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Drawing on insights from Kinstellar's ESG Service Line members, we present you summary of the most recent regulatory and policy updates impacting ESG across the Central and Eastern European and Central Asian region. Q3 of 2025 saw continued momentum in ESG regulation, marked by following themes.
First, progress on the transposition of the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) and related due diligence legislation under the new direction of the Omnibus proposals remained uneven across the region. Several countries managed to adjust timelines and thresholds in response to the EU's Directive (EU) 2025/794 (the Stop-the-Clock Directive).
At the same time, national authorities are moving from policy design to enforcement: Hungary's new ESG sanctioning regime and Uzbekistan's strengthened governance standards for public interest entities signal a more rules-based approach to compliance.
Finally, there is growing support for broader climate and social objectives, including new waste and adaptation strategies, equal pay initiatives, and the integration of ESG performance criteria into public sector operations. Meanwhile, governments have intensified their focus on the energy transition by introducing new frameworks to accelerate the deployment of renewables, expand access to sustainable finance and explore nuclear and alternative energy technologies. This marks a region-wide acceleration in clean energy policies.
Austria
Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CS3D) – transposition delayed
As of the end of Q3 2025, neither the Corporate Sustainability Reporting Directive (CSRD) nor the Corporate Sustainability Due Diligence Directive (CS3D) have been implemented in Austria. A national draft law for the transposition of the CSRD has been published and is currently awaiting approval by the Austrian parliament. The draft was issued on 27 March 2025, but its adoption timeline remains uncertain. Crucially, the current draft does not provide for any "goldplating" – i.e., it mirrors the minimum requirements of the directive without adding stricter national obligations. However, it is worth noting that the draft is based on the original version of the CSRD and does not yet reflect the updates introduced by the "Stop the Clock" amending directive, which deferred reporting deadlines and eased certain reporting obligations.
Austrian companies are therefore advised to monitor the legislative process closely, as further changes may be expected before final adoption.
Renewable Energy Expansion Acceleration Act
The Austrian draft law Renewable Energy Expansion Acceleration Act (Erneuerbaren-Ausbau-Beschleunigungsgesetz – "EABG")" seeks to significantly speed up the expansion of renewable energy in Austria by introducing a more streamlined, centralized approval regime for energy projects.
A key innovation is the introduction of a fully concentrated approval procedure, which will apply even to projects below the thresholds ordinarily triggering an environmental impact assessment (Umweltverträglichkeitsprüfung). This ensures that the permitting process is no longer fragmented across multiple parallel procedures, thereby reducing administrative complexity and delays. The proposal further modernizes procedural practice through digital publication of announcements, hybrid or virtual hearings, and codified rules on procedural structuring, including stages for public participation. It also creates mechanisms for preliminary work authorizations, emergency or trial operations, and introduces a coordinated approach to route planning by updating the national integrated infrastructure plan (Netzinfrastrukturplan) and providing for corridor reservations.
From a regulatory perspective, the reform seeks to harmonize Austrian law with the requirements of the revised EU Renewable Energy Directive – RED III. The legislator is thereby safeguarding Austria's distinct system of combining environmental assessment and final permitting within a single proceeding – an approach that would otherwise risk being undermined by EU-mandated acceleration zones. The draft also amends the existing Austrian Renewable Energy Expansion Act (Erneuerbaren-Ausbau-Gesetz – "EAG") to align its infrastructure planning framework with the new procedural regime. In this way, the law ensures legal certainty, compliance with Union law, and the creation of a more efficient and predictable pathway for the development of renewable energy projects.
Bulgaria
Amendments to the Climate Change Mitigation Act
In September 2025, the Bulgarian parliament approved amendments to the Climate Change Mitigation Act. The bill has been officially promulgated in the State Gazette and the proposed changes are already in effect.
The latest amendments concern Bulgaria's commitments to reducing greenhouse gas emissions. In line with the Bulgarian National Recovery and Resilience Plan, the country has pledged to phase out coal-fired power plants and reduce emissions according to a timeline set to begin in early 2026. Instead of mandating the closure of existing power plants using coal, the amended Climate Change Mitigation Act prohibits the construction and operation of new coal-based facilities. For the existing plants, the amendments introduce a cumulative emissions cap of 10,983,000 tons of carbon dioxide, which will remain applicable until these plants cease electricity production.
In addition, a number of amendments to the Climate Change Mitigation Act are aimed at incorporating into national legislation Directive 2023/959 on the EU Emissions Trading System (EU ETS) and Directive 2023/958 on revised EU ETS rules for the aviation sector. Furthermore, it implements national measures to align with Regulation (EU) 2023/957, Regulation (EU) 2023/839, Regulation (EU) 2023/857, and Regulation (EU) 2018/1999.
Croatia
European Investment Bank (EIB) provides EUR 150 million loan for green-financin
In July 2025, the European Investment Bank (EIB) approved a €150 million loan to the Croatian Bank for Reconstruction and Development (HBOR), marking the first tranche of a wider €350 million financing facility. The funds will be distributed through HBOR and local commercial banks to Croatian companies and public entities, with at least 30 percent explicitly reserved for green projects such as renewable energy, energy efficiency, sustainable construction, and clean mobility. Importantly, HBOR has committed to ensuring that all supported projects comply with EU and national environmental, climate, and social standards.
Exploration of nuclear power and construction of small modular reactors (SMR) in Croatia
One of the most significant strategic developments in Croatia's energy policy is the renewed consideration of nuclear power, with particular focus on small modular reactors (SMRs). The Government has announced its intention to construct at least three SMR units as part of a broader effort to strengthen energy security, reduce greenhouse gas emissions, and modernize the national power system. To that end, a dedicated Working Group for Nuclear Energy has been established.
Its mandate includes identifying potential sites, preparing the necessary legislative and regulatory framework, and conducting a comparative assessment of SMRs in relation to conventional nuclear power plants. At the end of September 2025, the Minister of Economy presented the Government's strategic plans for the deployment of SMRs, stressing that the Working Group is in the process of drafting a legal framework to enable the project's realization. It is anticipated that a draft Nuclear Energy Act will be submitted to the Croatian Parliament by the end of the year.
Czech Republic
Czech CSRD transposition finalised
On 21 August 2025, the Czech President signed the amendment to the Accounting Act and related legislation (published as Act No. 316/2025 Coll.), thereby finalising the second phase of the Czech Republic's implementation of the Corporate Sustainability Reporting Directive (CSRD). The revised legislation was published in September 2025.
The initial draft aimed to implement the second and subsequent waves of reporting obligations according to the CSRD. However, following the adoption of the Stop-the-Clock Directive and the European Commission's ESG Omnibus proposals, the Czech legislation was revised. Notably, the applicability threshold for sustainability reporting was increased from 500 to 1,000 employees and the phased approach was removed. This effectively suspends the extension of reporting obligations to further company categories, in line with the Stop-the-Clock measure.
The amendment also introduces new rules for sustainability reporting. Where an entity is not legally obliged to prepare a sustainability report, it may only label a voluntary report as a "sustainability report" if it complies with EU or international sustainability reporting standards. All sustainability reports, including voluntary ones, must be verified by an auditor. The revised threshold will apply to accounting periods beginning on or after 1 January 2025.
Czech Waste Management Plan 2025–2035 was adopted
In September 2025, the Czech government approved a new Waste Management Plan for the period 2025–2035. The plan provides a strategic framework for transitioning to sustainable waste management and reflects both EU and national obligations, particularly the progressive restriction of landfilling. The plan is based on the principles of the circular economy and prioritises waste prevention, recycling and energy recovery from residual waste.
Key elements include extending the scope of extended producer responsibility beyond packaging, batteries, and electronics to include textiles and footwear, with a potential future expansion to furniture, toys, and sporting goods. The plan also sets out clear quantitative targets: by 2035, over four million tonnes of municipal waste should be recycled each year and less than 300,000 tonnes of mixed municipal waste should go to landfill. The government estimates that meeting these objectives will require investments of approximately CZK 159 billion by 2035.
EU ETS2 stabilisation proposal – Czech initiative gains majority support
Supported by 18 other Member States representing over 91% of the EU's population, the Czech Republic submitted a joint 'non-paper' to the European Commission requesting changes to the design of the new EU emissions trading system for buildings and road transport (EU ETS2). Although the Czech government continues to advocate the cancellation or postponement of ETS2, it has secured significant support for specific stabilising measures intended to prevent excessive price volatility and shield households from excessive costs.
The joint document calls for: (i) earlier auctions of allowances in 2026 to reduce uncertainty; (ii) a strengthened market stability reserve (MSR) with the ability to release additional allowances more flexibly; and (iii) a price threshold of EUR 45 per allowance, above which further allowances would be released.
In September 2025, EU Climate Commissioner Wopke Hoekstra confirmed that the Commission is analysing the proposals and is committed to presenting adjustments by the end of the year to ensure that ETS2 is implemented in a socially sensitive manner and that the risks of energy and transport poverty are mitigated.
EU Climate target for 2040 challenged by Czech Republic calling for revision
At the extraordinary Environment Council meeting in Brussels in September 2025, the Czech Republic — supported by France, Italy, Poland, Austria and others — opposed the European Commission's proposal for a new EU climate target of reducing greenhouse gas emissions by 90% by 2040 compared to 1990 levels. The Czech government considers the proposal to be unrealistic, given the current technological and geopolitical circumstances, and has called for a broader discussion at the level of the European Council. The Danish presidency subsequently withdrew the vote from the agenda, with further discussions expected.
The Czech position emphasises the need to safeguard industrial competitiveness, ensure affordable access to clean energy, and avoid negative social impacts. While reaffirming its commitment to the 2030 target of reducing emissions by 55%, the government argued that a target for 2040 should only be set once clear technological pathways have been established for hard-to-abate sectors such as steel, cement, and chemicals.
Hungary
Government Decree No. 276/2025 (VIII.21.) – ESG sanctioning framework introduced
Government Decree No. 276/2025 (VIII.21.) introduced a structured and transparent framework for the imposition of sanctions related to breaches of specific ESG obligations, effective from 6 September 2025. The Decree sets out clear and proportionate rules, covering cases such as acting as an ESG intermediary without proper authorisation, failing to provide data to the competent authority, or neglecting to notify changes to relevant data. The Supervisory Authority for Regulated Activities (in Hungarian: Szabályozott Tevékenységek Felügyeleti Hatósága)has been designated as the competent body to impose fines, which may reach up to HUF 50 million for specific violations detailed in the Annex. Importantly, penalties for failing to submit ESG reports will only apply from January 2026.
Kazakhstan
First Social Bond Issuance in Kazakhstan
On 4 September 2025, the Aktobe Social-Entrepreneurship Corporation (SEC Aktobe) issued its first social bond on the Astana International Exchange (AIX). The proceeds are intended to support job creation, small and medium-sized enterprises, and social infrastructure projects. The issuance was reviewed by the AIFC Green Finance Centre for compliance with international Social Bond Principles, marking an important milestone in the development of sustainable finance in Kazakhstan.
Kazakhstan-AIIB Multi-Year Rolling Pipeline
On 10 September 2025, Kazakhstan and the Asian Infrastructure Investment Bank (AIIB) signed a Memorandum of Understanding to establish a multi-year rolling pipeline of up to USD 6 billion in infrastructure investments through 2029. The framework covers 14 sovereign-backed projects focused on transport modernization, green energy transition, and social infrastructure, highlighting Kazakhstan's commitment to sustainable development and its role as a regional hub for ESG-driven growth.
Romania
Postponement of CSRD Reporting Deadlines
Romania has transposed the EU's Stop-the-Clock Directive through Ministry of Finance Order No. 1421/2025, published in the Official Gazette on 22 August 2025, thus amending Order No. 85/2024 on sustainability reporting (initially transposing Corporate Sustainability Reporting EU Directive) by moving deadlines originally set for 1 January 2025 to 1 January 2027, and deadlines from 1 January 2026 to 1 January 2028.
The postponement of reporting obligations did not affect the entities whose sustainability reporting obligations commenced in the financial year beginning on January 1, 2024 (those with more than 500 employees).
This provides additional time for companies in Romania to prepare for the new CSRD requirements, easing the transition to enhanced sustainability reporting.
Romania approved the National Strategy on Adaptation to Climate Change for 2024-2030
On August 14, 2025 the Government approved, at the proposal of the Ministry of Environment, Water and Forests, the Government Decision for the adoption of the National Strategy on Adaptation to Climate Change for the period 2024-2030, with the perspective of 2050.
The goal of this strategy is to increase the resilience of socio-economic and ecological systems to the growing risks posed by climate change and protect communities. The strategy covers key sectors such as water management, public health, forests, energy, and transport, and includes concrete measures to be implemented.
In this context, companies should consider assessing physical climate risks, integrate adaptive solutions into their activities and projects and monitor the requirements of local and central authorities, as the case may be.
National Program on Environmental Performance of Public Authorities
On 28 August 2025, Romania approved the National Program on Environmental Performance of Public Authorities and Institutions which requires public authorities and institutions to measure and report environmental performance indicators and to submit monitoring plans. Key program objectives refer to aspects such as: optimize water, energy, and material consumption, reduce waste generation, promote green public procurement, implement measures for consumption reduction.
The program positions environmental performance as a core element of public sector operations, with implications for private companies engaging with public authorities on contracts or ESG compliance initiatives. The program creates conditions for updating public procurement criteria to integrate ESG reporting and environmental performance considerations and opens more opportunities for suppliers with green capabilities to participate in public contracts. Additionally, public reporting can serve as a reference point for ESG due diligence in business sector.
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