Sustainability/ESG

The IFRS Foundation has published a guide to help businesses report climate-related information using International Sustainability Standards Board standards.

The EU’s Regulation on ESG activities has been published. It aims to enhance transparency, reliability, and accountability in the ESG ratings market. Key provisions include mandatory registration for ESG ratings providers, standardised methodologies, and regular audits.

On 26 February 2025 the EU published a proposal to simplify sustainability due diligence and reporting via the Corporate Sustainability Due Diligence Directive (CSDDD) and the Corporate Sustainability Reporting Directive (CSRD). The intention is to simplify administrative burdens, boost competitiveness, and unlock investment capacity. It would delay the coming into force of CSDDD, with the deadline for Member States to transpose CSDDD into national law postponed to 26 July 2027, and the compliance deadline for the first wave of in-scope companies also postponed to 26 July 2028. The date for publication of compliance guidance by the EU Commission would also be brought forward to July 2026, to give businesses more time to prepare. The proposal may also water down CSDDD due diligence measures. Re CSRD, the proposal intends to reduce the number of companies within scope and postpone reporting requirements by 2 years for companies that were due to comply for financial years 2025 and 2026. We’ll monitor and report on developments.

The Loan Market Association (LMA) has published the first of its Sustainable Finance Insights Report series, Greenwashing: Understanding and navigating the impacts for the loan market (hosted on its sustainable financing microsite). The report considers greenwashing rules, guidance and initiatives developed in response to concerns about misleading sustainability claims and the impact on the loan market.

The LMA has also released its green loan term sheet, supplementing the model provisions for green loans. The Green Term Sheet accompanies the Draft Provisions of Green Loans, published in November 2024. These provisions aim to standardise documentation, enhance clarity, and uphold the integrity of green loan facilities. They promote sustainable finance by ensuring funds are directed towards projects with clear environmental benefits.

Data centres are the crucial infrastructure behind AI and related tech, and they’ve recently been designated ‘Critical National Infrastructure’ under the updated National Planning Policy Framework. But there are sustainability and environmental issues associated with the amounts of energy and water needed to power data centres. The BBC has recently reported that the UK’s AI ambitions could lead to water shortages, and we’ve published a briefing on environmental and commercial concerns associated with water stress more generally. The Royal Academy of Engineering has published a report which asks the government to ensure tech companies report how much energy and water their data centres are using, as well as calling for additional sustainability requirements for all data centres.

Also in water news, in a UK first, Lewes District Council has agreed to recognise the legal rights of Sussex’s River Ouse, in a charter to protect the river’s fundamental right to “exist, thrive, and evolve”, and to promote action to restore the river’s and the surrounding catchment’s ecological and chemical health. The move follows a growing international trend aimed at increasing environmental protections, with examples already found in New Zealand, Canada and Colombia.

Corporate/corporate reporting

Companies House has updated the indicative timetable for implementation of key company law reforms introduced by the Economic Crime and Corporate Transparency Act 2023 (ECCTA). In related news, regulations were published as part of the new identity verification regime introduced by the ECCTA. See the explanatory memoranda here and here.

The Financial Reporting Council has published its thematic review of Climate-related Financial Disclosures (CFD) by AIM-traded and large private companies. The findings are relevant to UK-registered listed companies subject to both the CFD requirements and the “comply or explain” requirements in connection with the Task Force on Climate-related Financial Disclosures. The review found inconsistent quality among the reports, although the companies sampled had tried to meet the CFD requirements.

The draft Companies (Directors’ Remuneration and Audit) (Amendment) Regulations 2025 (Regulations) set out proposed amendments to the directors’ remuneration reporting requirements in the Companies Act 2006 and the Large and Medium-Sized Companies and Groups (Accounts and Report) Regulations 2008. The proposed changes remove most of the disclosures which were added to implement parts of the revised EU Shareholder Rights Directive into the UK in 2019. The Regulations also propose to remove the requirement for directors’ remuneration reports to be kept available on the company’s website for ten years, and to exclude unquoted traded companies from the directors’ remuneration report and policy requirements.

The Reporting on Payment Practices and Performance (Amendment) Regulations 2025 came into force on 1 March 2025. In relation to financial years beginning on or after 1 April 2025, in-scope companies will be required to publish the additional information set out in a new Schedule 2 relating to retention clauses in qualifying construction contracts with their suppliers. The government published updated guidance for companies and LLPs who must comply with the statutory reporting duty for payment practices and performance. The guidance also covers other regulatory changes, including changes made to thresholds for defining a large business (effective from April 2025), and new reporting requirements for businesses with reporting periods starting in January 2025.

UK PLCs are starting to see more class action securities claims (sometimes known as ‘stock-drop’ litigation). Such claims are typically brought by investors in relation to a company’s published information, for example in the annual report, prospectus or other listing document[s]. Liability arises if the company’s senior management knew, or were reckless as to whether, published information was false or misleading.

Data protection/cyber security/tech and digital

The UK government has published the First Independent International AI Safety Report. It sets out “the first comprehensive, shared scientific understanding of advanced AI systems and their risks”, having had input from 100 world-leading AI experts. It’s anecdotally described as the first global handbook on AI.

The government has also launched the “Blueprint for Digital Government”. The plan identifies key priorities, including: joining up public sector services; harnessing the power of AI; reforming funding of digital and technology; and maximising the value and potential of public procurement of digital and technology. It also begins to expand upon the AI Opportunities Action Plan.

The government has opened bidding for its AI Growth Zones in a major drive to revitalise local communities. Local and regional authorities across the UK are being encouraged to put their communities forward to become dedicated hotbeds for AI infrastructure development and attracting millions in private investment.

The AI literacy requirement under the EU AI Act started to apply on 2 February. We also saw the first pieces of guidance coming out of Europe, on prohibited AI practices and the definition of AI system under the Act. We’re waiting for guidance on other key aspects, including high-risk AI systems. Our recent webinar on the regulatory requirements under the Act and the AI landscape generally is now available to view on demand.

We’re seeing an increasing amount of hype about ‘agentic AI’ – one of the top tech trends for 2025. The government’s recently published AI playbook for the public sector describes agentic AI as “autonomous AI systems that can make decisions and perform actions with minimal human intervention”. The UK’s AI Opportunities Action Plan refers to these systems, saying that “the chatbots we are all familiar with are just an early glimpse as to what is possible”.

Amazon has introduced Alexa+, its next-generation assistant powered by generative AI and with agentic capabilities. The tool promises to enable Alexa to navigate the internet in a self-directed way to complete tasks on the customer’s behalf.

The government is currently analysing the feedback from a consultation on proposals to change the way copyright law applies to the training of AI models, amid a backlash from key figures in the creative industries sector.

The government is recruiting key specialists to expand the board which is advising it on ‘seizing the transformative potential of quantum technologies’. The government describes the technology as critical, offering solutions in almost every sector, from healthcare to energy, and says it will be an important part of the forthcoming industrial strategy. With Microsoft recently introducing a new chip that it “expects will realise quantum computers capable of solving meaningful, industrial-scale problems in years, not decades”, and Amazon announcing its own new chip, this emerging tech – in all its forms – is firmly on the radar.

The Information Commissioner’s Office (ICO) published its 2025 Tech Horizons report, focusing on the technologies poised to significantly affect society, the economy and information rights in the next 2 to 7 years. They include synthetic media and its identification and detection. The report also provides updates on other emerging tech featured in previous reports, including the commercial use of drones, quantum tech and neurotech.

The ICO is intensifying efforts to tackle cookie compliance across the UK’s top 1,000 websites. It’s part of a new online tracking strategy aimed at making sure people have meaningful control over how their personal information is tracked and used online. It has also published guidance on ‘consent or pay’ online advertising models and is consulting on guidance on the use of storage and access technologies (formerly its ‘cookies guidance’). See Walker Morris’ recent briefing.

The fees payable to the ICO by data controllers increased on 17 February 2025 following a 2024 consultation. The new fees are: £52 for tier 1 (micro-organisations): £78 for tier 2 (small and medium organisations); and £3,763 for tier 3 (large organisations).

The government responded to a call for views on a code of practice for cyber governance. An updated code will be published early this year.

The government recently published a voluntary code of practice on AI cybersecurity and an accompanying implementation guide. The code sets out baseline cybersecurity principles to help secure AI systems and the organisations which develop and deploy them. It will be used as the basis for a new global standard. The code is relevant for businesses across the supply chain for AI systems and those planning to purchase AI services.

Commercial/general

The European Commission has announced its three core areas for action to boost the EU’s competitiveness (through the aptly named “Competitiveness Compass” roadmap): boosting innovation – AI gigafactories and action plans for the increased adoption of AI; access to clean and affordable energy; and Clean Trade and Investment Partnerships to help “secure supply of raw materials, clean energy, sustainable transport fuels, and clean tech from across the world”. Businesses operating with or in the EU should review the detail to understand potential opportunities and compliance.

In February 2025, the Department for Business and Trade published its strategic steer to the CMA, setting out how it expects the CMA to support and contribute to economic growth. On 10 March 2025, the CMA announced that promoting competition and protecting consumers will remain fundamental, while a key tenet of its strategy to support growth will be to use its enhanced powers under the Digital Markets, Competition and Consumers Act (DMCCA) to promote consumer confidence and deter poor corporate practices. Commentators are predicting this will mean an increased focus on greenwashing, as well as on fake reviews and drip-pricing. (Drip pricing is where a customer is shown an initial price for a product or service, later to discover additional fees/charges.) In April 2025, the CMA will publish guidance an approach document and final guidance on the new consumer enforcement regime.

The government has announced measures to speed up and simplify procurement processes in the public sector. The intention is that thousands of small businesses across the country will have more opportunities to win contracts with public sector organisations. Alongside measures for small business, companies that win public sector contracts will be told to advertise vacancies at local job centres. The government has said that it will also consult on more reforms, including a requirement for large contracting authorities to publish and report on targets for small business and social enterprise spend, and the exclusion of suppliers from contracts worth more than £5million if they don’t complete prompt payments of invoices.

On 13 February 2025, the Government published its response to its consultation  on the deregulation of the Commercial Agents (Council Directive) Regulations 1993 (CARs). It concludes: the CARs will continue in effect without amendment, and there’s insufficient evidence that the freedom to negotiate contracts is restricted/a significant issue.

On 22 January 2025, the Packaging and Packaging Waste Regulation was published. The Regulation will apply from 12 August 2026 and includes re-use obligations for businesses.

On 6 February 2025, the Government confirmed mandatory digital waste tracking will come into force from April 2026. The initiative aims to provide a comprehensive system for tracking waste production, handling, and disposal, and will help businesses comply with waste management regulations, promote a circular economy, and replace outdated systems.

The government has committed to reforming business rates. A discussion paper sets out the priority areas of reform, although timings for implementation of various measures are currently unknown. For 2025-26, the discount offered to retail, hospitality and leisure will be 40% with a cap of £110,000 per business. The small business multiplier will also be frozen in 2025-26. Further details on new multipliers to be introduced from April 2026 are awaited.

The Future Buildings Standard, which will set out more stringent efficiency standards, is expected to be implemented at some point in 2025 (date to be confirmed) for all new non-domestic developments.

A commercial tenant has brought a High Court claim against its landlord, which could have far-reaching implications. Picturehouse claims that Criterion arranged for its insurers to charge enhanced commission on insurance which it passed on to the tenant and then recovered via ‘insurance rent’. Picturehouse claims this can’t be justified and should be claimed back. Picturehouse also argues that fire sprinklers in the building were turned off in 2015 because of building safety renovation works. That led to the insurer ramping up the premiums and increasing the excess to more than £1m. It claims that tenants shouldn’t be obliged to pay insurance increases caused by fire safety issues.

The Ministry of Housing, Communities & Local Government has published the Construction Products Reform Green Paper. It’s a consultation, open until 21 May 2025, on wide-ranging plans for the future regulation of construction products. Proposals include bringing all construction products within the general product safety regime; enhanced regulatory, surveillance and enforcement powers; development of a new single Construction Products Regulator; and civil and criminal penalties for manufacturers that engage in misleading practices or neglect their responsibilities regarding product safety.

The government is consulting until 7 May 2025 on standardising electronic invoicing and increasing its adoption across UK businesses and the public sector.

The Risk Coalition published new principles-based guidance for board risk committees and risk functions across all sectors.

The Arbitration Act 2025 has received Royal Assent. It’s not yet known on what date the provisions will come into force, but the new legislation codifies established case law and introduces practical improvements to the arbitration framework set by the 1996 Act.

People

The Employment Rights Bill (Bill) is currently progressing through Parliament and is expected to be finalised this summer, with a staged implementation during 2025 and 2026. See Walker Morris’ March 2025 article for the latest developments.

As part of its new guidance on employment practices and data protection, the ICO published its final guidance on keeping employment records.

On 11 February 2025, the Independent Anti-Slavery Commissioner published its Strategic Plan for 2024-2026. The Plan outlines three primary objectives: Prevention, Protection, and Prosecution. It emphasises the need to incorporate the perspectives of those with lived experiences into anti-slavery policies and initiatives and to enhance our comprehension of modern slavery. The Plan follows calls from the House of Lords Select Committee for the UK government to review its approach to Modern Slavery or be left behind the EU and international measures. The government is reviewing how to best tackle forced labour and increase transparency in supply chains and an inquiry into Forced Labour in UK Supply Chains closed on 14 February.

The Home Office updated its employer’s guide to right to work checks.

The FTSE Women Leaders Review published a report on gender balance on boards and in leadership teams of the FTSE 350. The report sets out the findings as of 10 January 2025. It assesses progress made against recommendations on the representation of women on boards and in senior leadership roles. It finds that, of the FTSE 350 companies, 43.3% of board roles were held by women which means that 73.4% of the FTSE 350 met or exceeded the target of a minimum of 40% women’s representation on the board. See the press release.

Recent studies have found that, despite the backlash against diversity, equity and inclusion programmes in the US, UK firms are protecting DEI budgets and embedding DEI goals into their core business.

Employing minors and young workers can bring many benefits to a business – different perspectives, skills, and meeting staffing needs. But employing young people comes with a few additional responsibilities and obligations. See our recent briefing for information and advice.