European Commission delays Level 2 acts in sustainable finance legislation

On 6 October 2025, the European Commission published a letter from the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) to the three European Supervisory Authorities (ESAs) and the Chair of the Anti-Money Laundering Authority, announcing the de-prioritisation of certain Level 2 acts in financial services legislation. Level 2 acts are intended to provide technical and implementation details for core (Level 1) legislation. For example, an EU Directive or Regulation is a Level 1 act and any delegated acts made under that are Level 2 acts. 

The Commission acknowledges that industry stakeholders have raised concerns about the large number of Level 2 measures - totalling 430 - due to be adopted in the coming years. After consultation with the Parliament and the Council, the Commission has decided to categorise 115 of these acts as “non-essential” for the effective functioning of Level 1 legislation.

Accordingly, the Commission will not adopt the Level 2 acts listed in the Annex to the letter before 1 October 2027. Where empowerment has legal deadlines, the Commission intends to propose amending or repealing them during forthcoming revisions of the relevant Level 1 acts.

This blog post focuses on the Level 2 acts that are most relevant to sustainable finance. 

Key -sustainability related “non-essential” legal acts include:

• ESRS under the CSRD:
  1. Delegated acts on sector-specific European Sustainability Reporting Standards (ESRS) under the Corporate Sustainability Reporting Directive (CSRD). Notably, under the Omnibus I proposal as suggested by the Commission, these sector-specific ESRS will not be required.
  2. ESRS for listed small and medium-sized enterprises (LSMEs). Under the Omnibus I proposal, LSMEs will fall outside the scope of the CSRD
  3. ESRS for non-EU companies (NESRS). Under the CSRD, non-EU companies are required to start reporting in 2029. The delegated act on the NESRS should be adopted by the Commission by 30 June 2026; this deadline remains unchanged in the Commission’s Omnibus I proposal. Unless the Omnibus I proposal is amended further by the European Parliament or the Council during the Omnibus trilogues (negotiations), the Commission would need to propose additional changes to the CSRD to postpone this deadline. Given the current legislative process for the Omnibus I is highly challenging, reopening the CSRD again to move this deadline may prove difficult.
  4. Review of the first set of (non-sector specific) ESRS. Under the CSRD, the Commission must review the ESRS at least every three years from the date of their application, taking into account the technical advice of the European Financial Reporting Advisory Group (EFRAG) and, where necessary, amend such delegated acts to reflect relevant developments, including international standards. The Commission is required to conduct this review in Q4 of 2027. Given that a major review of the ESRS is already ongoing, it is logical that the periodic review required by the CSRD would be delayed. However, any formal delay or termination of the duty to carry out these reviews would require further amendments to the CSRD.
• Audit Directive: The “non-essential” documents include delegated acts on standards for the limited assurance of sustainability reporting and on standards for reasonable assurance of sustainability reporting. Regarding reasonable assurance, the Omnibus I proposal removes the provisions that contemplated an uplift in assurance requirements from limited to reasonable assurance, rendering this act redundant if the proposal is adopted as suggested by the Commission. For limited assurance, the Omnibus I proposal changes the Commission’s obligation to adopt limited assurance standards to a power to do so. The Explanatory Memorandum to the Omnibus I proposal states that the Commission will issue targeted assurance guidelines by 2026. It is unclear whether the delay envisaged by the October letter also affects these guidelines, or if they will be developed as originally planned.
• Transparency Directive: The “non-essential” acts include an implementing act on equivalence decisions for third-country sustainability reporting standards, as well as delegated acts on general criteria on equivalence for third-country sustainability reporting and on the equivalence of management report requirements. Under the Transparency Directive, as amended by the CSRD, non-EU issuers (companies with equity or debt securities listed on an EEA regulated market) may also fall within the scope of the CSRD. One exemption allows undertakings whose reports are prepared under third-country law, and where the European Union has determined equivalence of those reporting standards, not to report under the CSRD. The delay of the relevant acts would most likely postpone non-EU issuers’ ability to use this exemption.
• SFDR: Ten revised regulatory technical standards (RTS) under the Sustainable Finance Disclosure Regulation (SFDR) are due to be delayed. Given that the Commission plans a major review of the SFDR, the postponement of these acts is logical in this context.
• ESG Ratings: The RTS on content and information to be disclosed for SFDR ESG ratings, the RTS on content and information to be disclosed for ESG ratings disclosed by financial undertakings that are not subject to SFDR, DA on equivalence conditions. This does not negate the need to comply with the Level 1 disclosure obligations. In the absence of the clarification that would have been delivered under the Level 2 text, firms will need to reach their own views of how to achieve compliance (and which of the disclosure obligations are relevant to their products) which could lead to divergent approaches in the market (unless ESA guidance is published in lieu of final delegated acts).
• Green Bonds: The RTS specifying information to be exchanged between competent authorities and the ITS to establish forms, templates and procedures for the purposes of the exchange of information and cooperation between competent authorities in investigation, supervision and enforcement under the European Green Bonds Regulation. 
• Solvency II: The RTS on management of sustainability risks including sustainability risk plans (which had originally been due to be adopted in H1 2026). 

For more information on the Omnibus I proposal, see our Omnibus Tracker.