Key highlights from April 2025 in the sustainability space.
1- EU adopts “stop-the-clock” mechanism
On April 14, the EU adopted part of the Omnibus I proposals, the “stop-the-clock” mechanism, which postpones the CSRD and CR3D application dates. The directive delays the entry into application of the CSRD for large companies not yet reporting, as well as for listed SMEs, by two years. Consequently, the next wave of CSRD reports is now expected for the 2027 financial year. The CS3D transposition deadline and first application phase have also been deferred by one year, setting the new transposition deadline at 26 July 2027 and the first wave of application for 26 July 2028.
For more information on the significance of the Omnibus proposals for sustainability, see our LinkedIn article here.
2- ESG funds experience record outflows in Q1 2025
According to Morningstar, sustainable investment funds saw outflows reach $8.6 billion in Q1 2025, marking their worst quarter since Morningstar began data collection on such funds in 2018. European investors became net sellers of these funds for the first time this quarter, and declining inflows in the US continued for their tenth quarter.
This decline is attributed to the political pushback against ESG that has emerged in early 2025, particularly in the US, where ESG funds are facing growing criticism for prioritising ideological agendas over financial returns. This sentiment influences global asset managers, leading to more cautious ESG marketing strategies. In Europe, the controversy has intensified with debates over including defence stocks in ESG portfolios amid rearmament efforts, which has unsettled long-time sustainability advocates.
Despite the outflows, the sustainable fund sector remains substantial, with over $3 trillion in assets. It will take more than current challenges for it to lose its position as a well-established asset class in the financial landscape.
3- NYC pension funds to require solid net-zero plans from asset managers
On Earth Day (April 22) 2025, New York City Comptroller Brad Lander reaffirmed the city's commitment to its Net Zero by 2040 goal for public pension funds, despite federal rollbacks on climate initiatives. The city's pension systems will now require asset managers overseeing the New York City Employees Retirement System, Teachers Retirement System, and Board of Education Retirement System to submit comprehensive net-zero plans by June 30, 2025. These plans must include strategies for real economy decarbonisation, integration of climate risks into investment decisions, and robust stewardship practices. Asset managers failing to meet these standards risk having their investment mandates put out to bid.
The city comptroller is also asking firms like BlackRock— which manages around $16.8 billion on behalf of NYCERS — to ask portfolio companies to “at minimum” measure and report scope 1, 2, and 3 emissions; establish a comprehensive net-zero and decarbonisation plan; consider the transition to a low-carbon business model; and “align future capital expenditures and lobbying with climate goals and targets.” This move not only offers a positive counterbalance to the current challenges facing sustainable initiatives in the US, but it also underscores that, in the short term at least, sustainability may increasingly become a matter for state and local governments to champion.
4- Canadian climate disclosure rule put on hold
On April 23, 2025, the Canadian Securities Administrators (CSA) announced that it has paused its efforts to develop a new mandatory climate-related disclosure rule for Canadian issuers. This decision aims to support Canadian markets and issuers as they navigate recent global economic and geopolitical changes, especially uncertainty caused by US tariffs. Issuers must still disclose material climate-related risks under existing securities legislation. Additionally, non-venture issuers must continue to provide disclosure regarding the representation of women on their boards and in executive officer positions.
It remains to be seen whether recent elections and the newly appointed prime minister will impact this change in direction.
5- Major nations reach a first-ever international agreement on a global carbon tax on shipping vessels
In April 2025, the International Maritime Organisation (IMO) reached a landmark agreement to impose a minimum fee of $100 per ton of greenhouse gas emissions from ships exceeding certain thresholds, marking the first global tax on such emissions. This initiative aims to generate $11–13 billion annually, allocated to the IMO’s Net Zero Fund to invest in green shipping technologies, reward low-emission vessels, and support developing countries in transitioning to cleaner fuels. The fee structure will become more stringent over time, aligning with the IMO’s goal of achieving net-zero emissions in the shipping industry by 2050.
The consensus emerged from a compromise between over 60 countries advocating for a straightforward emissions tax, led by climate-vulnerable Pacific island nations, and others, including China, Brazil, Saudi Arabia, and South Africa, who favoured a credit trading system. Environmental groups have offered mixed reactions; some praise the agreement as a significant step forward, while others criticise it for lacking sufficient ambition and potentially allowing companies to pay the fee rather than invest in cleaner technologies. Nonetheless, the agreement is notable, particularly given that it was reached despite strong opposition from the US.
- Content prepared with the help of Defne Fresko Tasci.