In the context of the omnibus simplification process and ongoing review of regulation in the EU, the European Commission has decided to de-prioritise the adoption of a number of ‘non-essential' Level 2 acts until after 1 October 2027. 

Sustainable finance and reporting legislation affected includes the Sustainable Finance Disclosure Regulation (SFDR), the European Sustainability Reporting Standards (ESRS), the EU Green Bond Standard Regulation and the ESG Ratings Regulation.

On 1 October 2025, the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (“DG FISMA”) wrote to the European Supervisory Authorities (the “ESAs”, which is comprised the European Insurance and Occupational Pensions Authority, the European Securities Markets Authority and the European Banking Authority) and the Anti-Money Laundering Authority to inform them of the Commission’s decision to delay, amend or repeal a number of “non-essential” Level 2 acts. See list of those acts here.

The letter refers to the Commission’s aim ‘to deliver more effective and efficient implementation of EU policies’ and notes that the EU ‘acquis’ (the accumulated body of EU law including all treaties, laws, decisions, international agreements and judgments of the Court of Justice) has grown significantly in the area of financial services. In light of this growth and also the omnibus simplification process which is currently proceeding, the Commission has categorised the 430 empowerments in the financial services acquis, identifying where the Commission is legally required to act and what the timeframe for action is. It has decided that 115 empowerments are ‘non-essential for the effective functioning of the Level 1 legislation for the achievement of EU policy objectives’ and has accordingly de-prioritised these Level 2 acts.

The Commission sets out which empowerments have been identified as non-essential here and it states that it will (i) not adopt any non-essential Level 2 acts listed before 1 October 2027; and (ii) propose to amend or repeal the empowerments for non-essential Level 2 acts where there is an obligation to act within a specified deadline in the context of amendments to relevant Level 1 acts.

The list of ‘non-essential empowerments’ related to sustainable finance and sustainability reporting include:

• revised regulatory technical standards (“RTS”) which were expected in relation to the Sustainable Finance Disclosure Regulation (“SFDR”) in Q1 2024 – these have been delayed due to the ongoing review of the SFDR;
• delegated acts expected under the Accounting Directive to provide for European Sustainability Reporting Standards (ESRS) for listed SMEs (LSMEs), sector-specific and third country undertakings and to amend the first set of ESRS as well as delegated acts in respect of sustainability assurance under the Audit Directive;
• RTS on content and information for ESG ratings (for entities subject to SFDR and those who are not) and equivalence conditions and implementing technical standards (ITS) related to disclosure requirements specifying data standards, formats and templates for methodology disclosures; and
• RTS in relation to cooperation between competent authorities under the EU Green Bond Standard.

After 1 October 2027, the Commission will adopt the outstanding acts or will amend or repeal them as appropriate in the context of the omnibus and any reviews of legislation. This de-prioritisation is not part of the omnibus simplification package itself and sits apart.

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This note is intended to be a general guide to the latest ESG developments. It does not constitute legal advice.

Authored by Emily Julier and Rita Hunter.