As climate risks intensify, governments and institutions are accelerating efforts to reform financial systems and strengthen environmental oversight. Here’s a breakdown of the most significant news shaping the climate landscape this week.
EU Tightens Climate Policy Framework as Global Climate Governance Evolves
The first weeks of July 2025 have seen a flurry of climate-related developments across Europe, the United States, and the global policy sphere. From sweeping EU reforms to landmark commitments on health and climate finance, regulators and institutions are pushing to align financial systems and public policy with the realities of the climate crisis.
EU Progresses on Sustainability Reporting and Taxonomy Reform
The European Commission has released proposed amendments to the Sustainability Omnibus Directive, signalling its intent to reinforce the EU’s green finance rulebook. The directive, now entering formal negotiations, is designed to strengthen climate and sustainability disclosures across the financial system.
At the same time, the Commission has extended the deadline for technical advice on revising the European Sustainability Reporting Standards (ESRS), offering regulators and stakeholders more time to shape future guidance. To ease the compliance burden, a draft act has also been published that extends phase-in provisions under the Corporate Sustainability Reporting Directive (CSRD) for companies reporting in 2025 and 2026.
In a related move, the Commission adopted a new Taxonomy Delegated Act, cutting back on reporting requirements under the EU Taxonomy. While this may simplify reporting for companies, the French Climate Council has warned that the Omnibus Package may fall short of delivering the ambitious sustainability oversight that climate goals demand.
The process itself is under scrutiny. The EU Ombudswoman raised transparency concerns about the use of urgency procedures to fast-track the directive. A joint statement from financial institutions has further highlighted the high stakes for both regulators and industry.
EU Authorities Focus on Biodiversity, Investment Risk, and Greenwashing
A suite of reports and guidance documents has emerged from EU-level bodies:
- The European Securities and Markets Authority (ESMA) published its final report on integrating sustainability risks and disclosures in investment funds.
- The European Insurance and Occupational Pensions Authority (EIOPA) released a detailed report on how insurers are managing biodiversity risks.
- ESMA also issued a thematic note calling for clear and fair sustainability-related claims in finance. It warned against greenwashing and underlined the need for accurate product communication.
According to the note, these measures support “transparency and trust in sustainable finance,” key to shifting capital towards low-carbon investments.
Denmark Sets the Climate Tone for EU Presidency
The Danish Presidency of the Council of the EU has made climate ambition a top priority in its programme. It has committed to accelerating regulatory and policy action, especially around integrating sustainability risks into financial regulation.
The document outlines Denmark’s determination to align EU law with long-term emissions targets and the broader energy transition. With Denmark’s leadership, climate policy is expected to take centre stage in EU discussions over the coming months.
Global Moves on Sustainability Standards and ESG Risk
Efforts to harmonise climate reporting standards have gained momentum. The International Sustainability Standards Board (ISSB) published exposure drafts proposing amendments to the SASB Standards and industry-specific guidance for implementing IFRS 2. These proposals aim to improve comparability in greenhouse gas reporting across sectors.
In response, the European Financial Reporting Advisory Group (EFRAG) has issued its final comment letter, offering recommendations to ensure alignment with EU climate goals. This reflects the ongoing effort to bridge international and European sustainability reporting frameworks.
Meanwhile, the European Supervisory Authorities (ESAs) have launched a consultation on ESG stress testing guidelines. The draft guidelines are designed to help banks, insurers, and investment firms assess their resilience to climate-related risks, further embedding ESG considerations into financial stability oversight.
UN Conference Backs Bold Climate Finance Reforms
At the UN development conference in Seville, delegates adopted the Seville Commitment, a call to mobilise global financial resources in line with the Paris Agreement and UNFCCC objectives. It emphasises reforming the international financial system and increasing private sector involvement to meet rising climate finance needs.
The outcome document supports stronger implementation of Nationally Determined Contributions (NDCs) and National Adaptation Plans (NAPs), calling for greater ambition in future NDC rounds. With adaptation finance still falling short, the document urges “coherent strategies” to maximise impact.
Meeting the $300 billion annual climate finance goal—and scaling to $1.3 trillion—will, the document stresses, require “innovative approaches and stronger collaboration between public and private actors.”
EPA Moves to Weaken Greenhouse Gas Safeguards
In the United States, the Environmental Protection Agency (EPA) has submitted a draft proposal to the White House Office of Management and Budget to roll back the 2009 Endangerment Finding. This landmark ruling established that greenhouse gas emissions threaten human health and underpins many of the US’s environmental protections.
Critics say the rollback would undermine climate accountability. Environmental groups argue it “prioritises industry interests over public health.” The proposal comes as debates intensify in Congress over clean energy funding and regulatory rollbacks.
WHO Adopts First Climate and Health Action Plan
The World Health Assembly has adopted its first Global Action Plan on Climate Change and Health, marking a major step in linking health and climate policy. The plan outlines strategies to strengthen health systems against climate-related threats.
This development signals growing global recognition of the health impacts of climate change. The WHO’s plan aims to drive integrated action across sectors and scale up resilience in the face of rising health risks.
Italy Advances on Green Bond Regulation
Italy is set to transpose the requirements of CRD VI on ESG risks and implement the Green Bond Regulation. This move will strengthen the country’s regulatory architecture for sustainable finance and support its growing green bond market.
The mandate is part of the EU’s broader push to embed climate risk in financial systems. It’s also expected to boost transparency and investor confidence in Italy’s sustainability credentials.
Other News in Brief
- A deadly glacial lake outburst in Nepal, a heatwave across Europe killing over 2,000 people, and wildfires in Greece and Catalonia are all fresh reminders of climate risk.
- The EU is exploring “nature credits” to fill green funding gaps, while several major corporates have asked to delay deforestation rules.
- Pope Leo issued a public plea for climate action, and over a third of Tuvalu’s population is reportedly seeking climate visas.
- Extreme heat could reduce Eurozone GDP by 5 percent. Allianz warned it could cut European output by 0.5 percentage points this year.
