your sustainability journey.

Focus on building a foundation with complete, accurate GHG emissions data, realistic reduction plans, team collaboration, and systems designed to evolve with future demands. In essence, choose the path that moves your organisation forward—always remembering that starting early amplifies your impact on global climate efforts and fortifies your company’s long-term resilience.

How Anthesis can help

Anthesis supports companies pursuing or renewing SBTi-validated targets, ensuring these targets remain credible, ambitious, and aligned with the latest climate science. Through this process, we help mitigate climate risks and prepare your business for future relevance and resilience in a net-zero economy.

We also assist organisations throughout their decarbonisation journeys, offering comprehensive support across inventory development, target-setting, revalidation, and implementation. Additionally, we guide companies in investing in high-quality carbon removal projects.

For companies not currently pursuing SBTi-validated targets, we provide support to achieve internal and strategic alignment on alternative climate goals, ensuring you have the data, roadmaps, and resources needed to take actionable next steps.

There are numerous complementary strategies that effectively address a company’s climate impact and help mitigate climate and nature risk, both alongside and beyond science-based targets.  These include renewable energy strategies, product life cycle assessment and the implementation of circular business models, supplier engagement and supply chain due diligence, and enhanced nature, biodiversity, and water stewardship.

Download the Cost of Silence Report

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How many times have we heard it? That sustainability initiatives are being deprioritised – pushed down the agenda by competing demands and persistent doubt over their financial return.

Now, with our new report, The Cost of Silence, we finally have the data to respond decisively. Based on three years of analysis across 500 companies and 16 sectors, this research shows that environmental action isn’t a reputational luxury – it’s a driver of commercial performance.

Our data shows a clear correlation between environmental action and business performance:

• Companies with strong environmental performance see up to 6% higher EBITDA than their peers
• Up to 31% of the reputational advantage held by market leaders comes down to how they are perceived on sustainability
• And yet, 79% of companies are still risking that advantage, either by overstating their efforts or staying silent altogether

A 6% uplift in earnings is not a matter of ideology – it’s a strategic priority; therefore, the choice to remain silent can no longer be considered a neutral decision. Sustainability is a lever for financial growth and a cornerstone of reputation. This report gives business leaders the evidence they need to act boldly and speak with confidence.

This report doesn’t just quantify impact. It shows where to focus, what to say, and how to avoid the risks of greenwashing or greenhushing. For anyone responsible for sustainability, reputation, growth, or all three, this is essential reading.

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Speak with our experts and discover how we can support you in creating impactful, purpose-driven communications for your brand.

Contents

• Europe
• North America
• Asia-Pacific
• Africa
• Central America
• South America
• Middle East
• Global collaboration
• How Anthesis can support
• Contact us

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The standards released by the International Sustainability Standards Board (ISSB) in June 2023 are rapidly gaining traction across the world, but the pace and approach of adoption have been significantly varied. The standards are comprised of IFRS S1 on general sustainability-related financial disclosures, and IFRS S2 on climate-related disclosures, which we have unpacked in a previous article. These standards will provide investors and other stakeholders with the comparable, decision-useful information they need to assess the financial impacts of sustainability and climate change on a company, and the adequateness of their governance and strategies to manage sustainability-related risks and opportunities.

In this article, we dive into how different jurisdictions are approaching and implementing the ISSB with our experts from around the world sharing their insights on key developments.

Europe

The European Union

The primary and most comprehensive sustainability disclosure framework in the EU is the Corporate Sustainability Reporting Directive (CSRD), under which the European Financial Reporting Advisory Group (EFRAG) has developed the European Sustainability Reporting Standards (ESRS). These standards cover the full range of sustainability-related issues and are intended to standardise sustainability reporting within the EU.

The EU has adopted European Sustainability Reporting Standards (ESRS) to comply with CSRD. Both The ISSB and the European Commission have highlighted the high degree of alignment between ESRS climate disclosure requirements and the ISSB standards.

EFRAG has expressed strong support for the ISSB and its standards, and highlights that the ESRS incorporate ISSB disclosures under a thorough interoperability approach. Entities preparing sustainability reports in compliance with the ESRS on climate change will therefore be meeting the requirements of the ISSB standards to a large extent, thus preventing the need for separate reporting under the ISSB standards.

The ESRS and IFRS S1 and S2 have been developed in parallel, ensuring a high degree of alignment between both sets of standards. EFRAG and the ISSB have recently released an interoperability map that illustrates this alignment.

Whilst in the EU, the CSRD remains the key ESG mandatory reporting framework, the commitment to interoperability from both the IFRS and EFRAG is crucial; especially for those companies headquartered outside the EU, but with significant operations within. We’re finally seeing more clarity on how the needs of both frameworks can be met, for example in materiality assessment and stakeholder engagement.

Chris Shaw, Technical Director, Anthesis EMEA

The United Kingdom

On 25th June 2025, the UK Government announced the launch of three public consultations aimed at strengthening the UK’s sustainability reporting framework. These consultations cover the following key areas: 

1. Adoption of International Sustainability Standards 
   The UK is proposing to adopt the International Sustainability Standards Board (ISSB) standards through the development of UK Sustainability Reporting Standards (UK SRS). The UK SRS will establish a consistent baseline for sustainability disclosures, closely aligned with global best practices. Feedback is sought on adopting these standards with minimal UK-specific modifications. 

2. Mandatory Climate Transition Plans 
   The government is consulting on introducing mandatory requirements for Climate Transition Plans, ensuring organisations clearly articulate their strategies for aligning with climate goals. 

3. Regulatory Oversight of Sustainability Assurance Providers 
   A new framework is being proposed to introduce regulatory oversight for sustainability assurance providers, enhancing trust and accountability in sustainability reporting. 

These consultations are a key step in the UK’s ambition to build a world-leading regulatory framework for sustainable finance, one that promotes transparency, accountability, and sustainable economic growth. 
All three consultations are open for comment until 17th September 2025. We strongly encourage UK businesses and stakeholders to engage with these consultations and provide their input to help shape the future of sustainability reporting in the UK. 

North America

The United States of America

The US Securities and Exchange Commission (SEC) approved its own climate disclosure rulemaking in March 2024. The general disclosures mandated through this regulation are broadly aligned with the TCFD framework. In the final rule, the SEC emphasises disclosure of only those climate-related risks that have been found to be potentially material to the company as well as Scope 1 and 2 GHG emissions only if found to be material. Companies subject to the SEC’s rule will also be required to disclose the actual financial impacts from climate-related events and/or transition planning activities on their income statement and balance sheet for the reporting period, subject to a reporting threshold.

Upon approval of the final rule, the SEC faced litigation from various groups stating concerns such as the SEC’s authority to implement such regulations and arguments that the ruling does not go far enough. In light of these legal challenges, the SEC put a pause on implementation of the rule until litigation is resolved, with hearing expected in 2025.

Canada

Canada has adopted ISSB standards by releasing its own set of standards, called the Canadian Sustainability Disclosure Standards (CSDS), which were developed based on ISSB Standards. These were released by the Canadian Sustainability Standards Board (CSSB) in December 2024, and comprise CSDS 1, i.e., General Requirements for Disclosure of Sustainability-related Financial Information, and CSDS 2, i.e., Climate-related Disclosures. Key modifications in relation to ISSB standards include an effective date from 1^st January 2025, a year later than the global ISSB baseline, a Scope 3 emissions relief of three years (until 1^st January 2028) before mandatory disclosure of Scope 3 emissions is required, and a transition relief of two years (until 1^st January 2027) before needing to report beyond climate-related disclosures.

We welcome the proposed Canadian Sustainability Disclosure Standards (CSDS). Aligning disclosures on sustainability-related information with the rest of the world is crucial for Canada’s long-term economic success. The CSDS represent a significant step forward in ensuring Canadian companies continue to act for crucial sustainability risks and opportunities while remaining competitive and attractive to global investors through standardised and consistent disclosures, echoing the actions recently taken by key trading partners such as the US and the EU.

Mari Desangles, Principal Consultant, and Bridie O'Boyle, Principal Consultant, Anthesis North America

Mexico

In January 2025, The Banking and Securities Commission of Mexico made several key amendments to Mexico’s security laws. The amendments require companies in Mexico to integrate sustainability information in their financial statements, in compliance with the ISSB Standards, IFRS S1 and S2.

Through these new changes, The Banking and Security Commission of Mexico has directed companies to report their sustainability information in their financial statements for 2025, reporting in 2026.

Additionally, from 2026 onwards, companies will be required to include assurance from an external auditor on their sustainability reports.

Asia-Pacific

The APAC region is leading the global response to the ISSB standards and implementation of these through the various national sustainability and climate reporting frameworks.

Australia

Australia is among the first countries to implement mandatory climate reporting standards aligned with the ISSB standards, through its climate-related financial disclosure regulation Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Act 2024, which was passed in September 2024.

The Australian Accounting Standards Board (AASB) issued its final climate reporting standards in December 2024, ahead of the 1^st January 2025 start date. The Australian Sustainability Reporting Standards (ASRS) comprise of AASB S1 – General Requirements for Disclosure of Sustainability-related Financial Information and AASB S2 – Climate-related Disclosures, align with ISSB standards with minimal variations, albeit only climate-related disclosures as a starting point.

Legislation to mandate the new ISSB-aligned reporting requirements was introduced to Parliament in March 2024. This includes a phased implementation timeline for mandatory reporting in the private sector over several years, with large listed and private entities meeting certain revenue, asset, employee, or emissions thresholds being required to publish mandatory climate-related disclosures. The legislation includes a phased approach to assurance requirements, with the expectation that companies will be required to obtain reasonable assurance over their full disclosure by FY2030. The Australian Auditing and Assurance Standards Board has been tasked with setting the roadmap to phase in assurance over a five-year period.

The Australian Government is separately developing mandatory climate-related disclosure requirements for the public sector based on the ASRS/ISSB tailored to Australian government entity circumstances, commencing for annual reports ending 30^th June 2025. The Australian government is also running a pilot disclosure program for some government entities to include a limited sub-set of climate-related disclosures their annual report ending 30^th June 2024.

As we move into this mandatory setting, companies will gain the most by focusing not only on compliance, but ultimately on the strategic benefits to gain deep business insights, improve resilience and performance and attract investment and other opportunities.

Amy Quinton, Principal Consultant, Anthesis Australia

Singapore

In September 2024, the Singapore Exchange Regulation (SGX RegCo) announced it would enhance its sustainability reporting by requiring companies to report on climate and to refer to ISSB standards as the guiding framework. It prescribed the general requirements and conceptual foundations of IFRS S1 insofar as they relate to the climate-related risks and opportunities, along with IFRS S2 requirements with the exception of the disclosure of Scope 3 GHG emissions. Reporting beyond climate-related disclosures is currently encouraged but not mandated. This is effective starting the 2025 financial year.

In practice, listed companies and large unlisted companies will be required to publish mandatory climate-related disclosures fully in line with IFRS S2 in a phased approach over FY2025 to FY2030. SRAC may review the implementation of the ISSB Standards for broader sustainability-related risks and opportunities beyond CRD a few years later.

Singapore’s adoption and mainstreaming of the ISSB standards is a clear signal that it is fully committed to the green transition and demonstrating credibility in its climate initiatives. It is also the first Asian country to extend mandatory climate-related disclosures to non-listed companies while implementing support mechanisms to support capacity building in meeting the new reporting requirements. This helps to position Singapore as a leader in advancing sustainability reporting in Asia and enable Singaporean companies to become more resilient and adaptable in a low-carbon economy.

Peggy Oh, Director, Anthesis Singapore

Read further regional insights below:

Japan

Japan is actively moving towards adopting sustainability disclosure standards (SDS) based on the ISSB framework. The Sustainability Standards Board of Japan (SSBJ) published three exposure drafts in April 2024:

1. Universal SDS Exposure Draft “Application of the Sustainability Disclosure Standards”
2. Theme-based SDS Exposure Draft No. 1 “General Disclosures”
3. Theme-based SDS Exposure Draft No. 2 “Climate-related Disclosures”

These drafts are largely based on the ISSB’s IFRS S1 and IFRS S2 standards, with some potential adjustments for the Japanese context.

In March 2025, the SSBJ issued the sustainability disclosure standards, i.e. SSBJ Standards. The final disclosure standards adopted are as mentioned above.  It is important to note that the SSBJ has divided the sustainability standards aligning with IFRS S1 standards into two standards, which are issued separately. The SSBJ has highlighted that the ‘Core content’ section of IFRS S1 is included in the ‘General Disclosures’, while the other requirements of IFRS S1 have been included in the ‘Application Standard.’

New Zealand

New Zealand pre-empted the ISSB by developing its own mandatory climate-related disclosure requirements through the Aotearoa New Zealand Climate Standards 1-3, in 2022. New Zealand companies are currently publishing climate-related disclosures[1] in line with the NZ CS, which are comprised of:

• NZ CS 1 Climate-related Disclosures
• NZ CS 2 Adoption of Aotearoa New Zealand Climate Standards
• NZ CS 3 General Requirements for Climate-related Disclosures

These were established by the External Reporting Board (XRB), which closely monitored the ISSB’s development process and ensured a high degree of alignment between the NZ CS and the IFRS S1 and S2 standards. The XRB is continuing to monitor the development and implementation of the ISSB standards and is open to further aligning the NZ CS with the standards in the future, especially as the ISSB releases additional industry-specific or thematic standards.  In October 2023, the XRB published a comparison guide to demonstrate the alignment of the NZ CS and the ISSB standards. The XRB plans to publish a similar comparison guide against the Australian ASRS.

The XRB plans to review New Zealand’s current climate standards in December 2025 to determine whether they need to make any changes to their current standards to align better with the present and future sustainability requirements.

[1] The first tranche of reports are now publicly available on the New Zealand Government’s register: Climate Reporting Entities (companiesoffice.govt.nz)

Hong Kong

In April 2023, the Stock Exchange of Hong Kong Limited (the Exchange) published a consultation paper seeking feedback on the implementation mandatory climate-related disclosures in line with IFRS S2 under its environmental, social and governance framework.

In December 2024, The Hong Kong Institute of Certified Public Accountants (HKICPA) published their sustainability disclosure standards, HKFRS S1 and HKFRS S2 which align directly with the ISSB standards, IFRS S1 and IFRS S2 respectively.

 

HKIPCA has suggested that these sustainability standards may be applied to ‘publicly accountable entities’ including listed entities and regulated financial institutions in Hong Kong initially, from the 1st of August 2025.

 

The timing and approach of adopting the sustainability standards, HKFRS S1 and S2 will be decided by individual regulators and authorities.

Most recently, in 2024, the HKEX also imposed new climate requirements based on IFRS S2 directed to listed issuers commencing from 1st January 2025.

India

The Reserve Bank of India (RBI) has published the Draft Disclosure framework on Climate-related Financial Risks, 2024, which is proposed to implement mandatory climate disclosure requirements for commercial banks, cooperative banks, financial institutions, as well as non-banking financial companies in India. Proposed climate-related disclosure requirements have been developed in line with the four pillars of the TCFD and IFRS S2 – governance, strategy, risk management and metrics and targets – and would be phased in from FY2028 onwards.

Malaysia

The Advisory Committee on Sustainability Reporting (ACSR) launched a consultation from February to March 2024 on the implementation of the ISSB standards for listed and large non-listed companies in Malaysia. The consultation aimed to seek feedback on the scope and timing for implementation, transition reliefs, and assurance-related matters. It is expected that the ISSB standards will form the baseline for the National Sustainability Reporting Framework in Malaysia.

Following the consultation, in September 2024, through the publication of The National Sustainability Reporting Framework (NSRF), Malaysia adopted the ISSB standards.

 

The ISSB standards, according to the NSRF is applicable to all listed companies on Bursa Malaysia’s main market and ACE market, along with, large non-listed companies whose annual turnover exceed RM 2 billion.

 

The NSRF highlights the adoption of the ISSB standards will follow a phased approach – from 2025 onwards, all large-listed issuers on the main market with a market capitalisation of RM 2 billion will apply these sustainable disclosures.

In 2026, all other main market issuers will have to adopt the sustainability standards, followed by ACE Market issuers and large non-listed companies adopting these sustainability standards by 2026.

Philippines

Publicly listed companies in the Philippines currently have mandatory sustainability reporting requirements on a ‘comply or explain’ basis. The Securities and Exchange Commission (SEC) is revising the Sustainability Reporting Guidelines to consider a range of global reporting frameworks, including the ISSB standards. The draft revised guidelines were released for comment in October 2024. Under the revised guidelines, listed companies will be required to submit Sustainability Reporting Narratives together with their annual reports, as well as a dedicated Sustainability Report Form, which would be comprised of sections on sustainability and climate-related risks, opportunities and exposures, and metrics (both cross-industry and industry-specific) in 2025, reporting on the 2024 financial year.

Pakistan

In December 2023, the Sustainability Working Group of the Accounting Standards Board published a recommendations paper outlining the study, consultations and recommendations for implementing the ISSB standards in Pakistan.

Most recently, on 1st of January 2025, The Securities and Exchange Commission of Pakistan (SECP) announced the adoption of the IFRS standards, applying to only listed companies through a phased approach on criteria’s such as a company’s total assets, turnover and number of employees.

Taiwan

In August 2023, the Financial Supervisory Commission of Taiwan published a roadmap for Taiwan-listed entities to align with the ISSB standards – both S1 and S2. These will be adopted from 2026, after which the FSC will continue assessing and endorsing ay additional standards released by the ISSB. Mandatory reporting will be phased in based on capital thresholds, and the same transition reliefs as are in the ISSB standards will be applied. In addition, entities may disclose qualitative information for matters involving a high degree of uncertainty and difficulty in quantification.

South Korea

In May 2024, The Korea Sustainability Standards Board (KSSB) published the Sustainability Disclosure Standards in Korea, KSSB 1, KSSB 2 and KSSB 101. The sustainability disclosure standards KSSB 1 and KSSB 2, follow the IFRS S1 and S2 standards respectively while KSSB 101 is an optional disclosure requirement which serves as a country specific set of standards that provides guidance on disclosure of sustainability related information is required by South Korean Laws.

The current scope and timing for when these disclosures will be implemented has not been confirmed yet.

Bangladesh

In December 2023, The Central Bank of Bangladesh, issued guidelines for the adoption of Sustainability Disclosures based on ISSB standards, specifically, IFRS S1 and IFRS S2 for banks and financial institutions.

The adoption of these Sustainability Disclosures will follow a phased approach in a three-year timeframe.

 

According to the Central Bank, financial institutions and banks will be required to file a limited intermediate report for June 2024, a limited supervisory report for December 2024 followed by a limited disclosures in annual reports in 2025, more detailed disclosures in 2026 and full disclosure in 2027.

Sri Lanka

The Institute of Chartered Accountants of Sri Lanka (CA Sri Lanka) announced the mandatory adoption of the Sri Lanka Sustainability Disclosure Standards, SFLRS S1 and SFLRS S2, based on ISSB Standards, IFRS S1 and IFRS S2, commencing 1st January 2025 with full implementation expected by 2030.

Adoption of Sustainability Disclosure Standards will follow a phased approach:

Phase 1: First 100 entities listed in the Columbo Stock Exchange are mandated to comply with SFLRS S1 and SFLRS S2 by 2025, reporting in 2026.

Phase 2: All listed entities on the main board of CSE mandated to adopt SFLRS S1 and SFLRS S2, and report by 2027.

Phase 3: Entities with an annual turnover exceeding LKR 10 billion in the last two consecutive years mandated to comply with these standards by 2028, followed by entities with an annual turnover exceeding LKR 5 billion in the last two consecutive years adopting these standards in 2029.

Phase 4: All listed entities on CSE empower board, i.e., small and medium size companies required to adopt these standards by 2030.

China

In May 2025, China’s Ministry of Finance published a draft sustainability disclosure standard, based on ISSB Standards termed ‘Corporate Sustainability Disclosure Standards – Basic Standard.’ This exposure draft outlines the general requirements for corporate sustainability information disclosures that all companies established in China are required to adhere to.

 

The adoption of these sustainability disclosure standards is plannedto follow a phased approach, starting  with listed companies  and subsequently extending to non-listed companies.

China aims to implementthe climate-related disclosure standard, based on IFRS S2, by 2027. The entire suite of sustainability disclosures standards are expected to be fully issued by 2030.

Africa

South Africa has created a set of complimentary systems starting with the SA Green Finance Taxonomy, which defines what is to be considered a sustainable asset or project in the South African context. This feeds into the Johannesburg Stock Exchange Sustainability u0026amp; Climate Disclosure guidance, which in turn aligns with the ISSB disclosure standards at an international level. What we are witnessing is the incremental infilling of identified gaps that when filled will enable local and international finance to flow towards increasingly sustainable projects inside our country.

The ISSB is gaining traction in Africa, with several key developments having taken place in recent times:

• Senior ministers and officials from African nations have expressed their support for the ISSB at the International Cooperation Forum and Meeting of African Ministers of Finance, Economy and the Environment in September 2022.
• The IFRS Foundation announced a partnership with the Pan-African Federation of Accountants (PAFA) in March 2024. They will create a comprehensive ISSB Capacity Building Strategy for the African continent and enable PAFA’s network of accountants to implement the ISSB standards.
• ISSB Chair, Emmanuel Faber, met with the Presidents of Kenya and Nigeria, and government ministers, regulators and other stakeholders in South Africa, in early 2024 to discuss the ISSB’s work and discuss considerations for implementation of the standards in the region.
• Morocco is developing climate-related disclosure requirements for banks for implementation in 2025 based on the ISSB standards.

Nigeria

Nigeria is positioned to be another early adopter of the ISSB standards. The Financial Reporting Council (FRC) developed a Draft Roadmap Report for Adoption of Sustainability Disclosure Standards in Nigeria, which was open for consultation until March 2024 and in April 2024, the FRC published the completed roadmap for the adoption of the Sustainability Disclosure Standards in Nigeria. The Roadmap affirms the ISSB standards as the recommended framework for Nigerian entities, discusses assurance, monitoring and enforcement considerations,

Presently, Nigeria has adopted the sustainability disclosure standards on a voluntary reporting basis until 2026.

Mandatory reporting of the Sustainability Disclosure Standards will occur through a phased approach, with full application of mandatory reporting applicable to all entities starting on or after January 1st 2028.

Ghana

In 2023, The Institute of Chartered Accountants, Ghana (ICAG) announced the adoption of the ISSB standards, specifically IFRS S1 and IFRS S2. The adoption of the ISSB standards will follow a phased approach, starting with voluntary adoption for entities from January 2024. Mandatory adoption will apply to significant public entities from January 2025, followed by other companies, with full implementation for all public sector entities based on the timeline issued y the International Public Sector Accounting Standards Board (IPSASB)

Tanzania

The National Board of Accountants and Auditors of Tanzania (NBAA) announced the adoption of ISSB Standards effective from 1st January 2025. 

Under this guidance, all public interest entities (PIEs) are directed to adopt and comply with these standards from 1st January 2025.

While public sector entities are not required to apply these standards, the timeline for mandatory adoption date for this sector will be reviewed by the NBAA based on the timeline by when IPSASB is issued, and until then the NBAA has encouraged public sector entities to voluntarily apply these sustainability disclosures.

Zambia

The Zambia Institute of Chartered Accountants on the 21st of November 2023, announced adoption of the ISSB standards, specifically IFRS S1 and IFRS S2.

According to the Zambia Institute of Chartered Accountants, all publically accountable entities (PAEs) are mandated to apply and comply with IFRS S1 and IFRS S2 and the Integrated Reporting framework for annual reporting periods beginning on or after January 2025.

 For all other companies, the reporting of these standards are voluntary until further updates.

Kenya

The Institute of Certified Public Accountants of Kenya (ICPAK) issued a roadmap in September 2023 on the phased adoption approach of the ISSB standards, specifically IFRS S1 and IFRS S2  from January 1st 2024 in Kenya.

The adoption of these standards follows a phased approach:

• Phase 1: Voluntary Adoption – all organisations are encouraged to voluntarily adopt the sustainability standards from 1^st January 2024. Phase 2: Mandatory Adoption
• Public Interest Entities (PIEs) – apply from 1^st January 2027
• Non-PIEs (Large Entreprises) – apply grom 1st January 2028
• Non-PIEs (SMEs) – apply from 1^st Janusary 2029
• Phase 3: Public Sector Adoption – the timelines for public sector adoption will be reviewed based on IPSASB’s standards.

Uganda

The Institute of Certified Public Accountants of Uganda (ICPAU) produced a roadmap for the adoption of ISSB standards, specifically the IFRS S1 and the IFRS S2.

The adoption of these standards follow a phased approach where by:

Public Interest Entities (PiEs), including listed companies, financial institutions and state-owned enterprises are encouraged to comply and apply the sustainability disclosures for the financial year 2026, reporting in 2027 voluntarily.

The mandatory adoption of PiEs will start with the period beginning on or after 1st January 2028.

All other Entities are encouraged to voluntarily report on the ISSB standards from 2029, based on 2028 financial year.

Zimbabwe

The Public Accountants and Auditors Board (PAAB), the Zimbabwe Stock Exchange (ZSE) and the Victoria Falls Stock Exchange (VFEX) have mandated all listed companies to  submit their sustainability reports for financial years commencing on or after January 1st 2024, based on the ISSB Standards.

The PAAB is also working on an implementation roadmap for the implementation of IFRS S1 and IFRS S2 for all other companies.

Central America

Costa Rica

The College of Public Accountants of Costa Rica announced in December 2023 the adoption of the ISSB standards in full through a phased approach as follows:

• Commencing 1 January 2024: voluntary for any entity
• For the financial year ending 31 December 2025: mandatory for companies regulated by the National Council for Supervision of the Financial System (Consejo Nacional de Supervisión del Sistema Financiero/CONASSIF)
• For FY ending 31 December 2026: mandatory for companies classified as large taxpayers

South America

Latin American jurisdictions have historically been leading the mandating of sustainability disclosures, with both Chile and Colombia having mandated TCFD disclosures and reporting in line with the standards published by the Sustainability Accounting Standards Board (SASB). Several South American nations are expressing growing interest in the ISSB standards. Recent developments in relation to the ISSB standards include:

• Superintendency of Banks of Panama announced support for the ISSB in October 2023.
• The IFRS Foundation published the Spanish and Brazilian Portuguese translation of IFRS S1 to support uptake of the standard across South America.
• The Inter-American Development Bank and Latinex co-hosted an event focused how the IFRS Accounting and Sustainability Disclosure Standards can support a more resilient and competitive financial sector.

Brazil

Brazil became the first South American country to adopt the ISSB standards in October 2023 when the Brazilian Ministry of Finance and the Comissão de Valores Mobiliários (CVM), the country’s securities regulator, announced that the ISSB standards would be incorporated into the Brazilian regulatory framework.

The CVM released Resolution No. 193, which sets out that publicly listed companies, securitisation firms and investments funds may choose to voluntarily disclose in line with IFRS S1 and S2 from 2024, while mandatory disclosures will be required for listed companies from 1^st January 2026. A stringent assurance pathway has also been outlined beginning with limited assurance until the end of FY2025, after which reasonable assurance over disclosures will be required. More recently, in October 2024, the CVM published Resolution No. 217, 218 and 219 that made the adoption of The Brazilian Sustainability Pronouncements Committee (CBPS)’s technical pronouncements 01 and 02 mandatory for all listed companies.

Therefore the new Resolution mandates adoption of IFRS S1 and through the Brazilian Sustainability Pronouncements Committee (CBPS)’s technical pronouncements, CBPS Technical Pronouncement 01 General Requirements for Disclosure of Financial Information Related to Sustainability

• CBPS Technical Pronouncement 02 Climate-related Disclosures

Through the CVM resolution No. 219, a new deadline of the voluntary adoption of the disclosures has been adopted.

Additionally, in 2024, the Brazilian Central Bank (BACEN) mandated that financial institutions under BACEN regulations are required to adopt the following CBPS standards under these specific timelines:

1. Larger financial institutions classified:  mandatory adoption beginning 1st Jan 2026.

2. For all other regulated financial institutions:  mandatory adoption beginning on 1st January 2028.

Bolivia

The College of Auditors or Public Accountants of Bolivia (CAUB) published a resolution in April 2024, announcing the mandatory adoption of the ISSB standards for all entities ‘carrying out economic activities’ in Bolivia, starting from the 1st of January 2027.

While the mandatory adoption of these standards start in 2027, CAUB has encouraged early applications.

Chile

In October 2024, The Financial Market Commission (CMF) of Chile announced the mandatory adoption of IFRS S1 and IFRS S2 standards commencing from 1st January 2026.

Exception:  entities whose average total consolidated assets for the two years has been lesser than UF 1million are exempt from reporting on IFRS S1 and S2 standards.

A ‘transition relief’ period of one year has been directed by CMF specifically for those entities who previously may not have reported on sustainability and corporate governance before.

Middle East

Turkey

In December 2023, Turkey’s Public Oversight, Accounting and Auditing Standards Authority (KGK) announced that businesses meeting certain asset, revenue or employee thresholds, and regulated banks will be subject to mandatory sustainability disclosure requirements. The KGK has adopted IFRS S1 and S2 in Turkish, published as the Turkish Sustainability Reporting Standards (TSRS) 1 on general sustainability disclosures and TSRS 2 on climate-related disclosures.

 Sustainability disclosures will be subject to assurance under the International Auditing and Assurance Standards Board (IAASB)’s upcoming International Standard on Sustainability Assurance (ISSA) 5000: General Requirements for Sustainability Assurance Engagements.

Most recently, the Turkish Official Gazette made assurance mandatory on corporate sustainability matters from 2024. The Gazette directed that initially limited assurance will be completed in compliance with GDS 3000 and GDS 3410 till the SDG 5000 is issued.

Global collaboration

The ISSB is actively engaging with national and regional standard setters to facilitate the implementation of a global baseline of sustainability disclosures. With jurisdictions around the world starting to consult on and finalise the adoption of IFRS S1 and S2 into national regulatory frameworks to varying extents, the IFRS Foundation is developing an Adoption Guide to support these efforts. A high-level roadmap to the Adoption Guide has been published, which documents the mechanisms available to support implementation.

The ISSB is focusing on four key areas to enable globally aligned adoption, i.e.: proportionality, transition reliefs, consistency in phasing in and scaling requirements, and capacity building to support implementation.

Key challenges that the ISSB and IFRS Foundation are likely to see in the global uptake of the ISSB standards include:

• Jurisdictional alignment: While the development of globally applicable standards consolidating several former best practice frameworks is a welcome step to standardising sustainability disclosures around the world, the inherent variations in jurisdictional contexts and market preparedness mean that modifications of the standards to some extent will be inevitable. The ISSB is emphasising the importance of maintaining a high level of alignment to ensure global comparability, which has been the key driver behind the development of the standards.
• Capacity building: Fully aligning with the requirements of IFRS S1 and S2 will present a significant reporting burden for companies which have not previously considered and assessed climate or sustainability-related matters. Mandatory reporting regimes are largely being designed through phased approaches in recognition of varying levels of maturity. National regulators and standard-setters will need to supplement this with sufficient capacity building, guidance and implementation support to ensure that the implementation of mandatory reporting achieves the aim of enhancing the understanding of climate and sustainability-related financial impacts and the management of these issues.

The development of the ISSB standards and subsequent global uptake represent significant steps towards a more transparent and accountable global business environment. As jurisdictions around the world continue to engage with the ISSB standards, we can expect a new era of sustainability reporting to emerge. Companies around the world reporting on their climate-related disclosures should think beyond mere compliance, to focus on the wealth of opportunities, innovations, and efficiencies that arise from understanding and managing their climate and sustainability challenges. Proactively managing these risks will not only drive sustainable performance but also position businesses for resilience and prosperity in the years ahead.

How Anthesis can support

Anthesis helps organisations cut through the complexity of reporting frameworks and focuses on what matters to key stakeholders, with an end-to-end offering that sets the stage for ISSB-aligned disclosure, risk management and value creation.

While many organisations have carried out single materiality assessments to help shape their ESG strategies, most have not focused in on financial materiality of sustainability-related risks and opportunities. As a crucial step towards ISSB-aligned reporting, our materiality process helps organisations focus in on and prioritise sustainability-related risks and opportunities that could affect the organisation’s prospects. Our ISSB alignment offering extends beyond climate, using our experience across all areas of sustainability, industry, geography, and along the value chain.

To keep informed of the latest sustainability regulations, standards and disclosure requirements subscribe to our sustainability reporting newsletter and you can find our latest insights on the regulations hub.

Table of contents

• How does it fit with CSRD changes?
• The progress report
• Step forward for double materiality
• What should you do now?
• How Anthesis can help
• Contact us

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On 19th June 2025, the European Financial Reporting Advisory Group (EFRAG) released a progress report on the revision of the European Sustainability Reporting Standards (ESRS). This marks a key step in the European Commission’s broader Omnibus Simplification Package, which aims to reduce the regulatory and administrative burden of key sustainability regulations, while still upholding the ambitions of the EU Green Deal.

As a member of Friends of EFRAG, Anthesis contributed to this process through the consultation phase and welcomes the direction of travel in these proposed changes.

While not yet final, the progress report outlines a draft of what a revised, simplified ESRS could look like, targeted at making sustainability reporting less burdensome, more strategic, and more aligned with global frameworks. A second draft is expected in early July, with the final technical guidance due to the European Commission by 31st October 2025.

How does this fit within the broader CSRD changes?

These proposed ESRS revisions are one component of the EU Omnibus Simplification Package released in February 2025 and updated in June 2025, focusing on what needs to be disclosed under the ESRS standards.

While the widely discussed ‘stop the clock’ amendment pushed back reporting deadlines for many companies, other regulatory elements, such as who is in scope and how reporting should be conducted, remain at the proposal stage.

The EU Council released a new proposal on 21st June 2025 that aligns with EFRAG’s efforts to streamline ESRS disclosures by removing data points, clarifying which disclosures are mandatory, and emphasising the importance of interoperability between the ESRS and ISSB standards.

What does the progress report tell us?

The draft can be summarised into four key areas of simplification:

1. A Refocus of the Double Materiality Assessment

EFRAG acknowledges that current requirements for double materiality are resource-intensive and risk becoming a box-ticking exercise rather than a strategic assessment of the impacts, risks and opportunities relevant to an organisation’s unique business model.

The revised approach aims to:

• Prioritise an organisation’s business model to support the identification of material topics
• Avoid requiring full disclosure on a topic where only a sub-topic is deemed material
• Clarify how mitigation should be considered when assessing material impacts
• Focus assessments on information that is relevant and decision-useful, not exhaustive
• Emphasise a proportionate and evidence-based process

The revised changes should help organisations generate insights that are more relevant to their unique business models and value chains, strengthening double materiality as a foundational step in identifying what matters most. This clarity supports the implementation of more targeted and effective sustainability practices and enables more meaningful and aligned reporting under CSRD.

2. Improved Clarity and Flexibility

The report acknowledges that a lack of clarification around how flexible preparers can be with the report template has led to organisations finding it difficult to tell their unique sustainability story, and an increasing focus on CSRD as a compliance exercise.

To support more coherent and impactful reporting:

• Organisations will be able to include an executive summary
• Detailed disclosures can be moved to appendices to enhance readability
• Disclosure will be limited to material matters, with clearer distinctions between mandatory and non-mandatory requirements
• Guidance will be provided on the flexibility of reports to avoid duplication of information to suit a rigid report template, helping companies tell their sustainability story more effectively

 

3. A Reduction in Data Points

In line with the aim to simplify reporting, EFRAG recommend a significant reduction in the required data points, achieved by:

• Better aligning the requirements between the two cross-cutting (ESRS 1 & 2) and the ten topical ESRS standards to reduce duplication
• Removing non-essential data points (both qualitative and quantitative), but with a retained focus on quantitative data points
• Clarifying which disclosures are mandatory

 

4. Improved Interoperability

Another key area is the focus on achieving greater interoperability with other standards, with priority given to alignment with the IFRS’ International Sustainability Standards Board (ISSB) S1 and S2 standards. This includes aligning reporting boundaries and language across the standards.

 

What this means: A strategic step forward for double materiality

At Anthesis, we welcome these proposed simplifications, particularly the emphasis on positioning the double materiality process as a strategic tool rather than a compliance hurdle. This aligns closely with our established approach and the feedback we shared through the consultation process.

We’ve heard from many large organisations, whose assessments were led by providers without deep ESG knowledge, that the double materiality process was not robust enough compared to other risk management processes and the impacts, risks and opportunities identified felt too generic or disconnected from their actual business or sector context. This creates challenges for developing strategies to address them and leaves a gap between what is reported and what needs to be managed.

Done right, double materiality should enable companies to reflect the unique characteristics of their value chain, prioritise what’s most material to their business, and drive long-term, measurable value.

Our double materiality assessments are grounded in strong ESG expertise and a deep understanding of business strategy, enabling us to deliver insights that are both tailored and decision-useful.

What should you do now? 

While this draft is subject to change, the direction of travel is clear, and simplification will happen.

For organisations entering Year 2 of CSRD reporting, there may be limited opportunity to respond to the proposed simplification in your next report. But you can already align with its intent by ensuring you have developed strategies to manage your Impacts, Risks, and Opportunities (IROs) and that you are clearly reporting on how they align with the actions you’re taking, the metrics and KPIs you’re using, and your performance. We recommend getting started as soon as possible to prioritise materiality, reduce duplication, and streamline your narrative.

For companies with a two-year delay, there is time to prepare but plenty to do ahead of the deadline. If you haven’t already, we recommend starting your double materiality assessment now, using these draft revisions as a guide. Doing so gives you time to collect data, close gaps, and shape an integrated sustainability strategy ahead of the FY2027 deadline.

Organisations that have already finalised their Double Materiality Assessment should begin preparing for a gap analysis focused on at least three core ESRS: E1 (Climate), S1 (Own Workforce), and G1 (Business Conduct). Analysis of existing reports from Wave 1 companies shows that all reported on these three standards, making them a logical and low-risk starting point. By concentrating on the mandatory quantitative disclosures within these ESRS, companies can gain time, maintain momentum, and avoid over-engineering early-stage reporting efforts. You may also choose to extend this approach to other clearly material topics, applying the same focused methodology.

Although the reporting deadline has been pushed back, using this time to make continuous improvements will enable more mature and robust disclosures by 2028. With a realistic roadmap and clear alignment from top management, you’ll be in a stronger position to secure the necessary budget and cross-functional time commitments, especially as ESG managers cannot deliver this alone.

Do you want to receive key sustainability reporting updates? Subscribe to our sustainability reporting newsletter here.

How Anthesis can help

At Anthesis, we help clients go beyond compliance to unlock the full value of sustainability reporting.

Our approach ensures your CSRD disclosures:

• Reflect your unique risks and opportunities
• Are decision-useful for internal and external stakeholders
• Support governance, performance, and long-term impact

With 1,400+ sustainability experts across climate, human rights, supply chain, finance, and beyond, we bring deep technical know-how, regulatory insight, and a proven ability to implement change.

Whether you’re starting your CSRD journey or preparing your second report, we can help you bridge the gap between materiality and action.

Explore the proposed changes

• Major Proposed Changes
• New Reporting Deadline
• CBAM Certificate Purchasing Delay
• Digital Operator Registration
• Third Country Recognition
• Reduced Holding Requirement
• Reporting for Importers
• Emissions Verification
• Non-Calcined Kaolinic Clays

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On the 26^th February, the EU proposed a set of targeted amendments to the Carbon Border Adjustment Mechanism (CBAM), informed by insights gained during its Transitional Phase. These changes aim to simplify compliance, reduce unnecessary burdens, and align CBAM more effectively with the EU Emissions Trading System (ETS) while ensuring its environmental objectives remain intact. 

Overall, the amendments that were part of the Omnibus Simplification Package reflect practical policymaking—they are responsive to business feedback and grounded in real-world implementation challenges. These proposed changes introduce meaningful simplifications, address practical challenges, and reflect a responsive approach to regulatory development. 

If approved, CBAM-affected businesses both within and outside the EU will see reduced reporting burdens, clearer carbon pricing rules, and greater certainty on compliance requirements. The amendments now need to pass through the EU’s legislative process, which will take several months at a minimum. 

Major proposed changes 

Proposed Change	Overview	Action if approved
New Mass-Based Threshold	Businesses importing less than 50 tonnes of CBAM goods annually into the EU will no longer be subject to CBAM obligations.	CBAM importers should assess if their annual imports exceed 50 tonnes to determine if they remain in scope.
Exclusion of Emissions from Finishing Processes for Steel and Aluminium	Manufacturers engaged only in finishing processes for steel and aluminium products will no longer need to report emissions from these processes, only from their precursors.	Non-EU manufacturers engaged only in finishing should revise their reporting processes to exclude these emissions.
Default Carbon Pricing Values	The EU may introduce default carbon prices for third countries from 2027, based on best available data.	CBAM importers and non-EU manufacturers should monitor default carbon price values and incorporate them into reporting where primary data is unavailable.
Stronger Penalties for Non-Compliance	The EU is enhancing its authority and increasing the severity of financial penalties under CBAM.	EU importers of CBAM goods not yet reporting to the CBAM Registry must act now or face steep financial penalties
Exclusion of ETS-Covered Precursors from CBAM Accounting	Emissions reporting for precursors produced in EU ETS countries, or those with fully-integrated equivalent system, will no longer be required.	Non-EU manufacturers should exclude ETS-covered precursors from emissions reporting.

Additional changes 

In addition to the major proposed changes, several additional updates could impact CBAM compliance and implementation. These refinements aim to enhance clarity, streamline processes, and address industry concerns. Here’s a brief look at other key adjustments businesses should be aware of: 

New reporting deadline 

The annual CBAM declaration deadline has been moved from May 31 to August 31, providing businesses with additional months to collect accurate emissions data, secure verification, and purchase the necessary CBAM certificates.

Delay in obligation to purchase CBAM certificates 

In a move to provide financial relief, importers will not be required to purchase CBAM certificates for carbon emissions on imported goods until 2027, even though these imports will be subject to carbon pricing from 2026 onwards. This delay offers businesses more time to adjust their financial strategies while ensuring emissions accountability remains intact. 

Digital operator registration & data sharing 

The introduction of a digital CBAM Registry formalises operator registration, data uploads, and information sharing. By enabling direct uploads from operators, the new system aims to reduce the administrative workload for importers, making compliance more efficient and transparent. 

Recognition of carbon pricing paid in third countries 

Another major reform is the recognition of carbon pricing paid in third countries at any stage of the supply chain. This ensures that CBAM imports face costs aligned with the EU ETS, preventing overcharging  and fostering fair competition between EU-produced and imported goods. 

Reduced certificate holding requirement 

To ease financial pressures, the EU has also reduced the required holding of CBAM certificates from 80% to 50% of total emissions at the end of each quarter. This adjustment lowers the upfront financial burden on businesses, improving cash flow management and reducing the strain of compliance. 

Delegated reporting for importers 

On the administrative front, importers will now be allowed to appoint third parties to submit CBAM declarations on their behalf. While legal responsibility remains with the importer, this delegated reporting option alleviates operational complexity and provides flexibility in meeting regulatory obligations. 

Emissions verification limited to actual values 

The verification process for emissions data is also seeing a crucial update. Only actual emissions data will require verification, with default values now exempt from this requirement. This practical amendment removes redundant verification processes, allowing businesses to focus on accurate and meaningful reporting. 

Removal of non-calcined kaolinic clays from CBAM scope 

Lastly, non-calcined kaolinic clay has been removed from the CBAM scope, further reducing the compliance burden for industries dealing with this material. This refinement highlights the EU’s commitment to ensuring that CBAM targets high-impact emissions while avoiding unnecessary regulatory complexity. 

How Anthesis can help

These updates represent a more pragmatic and business-friendly evolution of CBAM, balancing the EU’s carbon pricing ambitions with the realities of global trade. Companies must stay ahead of these changes to leverage the additional time, financial flexibility, and reduced administrative burdens these reforms provide. As CBAM continues to take shape, proactive compliance and strategic planning will be key to navigating the evolving regulatory landscape. 

If you’d like to understand how any of these changes impact your business and its CBAM requirements, Anthesis’ CBAM experts are available to help.