Welcome to the Matheson ESG Bulletin

The Corporate Sustainability Reporting Directive (“CSRD”) (originally enacted in January 2023) introduced mandatory sustainability reporting requirements for many companies, requiring them to include extensive sustainability related disclosures in a dedicated section of their annual reports.  Companies that engage in sustainability reporting under the CSRD have to do so in accordance with reporting standards set by the European Commission.

Simplified versions of the reporting standards for European companies (the “ESRS”) were published by EFRAG (the technical advisor to the Commission) in November 2025, which were shared with the Commission in the form of technical advice.  On Wednesday, 6 May 2026 the European Commission published further drafts of the simplified ESRS, built on the EFRAG versions from November 2025, and announced a public feedback period that will run until 3 June 2026.  The Commission’s latest version of the ESRS are broadly in line with the versions published by EFRAG in November 2025, subject to certain changes.  In particular, despite reporting to the contrary in the run up to the Commission’s announcement, the new ESRS do not align with the ISSB framework; reporting under the ESRS will not mean automatically complying with the ISSB reporting standards.  Other relevant changes between the version of the ESRS published by EFRAG in November 2025 and this latest version prepared by the Commission include:

1. Estimates for anticipated financial effects: The new ESRS clarify that when reporting anticipated financial effects, it is likely that estimates will be used and if estimates of anticipated financial effects turn out to be inaccurate later, the company should revise its estimate in the next appropriate sustainability statement; the need to revise an estimate does not necessarily imply a reporting error
2. Additional disclosure for transition plan that does not comply with 1.5°C targets: If a company discloses information about a transition plan that refers to GHG emission reduction targets that are not compatible with limiting global warming to 1.5°C, the company has to explain that in the CSRD sustainability statement, in particular by explaining how its target values compare with the reference values and how it has considered future developments.
3. Flexibility for GHG emission reporting boundaries: When disclosing GHG emissions, the new draft ESRS envisage that companies have the option of determining the reporting boundary by reference to the financial control per the GHG Protocol Corporate Accounting and Reporting Standard (2004) or the equity share or operational control approach per the Greenhouse Gtas Protocol: A Corporate Accounting and Reporting Standard (2004), subject to certain specific rules for leased assets, benefit schemes and joint operations.
4. Disclosures regarding secondary microplastics removed: The EFRAG draft ESRS could require disclosures on ‘secondary microplastics’ ie, plastics that result from the breakdown of larger plastic items from the company’s own products in its downstream value chain (eg, wear and tear of car tyres or synthetic textiles) or that are unintentionally released through the product life cycle.  The Commission’s draft ESRS remove these disclosures.
5. Substantiated human rights and discrimination incidents: The Commission’s new draft ESRS set out more clearly that certain disclosures are only required in respect of human rights incidents / incidents of discrimination where ‘substantiated’.  The new version of the ESRS explains that an instance is ‘substantiated’ where it is evidenced by objective, factual and verifiable information.
6. Investments managed on a fiduciary basis are excluded from the materiality assessment: The new ESRS include new application requirements clarifying that where a company manages investments subject to a fiduciary duty on behalf of clients without retaining the risks or rewards of ownership, that company is not expected to assess the IROs related to those investments in the context of the double materiality assessment.
7. Disaggregation of fossil fuel revenues: The EFRAG draft of the ESRS requires disclosure of whether a company is active in the fossil fuel sector and provide for an option to present a disaggregation of revenues derived from coal, oil and gas.  Under the Commission’s new draft, this disclosure of disaggregated revenue is mandatory.

On 6 May, the Commission also published draft voluntary reporting standards, for SMEs that are protected by the value chain cap, on which the Commission is also seeking feedback.

If certain conditions are met, it is envisaged that global CSRD reports prepared by in-scope non-EU incorporated ultimate parent companies and EU branches of non-EU Companies can be prepared using ‘lighter touch’ reporting standards for non-EU companies (the “N-ESRS”).  On 24 April 2026, EFRAG submitted its sustainability reporting work programme for 2026 to the Commission, setting out its strategic priorities and planned activities.  The work programme envisages that exposure drafts of the N-ESRS will be published in advance of a 100-day consultation period, to run from July 2026.  EFRAG envisages issuing its technical advice to the Commission in January 2027, meaning that it is likely that the N-ESRS will only be finalised during 2027.

Now that the Omnibus simplification of the CSRD has concluded and the thresholds determining what companies are in scope has settled, in-scope many companies are restarting CSRD readiness projects.    Companies that expect to now fall out of scope should clarify and document, and brief their boards on, their new status and should consider whether and how sustainability is integrated into their governance framework in light of stakeholder expectations.  We recommend that companies closely watch the transposition of the CSRD into national laws.

Companies that are in-scope for CSRD reporting can also be required to include in their report information on how / to what extent the companies’ activities are associated with economic activities that qualify as environmentally sustainable in accordance with the EU Taxonomy Regulation.

The way to approach these disclosures is set down in the Disclosures Delegated Act.  As part of the first omnibus package announced last year, amendments were made to the Disclosures Delegated Act in July 2025 and these changes came into effect at the end of January 2026 (applying from 1 January 2026, subject to an option for companies whose financial year began between 1 January 2025 and 31 January 2025 to elect to use the former rules).

On 30 April 2026, the European Commission issued the a notice with interpretation and implementation guidance for the Taxonomy Regulation, which includes FAQs on the changes made the Disclosures Delegated Act, including with respect to assessing materiality and the interaction with IFRS 8.   This notice was originally issued in draft in December 2025.

Ireland has now transposed the EU’s Green Transition Directive into national law.  The new regulations amend existing Irish consumer protection laws to create new criminal offences (for both companies and their officers / managers) for engaging in certain types of greenwashing.  The new rules will apply from September of 2026.  Now may be an opportune time for clients to revisit the processes they have in place for reviewing and approving claims made in advertisements, promotional materials and product materials relating to sustainability.

When in force, the EU’s Deforestation Regulation (“EUDR“) will prohibit companies from importing, exporting or supplying certain products containing, fed with or made using cattle, cocoa, coffee, oil palm, rubber, soya or wood, unless the products are (a) deforestation-free; (b) produced in accordance with relevant legislation in the country of production; and (c) covered by a due diligence statement or simplified declaration.

On 4 May 2026, the Commission published a report on the simplification of the EUDR.  This report was accompanied by updated guidance and FAQs documents, as well as a draft new law that would amend the scope of application of the EUDR.  The proposed changes to the scope of the EUDR include: adding soluble coffee and certain palm oil derivatives to the scope of the regime; and removing leather and retreaded tyres.  A public feedback period on the draft new law is open until 1 June 2026.

The Commission’s latest announcement stresses the role of legal stability and predictability, indicating that significant further changes to the EUDR are unlikely.

The EUDR is due to come into effect on 30 December 2026.  There is a six-month delay for micro or small businesses established prior to 31 December 2024 (other than in respect of certain timber products).

The Ecodesign for Sustainable Products Regulation (“ESPR“) establishes a framework for setting ecodesign requirements for products to be placed on the market or put into service in the EU, aimed at improving environmental sustainability over the product lifecycle.  The ESPR also:

1. establishes the requirements for the new Digital Product Passport (“DPP“); every product for which ecodesign measures will be adopted will have a DPP, except if there is an alternative digital system providing equivalent information; and
2. creates a framework to prevent unsold consumer products from being destroyed.

On 9 February 2026, the EU Commission published the Commission Delegated Regulation, which outlines the circumstances in which derogations will be permitted from the prohibition of the destruction of unsold consumer goods (eg, health, hygiene and safety reasons), and the Commission Implementing Regulation to the ESPR which provides a standardised format for the disclosure of information on discarded unsold consumer products.

Many provisions of the ESPR will only apply after specific requirements for particular product groups are introduced by the Commission.  The timetable for adopting product requirements was set out on 16 April 2026, when the European Commission announced the Ecodesign for sustainable products and energy labelling working plan for 2025-2030.  The working plan follows a public consultation process in 2023 and a meeting of the Ecodesign Forum in February 2026.  The working plan envisages that product requirements will be adopted on the following basis:

• iron & steel – 2026
• textiles / apparel, tyres, aluminium – 2027
• furniture – 2028
• mattresses – 2029

Measures regarding repairability are due to be adopted in 2027 and regarding the recycled content and recyclability of electrical and electronic equipment are due to be adopted in 2029.

In April 2026, the Central Bank of Ireland published its findings from a review of board effectiveness through the lens of diversity and inclusion in the fund management company sector — the first standalone D&I review conducted in this sector.  Please see our article available here.

On 27 April 2026, the Irish Hight Court granted three environmental NGOs, including Client Earth, permission to challenge against a decision adopted by the Irish Commission for the Regulation of Utilities, which will govern granting of grid connections for large energy users (“LEUs“) such as data centres.  The NGOs claim that the decision is in breach of Ireland’s Climate Action and Low Carbon Development Act 2015 (including by failing to require LEUs to reduce emissions) and the EU Energy Efficiency Directive 2023/1791 (including that the decision will interfere with Ireland’s compliance with targets set under this Directive).

In the context of recent fuel price increases stemming from the Iran war, Ireland experienced a period of country-wide protests and road blockades.  As a direct consequence of these protests, Ireland postponed the planned carbon tax increase in respect of fuel which was originally due to be implemented on 1 May 2026 until 14 October 2026.  This was implemented through a Financial Resolution passed in the Oireachtas (the Irish parliament) on 14 April 2026.

Further temporary reductions in Mineral Oil Tax (excise duty) were also introduced.  Effective from midnight on 14 April 2026 until 31 July 2026 (extended from the original end-of-May date), the total reductions (VAT inclusive) are:

• Petrol: 27 cent per litre
• Diesel: 32 cent per litre
• Green diesel (marked gas oil): 7.4 cent per litre

These measures form part of the €505 million support package for the transport, farming and fisheries sectors and are funded from the exchequer surplus.

The Central Bank of Ireland published a revised Consumer Protection Code in March 2025 which took effect on 24 March 2026.  The Consumer Protection Code applies to a wide range of regulated firms that offer financial services to consumers in Ireland and includes a number of ESG related requirements, including requirements which seek to ensure customers are protected from ‘greenwashing’ and that firms take account of customers’ sustainability preferences when providing financial products and services.

On 29 April 2026, the European Commission announced that it has decided to open an infringement procedure against Ireland for failing to correctly transpose the Single-Use Plastics Directive into Irish law.  In particular, the Commission has called out that the Ireland has not transposed:

• the requirement for producers of single-use plastic items to cover the costs of awareness-raising initiatives;
• the requirement for ensuring that litter clean-up costs from public authorities are covered by producers;
• provisions allowing producers from other Member States to appoint an authorised representative in Ireland;
• measures specified for achieving a quantifiable reduction in single-use plastics in 2026 and for ensuring separate collection for recycling certain single-use plastics; and
• deadlines for extended producer responsibility schemes for some single-use plastic products.

Ireland has two months to respond and address the shortcomings raised by the Commission. If the Commission is not satisfied with Ireland’s response, the Commission may decide to issue a reasoned opinion ie, a formal request to comply with EU law.

The Irish Pharmaceutical Healthcare Association Limited (“IPHA”) has launched a challenge to the Urban Wastewater Treatment Directive (Directive 2024 / 3019, the (“UWWTD”) via an Irish High Court case. By way of reminder, the UWWTD imposes various obligations on Members States to ensure the proper the collection and treatment of wastewater, this includes the obligation to remove micropollutants which will financed by the sectors responsible for this pollution, ie the pharmaceutical and cosmetics industry. Member States must transpose the UWWTD by 31 July 2027, with extended producer responsibility obligations for in-scope companies coming into effect on 31 December 2028. The High Court has referred questions to the CJEU.  Full details are not yet available but we expect that a written judgment in respect of the referral will be published in due course.