The UK’s regulatory landscape is rapidly transforming sustainability into a fundamental business imperative. Recent updates to environmental legislation and related frameworks create a more demanding compliance environment. Organisations must utilise 2025 as a critical preparation period to address increasingly stringent ESG requirements, enhance supply chain transparency, and develop robust strategies to meet ambitious carbon reduction targets.
- Legislative Updates
Carbon Border Adjustment Mechanism – CBAM
For importers and exporters, the EU Carbon Border Adjustment Mechanism (CBAM), a scheme which puts a carbon price on imports of carbon-intensive goods to prevent carbon leakage has undergone significant simplification in early 2025. A new de minimis threshold has been introduced, which exempts importers handling less than 50 tonnes annually across iron and steel, aluminium, cement, and fertiliser sectors. This change affects approximately 90% of importers whilst still capturing over 99% of embedded emissions. Notably, electricity and hydrogen sectors remain exempt from this threshold, with algorithm-based calculations and anti-abuse provisions added, ensuring compliance through customs declarations and monitoring.
For larger importers, several streamlining measures have been implemented, including a simplified authorisation procedure, reduced verification requirements for emissions calculations, decreased financial liability with certificate holding requirements dropping from 80% to 50%, and extended reporting deadlines from May to August. The implementation timeline has been adjusted, with certificate sales for 2026 emissions beginning in February 2027, further reflecting EU ETS.
Corporate Sustainability Reporting Directive – CSRD
The Corporate Sustainability Reporting Directive (CSRD) requires qualifying companies to publish detailed sustainability information in their management reports covering environmental, social and governance impacts. Companies must follow European Sustainability Reporting Standards (ESRS), apply a double materiality perspective, reporting both how sustainability issues affect the company and how the company impacts people and environment.
As of February 2025, the scope of the CSRD has been reduced to only companies with over 1,000 employees (and either €50M turnover or €25M balance sheet), exempting approximately 80% of previously in-scope companies. It introduces a two-year postponement for implementation timelines, establishes value chain protections limiting information requests from smaller firms, simplifies the ESRS standards, eliminates sector-specific standards requirements, modifies assurance requirements by removing potential upgrades to reasonable assurance, and creates voluntary reporting options for companies not in scope. These changes aim to reduce administrative costs by an estimated €4.4 billion annually whilst maintaining the core sustainability disclosure principles of the directive.
Corporate Sustainability Due Diligence Directive – CSDDD
The Corporate Sustainability Due Diligence Directive is an EU legislation requiring large companies to identify, prevent, mitigate and account for adverse human rights and environmental impacts in their own operations, subsidiaries and value chains. It also obliges companies to adopt transition plans for climate change mitigation on a best effort basis.
The February 2025 simplification package introduces several key changes, including postponed implementation timelines (delayed to July 2027 and first application to July 2028), streamlined value chain assessment requirements that limit due diligence, and simplified process requirements such as reducing assessment frequency from annual to every five years. The update also removes the EU-wide civil liability regime in favour of national systems and better aligns climate plan requirements with existing Corporate Sustainability Reporting Directive (CSRD) standards. These adjustments aim to reduce compliance costs whilst maintaining core environmental and human rights protections.
- The Built Environment
National Planning Policy Framework – NPPF
The December 2024 updated National Planning Policy Framework (NPPF) contains significant amendments concerning climate change, which make explicit that climate adaptation and mitigation are now central to decision-making. The major update is quoted as “the need to mitigate and adapt to climate change should also be considered in preparing and assessing planning applications, taking into account the full range of potential climate change impacts.”
Those bringing forward planning applications must now provide information concerning the climate impacts of the proposed development and measures taken to adapt to the new requirements. Evidence of such considerations may include; whole-life carbon assessments and quantification of the projects embodied carbon emissions, which provide information about both operational carbon emissions, along with upstream and downstream Scope 3 emissions of the project. The framework also gives significant weight to renewable and low carbon energy generation.
Building Regulations
The Department for Levelling Up, Housing and Communities (DLUHC) has announced significant updates to England’s Building Regulations, effective 15 June 2025. These changes represent an important step towards the Future Homes Standard in 2025 and support the UK’s target of achieving net-zero carbon emissions by 2050.
More stringent energy efficiency requirements have been introduced, with new build homes required to cut carbon emissions by approximately 30% and new commercial buildings by 27% compared to current standards. Within this, Approved Document O addresses the issue of overheating in new residential buildings and establishes a new ‘Primary Energy’ metric, alongside CO2 measurements, to assess energy efficiency compliance. This now takes into account factors such as heating system efficiency and energy production impacts. These measures aim to increase the proportion of homes rated C or above for energy efficiency, which currently stands at 46% compared to just 14% in 2010. New requirements for offices are also included, detailing standards for the use of recirculating ventilation systems and mandatory CO2 monitors.
Construction Products Regulation – CPR
The revised Construction Products Regulation (CPR) of January 2025, modernised the previous 2011 rules to address shortcomings in the single market for construction products. The update tackles inconsistent implementation across Member States, simplifies the complex legal framework, and better supports green and digital transitions whilst ensuring product safety.
Key updates include the introduction of Digital Product Passports (DPPs) that serve as centralised digital records containing technical specifications and environmental data, improving product traceability throughout the EU market. The CE marking has been expanded beyond technical performance to incorporate environmental impact assessments, and manufacturers must now report on climate-related factors such as CO2 emissions and energy consumption for key construction products. These changes align with broader EU sustainability initiatives like the Energy Performance of Buildings Directive, integrating product-level data into building-level assessments. The regulation represents a significant shift for the construction sector’s digitalisation and sustainability efforts, to enable more informed choices based on both performance and environmental impact.
- Reports and Disclosures
UK Sustainability Reporting Standards – UK SRS
The International Sustainability Standards Board (ISSB) was established at COP26 in 2021 as part of the IFRS Foundation to create a global baseline for sustainability reporting. The UK government, a strong supporter of the ISSB, has established a framework to assess these standards for endorsement in the UK. If approved, this would become the first UK Sustainability Reporting Standards. The government plans to consult on exposure drafts of UK SRS in Quarter 1 2025, as part of a wider Sustainability Disclosure Reporting framework led by HM Treasury.
Following the creation of the standards and subject to endorsement, the Financial Conduct Authority will be able to introduce requirements for UK-listed companies to report sustainability-related information to investors. The government has also committed to consulting on requirements for economically significant companies to disclose information using future UK SRS.
Streamlined Energy and Carbon Reporting – SECR
The UK’s Streamlined Energy and Carbon Reporting (SECR) policy, introduced in 2019, establishes mandatory carbon and energy reporting requirements for a wide range of organisations. The policy applies to quoted companies (those listed on major exchanges including the London Stock Exchange, EEA markets, NYSE or NASDAQ), large unquoted companies, LLPs, and academy trusts. For unquoted companies and LLPs, the qualification criteria include meeting at least two of the following thresholds: turnover of £36 million or more, balance sheet assets of £18 million or more, or 250 or more employees.
Companies that consume less than 40,000 kWh of energy in a reporting period qualify as low energy users and are exempt from SECR requirements. Whilst quoted companies must report global data, large unquoted companies, LLPs and academy trusts are only required to report UK energy usage. The policy also includes a ‘comply or explain’ provision allowing organisations to omit data if collection is not possible, provided they explain what has been excluded and why. This provision gives organisations in earlier stages of their ESG reporting journey time to develop more comprehensive reporting capabilities for future years.
- Your Responsibilities
Next Steps with Decerna
With the evolving UK sustainability regulatory landscape, Decerna is uniquely positioned to help organisations navigate new compliance requirements through our comprehensive consultancy and development services. Our extensive experience in Life Cycle Assessments makes us one of the longest-established UK consultancies in this field, offering ISO 14040/44 compliant assessments and Environmental Product Declarations, along with carbon capture due diligence. This expertise is particularly valuable for businesses needing to address specific now mandated climate impact assessment requirements.
Our capabilities extend to providing Carbon Border Adjustment Mechanism support, comprehensive carbon reporting covering all Scope 1, 2 and 3 emissions, and developing bespoke carbon reduction and Net-Zero plans that align with the UK Government’s procurement policy. By leveraging our multidisciplinary expertise, we support clients throughout their sustainability journey, from initial concept through to the implementation of low carbon systems and infrastructure.
Conclusion
In summary, key EU mechanisms have been modified with higher thresholds and streamlined requirements for corporations and international traders, whilst updated regulations now explicitly incorporate climate considerations into planning and construction. Simultaneously, new reporting frameworks are being developed continue to provide structure for carbon and energy reporting.
These developments signal the UK’s commitment to balancing ambitious sustainability goals with practical implementation challenges. For businesses, 2025 represents a critical preparation period to adapt to these evolving requirements, with particular focus needed on supply chain transparency, carbon reduction strategies, and comprehensive ESG reporting capabilities.
