In April 2024, the Competition and Markets Authority (CMA) issued updated guidance on its merger review process. The most significant changes were to the process for in-depth phase 2 merger reviews and were designed to streamline the process, increase engagement with the Inquiry Group that determines the case and encourage earlier discussions on remedies (see our May 2024 update).

On 6 March 2025, the CMA concluded its first phase 2 review under the revised process and cleared the merger of two travel agency services companies that operate globally (Amex Global Business Travel and CWT). The CMA had initially identified competition issues, but changed its view late in the process.

What you need to know

• This is the first merger to be reviewed under the CMA's new "streamlined" phase 2 process and it is also the first Phase 2 decision since the appointment of Doug Gurr as interim chair of the CMA.
• Unusually, the CMA panel was divided on whether the merger gives rise competition concerns.
• The decision is consistent with the CMA's renewed focus on 'growth' and taking a more proportionate approach to reviewing global deals. However, it remains too early to tell if this is the beginning of a new pro-business CMA.

Background on the merger

The merger relates to Amex Global Business Travel's (GBT) acquisition of rival CWT. Both parties provide travel agency services to business customers and allow corporate customers to search for, book and manage expenses on behalf of business travellers. Both parties supply customers globally.

The CMA's investigation focused on the supply of these services to customers with a high total spend and requirements spanning multiple regions. The supply of these services was found to be global (i.e. suppliers based anywhere in the world can compete to provide such services).

The CMA found this segment of the market was characterised by two large players (the acquirer, GBT, and its competitor BCD) and a tail of smaller competitors. The long tail of competitors included FCM, CTM, Navan and the target (CWT).

Wider context of the merger

This is the first merger reviewed under the CMA's new phase 2 process, which applies to all cases opened by the CMA from 25 April 2024. The new process involves increased engagement with the merging parties, an Interim Report published earlier in the process (replacing the Provisional Findings under the old process) and the opportunity for an earlier discussion on remedies.

It is also the first Phase 2 decision since Doug Gurr was appointed as interim chair of the CMA and the publication of the UK Government's draft strategic steer to the CMA to support growth and investment. On the same day that the draft strategic steer was published, the CMA reiterated the 4Ps (pace, predictability, proportionality and process) framework. The CMA has committed to "rapid, meaningful change based on these principles, starting with the mergers process" which it recognises as a "particularly critical area for investment, including inward investment to the UK". The CMA has stated that it will take a proportionate approach to reviewing global deals.

Given the parties' global reach, the merger is also being reviewed in the United States and on the 10 January 2025 the Department of Justice filed a lawsuit to block the merger. Despite approval from the CMA, the merger therefore still faces an uncertain future.

The CMA's analysis

The CMA decision turns on two key issues.

• First, the CMA found that CWT had been in a weak financial position since the Covid-19 pandemic and has struggled to retain and win new customers in recent years. For example, the CMA's analysis showed that CWT was the only supplier in the market to be shrinking, with all other suppliers experiencing double-digit growth. Turning to the question of the future of CWT, the CMA found "its financial position is unlikely to improve and it potentially faces a trajectory of continuing to lose more business than it will gain".
• Second, the CMA conducted an analysis of bidding data and recent customer wins, with a particular focus on recent data. The CMA's analysis confirmed that BCD was a strong constraint on the parties. The CMA also concluded that whilst the remaining competitors were currently much smaller than the parties their customer volumes have been "consistently and substantially increasing" and it is expected that they "will exert increased competitive constraints in the market".

In combination, these factors led the CMA to conclude that the competitive constraint imposed by CWT was declining, whilst that imposed by other suppliers was increasing.

The CMA's findings are heavily reliant on the results of bidding data, with relatively little weight placed on other factors it typically considers important. For example, the parties had a combined market share of 50-60% (with an increment of 10-20%), which is a level which would typically raise concerns. In addition, the CMA's conclusion places relatively little weight on feedback from customers and internal documents which suggested that the parties were close competitors.

Outcome of the CMA review

In its Interim Report, the CMA had provisionally identified competition concerns. However, the CMA issued a supplemental report on 18 February 2025 which took into account new evidence relating to the target's financial health and the strength of competitors and reversed their provisional competition concerns to clear the merger.

The CMA's conclusion was finely balanced. Phase 2 merger decisions are typically decided by a panel of four independent members, with a two-thirds majority (i.e. at least three out of four) being required to identify competition concerns. This case was a relatively rare instance of the CMA panel being evenly split.

Implications for future cases

Under the revised Phase 2 process, the CMA published its Interim Report earlier than Provisional Findings would have been published under the previous process. The subsequent publication of a supplemental Interim Report is consistent with the CMA issuing a more provisional report under the revised Phase 2 process, suggesting that the outcome of more cases may change between the interim and final report stages.

The decision in this case is also consistent with the CMA's intention to take a less interventionist role in global deals.

This is the first case to have been completed under the new process so it is too early to draw firm conclusions. It was not unusual for the CMA to change provisional findings under the old Phase 2 process and, with only two other ongoing phase 2 cases, it will take time to determine if this represents a genuinely new approach from the CMA consistent with their pro-growth and pro-business agenda.

Want to know more?

• CMA adopts new Phase 2 merger process (3 May 2024) https://www.ashurst.com/en/insights/cma-adopts-new-phase-2-merger-process/

Other author: Oliver Noble, Competition Economist

On 23 January 2025, the EU Platform on Sustainable Finance (PSF), which is an expert advisory body established under Article 20 of the Taxonomy Regulation ((EU) 2019/2088), published a summary report: Building trust in transition: core elements for assessing corporate transition plans. The Report identifies core elements for evaluating transition plans (TPs), which the PSF recognises are a key tool in raising and granting the transition finance that is needed by businesses to align their business models with climate and other environmental targets. The Report also recommends issues for financial market participants (FMPs) to consider when assessing the credibility of TPs and makes recommendations to the EU Commission on enhancing the effectiveness of its policy framework and supporting the market to provide and access transition finance.

Key findings of the Report include:

• FMPs can assess TPs on four core elements: (i) science-based and time-bound targets (ii) levers and actions to achieve these targets, (iii) financial planning (i.e. investments and funding supporting the TP) and (iv) governance and oversight of the plan and its implementation.
• The EU Taxonomy and other tools including disclosures required by EU legislation (e.g., the climate neutrality plans required by the EU Emissions Trading Scheme (EU ETS) or the transformation plans required under the Industrial Emissions Directive (2010/75/EU) (IED)) can help to evaluate the robustness and consistency of TPs. In particular, the EU Taxonomy can enhance the credibility of a company’s financial planning by demonstrating how its expenditures align with the EU´s net zero by 2050 target and other EU environmental objectives.
• Effective TPs take a holistic approach which integrates climate mitigation and adaptation actions with broader environmental and social objectives.

The report is intended to complement the anticipated EFRAG Implementation Guidance on Transition Plans for Climate Change Mitigation (TPIG), which will support entities in meeting transparency and disclosure obligations under the EU Sustainability Reporting Standards (ESRS) made under the Corporate Sustainability Reporting Directive (CSRD) ((EU) 2022/2464) (see Ashurst Governance & Compliance Update - Issue 60).

In its Omnibus Package announced on 26 February 2025, the Commission proposed changes to Article 22(1) of the Corporate Sustainability Due Diligence Directive (CS3D) ((EU) 2024/1760), which currently requires in-scope companies to adopt and put into effect 1.5 degrees Paris aligned climate TPs. If the proposed changes are adopted by the EU Parliament and EU Council, companies would no longer be required to put TPs into effect but they will still need to develop them. The EU Commission also proposes to review the ESRS to reduce the number of mandatory datapoints that in-scope companies must report. It is not clear how this will affect existing requirements relating to TPs in the ESRS (see EU Commission publishes first Omnibus Package to simplify sustainability regulations).

Principles and core elements to assess TPs

The PSF considers that FMPs should assess TPs based on all material impacts, risks, and opportunities faced by companies, not just those related to climate change mitigation. The Report sets out guiding principles and core elements that can be used to assess TPs. There is a table in section 4.2 summarising the issues the PSF recommend FMPs consider when assessing TPs. The PSF also recommends that the Commission develops a checklist of core elements FMPs should consider when assessing corporate TPs when providing transition finance in the EU.

The three principles that should guide TP assessments include:

• Ambition, environmental and social integrity. FMPs should assess if the targets in a TP are compatible with the 1.5 degrees Paris Agreement goal. Even where the TP's focus is on climate mitigation, the plan should avoid causing significant harm to other environmental and social objectives.
• Consistency & feasibility. FMPs should assess whether the TP is consistent with the company’s business strategy, ambition and mitigation actions and whether decarbonisation levers are feasible given external dependencies, disclosed assumptions, and the relevant time horizons. FMPs should assess whether the targets are technologically achievable and economically viable and, if not 1.5 degrees aligned, work with the company and other stakeholders to understand what actions need to be taken to ensure they can be aligned to that goal in the future.
• Transparency & completeness. TPs should provide sufficient detail for FMPs to evaluate whether the company’s transition is realistic and aligned with its stated goals.

The PSF's four core elements are based on the elements of a TP required under Article 22(1) of the CS3D. The sections below summarise the PSF's recommendations in respect of these core and other elements.

Targets

The PSF considers that FMPs should assess whether targets are science-based (i.e. aligned with the goal of limiting of global warming to 1.5 °C with no or limited overshoot, which implies meeting net zero by 2050 and a remaining global carbon budget of 400-500 Gt).

FMPs should also understand if climate scenarios (such as those provided by the Network for Greening the Financial System or the International Energy Agency) have been used to set the targets and if the targets cover all of Scope 1-3 greenhouse gas emissions. In addition, there should be short, medium and long term targets and these should include absolute targets although intensity targets can also be provided. (Intensity targets are those that are expressed as the amount of GHG relative to a particular metric e.g. GHG per number of employees or GHG per unit of revenue.) Targets should also be gross targets rather than expressed net of carbon removals or offsetting. Only net zero (rather than intermediate) targets can incorporate the use of carbon removals and only for restricted clearly-defined applications addressing residual emissions (which allowing for justified sectoral variations, will usually be 5-10% of emissions).

The Report explains the characteristics of climate scenarios that FMPs should understand in assessing TPs. For example, the variations in methodologies between the various scenario providers should be borne in mind when making comparisons of TPs across entities or of assets in portfolios.

The PSF recommends that the Commission develops EU sectoral transition pathways for high-emitting sectors consistent with the existing tools like the Taxonomy, provides guidance on selecting climate scenarios to be used in target setting and transition planning and develops criteria for qualifying targets as credible and science-based as this is not currently defined in existing EU legislation. At present, many organisations choose to have their targets verified by the Science-based Targets initiative (SBTi) to demonstrate their credibility.

Mitigation actions and levers

The PSF suggests that mitigation actions and levers should be considered in the context of the external dependencies (such as infrastructure, resources, or geographic or policy factors) that may limit their uptake. It recommends that FMPs should perform a DNSH assessment of the implemented or planned actions using the EU Taxonomy DNSH and minimum social safeguard criteria to see if there are other social or environmental issues that would suggest the actions should not be undertaken.

The PSF also suggests that TPs of companies exposed to fossil fuels should be assessed as to whether they lock-in use of fossil fuel-based assets even where low-carbon alternatives are available or whether they promote the phase-out of fossil fuels. The Report recommends that FMPs should ensure companies disclose a qualitative assessment of the potential locked-in GHG emissions from key assets and products, in line with the ESRS requirements. This should include an explanation of whether and how these emissions may jeopardise the achievement of the company’s GHG targets and drive transition risk, and if applicable, how the company will manage its GHG-intensive and energy-intensive assets that are at risk of becoming stranded. The Report notes that asset-level data and activity-level information, is vital for understanding the risk of locked-in emissions and linking to other tools such as the climate neutrality plans required by the EU ETS or the transformation plans required under the IED can add credibility to TPs.

Activities that lack technological solutions to achieve net zero but where lower-carbon alternatives are available (known as "always significantly harmful" or ASH) require a decommissioning or a managed exit plan. The PSF considers identifying ASH activities would help identify potential stranded assets at a company level and also within portfolios, financial instruments and products. If a list of ASH activities is not given, FMPs should consider if companies exposed to fossil fuels have a phase-out strategy and whether they are investing in new fossil fuel assets, including coal reserves, oil and gas fields, operations, or production.

Financial planning

The PSF suggests that FMPs assess the extent to which the TP is integrated into the preparer's financial plans. FMPs should also use EU Taxonomy capex alignment information to assess whether a company is using sufficient resources to achieve its climate targets. In particular, capex plans for reaching Taxonomy alignment in five-ten years can help understand how a company intends to transition eligible assets at the economic activity-level. If alignment is not currently possible, FMPs can assess whether the company has set targets to achieve alignment in the future.

The PSF also suggests FMPs should check capex information for new investments in fossil fuel infrastructure (excluding capex investments in line with EU Taxonomy’s criteria for gas-related transitional activities). FMPs should use available EU Taxonomy opex alignment information to assess company´s efforts in research, development and innovation. (Note the EU Commission proposes in the Omnibus Package that certain in-scope companies claiming Taxonomy alignment or partial alignment can choose to disclose OpEx KPIs. This may limit the Taxonomy alignment information available to FMPs.)

FMPs could also assess the consistency between planned investments/ financial planning and stated decarbonisation actions and levers in the TP, particularly relating to the achievement of short and mid-term targets.

Governance

The PSF recommends that a TP should explain Board and audit committee oversight of the TP as well as stakeholder engagement and if the company's position on lobbying and advocacy is aligned with its climate targets. The TP should also detail how it will be implemented and how progress against the targets will be monitored.

Another key area for FMPs to consider is whether the TP explains how performance on sustainability-related targets and executive compensation is linked.

The PSF suggests that the Commission should develop:

(i) A monitoring framework or a public registry that could be used to track emission reductions and implementation of TPs on a company and sector-level.

(ii) A TP template for non-financial undertakings that could be used to comply with EU legislation including CSRD and CS3D.

Other consideration - adaptation and just transition issues

The PSF considers that TPs should address climate adaptation as well as climate mitigation given the interdependencies between these objectives. Other environmental objectives (for example, reducing an entity's impact on nature or reducing waste) should also be integrated where they materially impact or are impacted by the entity, in line with the double materiality principle.

TPs should also address the social implications of the plan to ensure a just transition for the company, workers and wider communities. In particular, PSF recommends that FMPs should assess if the TP takes a people-centred and human rights-based approach that explains how the social impacts of the transition will be addressed, how human rights and labour standards are respected and whether employment and training opportunities are promoted. They should also assess if climate adaptation and resilience measures are incorporated including how working conditions will be safeguarded from climate change impacts and if affected stakeholders have been engaged. The Report notes that the CS3D, which is based on existing business and human rights standards (such as the UN Guiding Principles on Business and Human Rights) provides a framework for integrating human rights considerations into TPs and that these standards also relate to the EU Taxonomy's minimum social safeguards and certain reporting requirements under the Sustainable Finance Disclosures Regulation ((EU) 2019/2088) (SFDR) and the CSRD.

Acknowledging that more work is needed in these areas, the PSF notes that the core principles and elements in its Report could be used across those social and environmental objectives. The Report also notes that the DNSH criteria in the EU Taxonomy provide a valuable tool to reduce harm for eligible economic activities. Plans to transition from harmful activities can be disclosed against the six environmental objectives of the Taxonomy Regulation (see Amendments to the EU Taxonomy Regulation). The PSF recommends that the Commission provides guidance on how adaptation and just transition can be further incorporated into TPs.

FMPs should assess whether the TP includes measures to avoid significant harm to other environmental objectives while making progress toward net-zero emissions. When assessing the robustness of targets, FMPs should assess whether targets include DNSH considerations on other environmental objectives and that consider trade-offs and co-benefits as between objectives.

In line with GFANZ's October 2024 consultation on draft guidance on incorporating nature into TPs (see Ashurst Governance & Compliance Update – Issue 58), PSF considers biodiversity plans should be incorporated into TPs to reduce reporting burdens on companies as well as improve consistency and impact and make assessing companies TPs easier for FMPs.

Comment

The PSF's Report acknowledges the EU Commission's competitiveness agenda, which was announced by Ursula von der Leyen in November 2024 and the Omnibus Package that was imminent when it was published (see EU Competitiveness Compass). The Report references administrative burdens placed on the private sector and stresses the need to use existing legal obligations to develop a methodology for assessing TPs. Following publication of the first Omnibus Package, it is not yet clear what it means for the development of Transition Plans. The proposals (which may yet be subject to further negotiation) still require the development of TPs by entities in-scope of CS3D. It seems likely however, that the level of disclosure will be better tailored to the size and complexity of reporting entities.

Irrespective of the changes that will result from the Omnibus Package, developing and publishing a Transition Plan is still a valuable exercise for companies that will help them to manage their climate risks, demonstrate that directors have adequately taken into account the impact of company's decisions on the environment when exercising their directors' duties, and where the TP is credible, could mitigate greenwashing risks.

Another area where clarity is needed is the possible gap between EU requirements and those in other jurisdictions. The PSF's core elements are similar to the core elements that the Transition Plan Taskforce (TPT) included in its Disclosure Framework and that are likely to form the basis of mandatory TP requirements anticipated in the UK (see Transition Plan Taskforce issues Disclosure Framework and consults on sector guidance). If the PSF's recommendation for the Commission to develop a checklist of core elements for FMPs to consider when assessing corporate TPs is based on this Report, entities with obligations to prepare and publish TPs under both EU and UK legislation may face additional burdens in ensuring that their TP satisfies both sets of requirements.

Want to know more?

• Transition Plan Taskforce issues Disclosure Framework and consults on sector guidance
• Transition Plan Taskforce publishes final report on next steps for Transition Plans

Download full publication

Want to know more?

Artificial Intelligence

• EU AI Act: deadline for prohibited AI systems is fast approaching (31 January 2025)
• Board Priorities in 2025: Artificial intelligence (16 January 2025)
• Australia: New AI safety "guardrails" and a targeted approach to high-risk settings (28 November 2024)
• Global AI Regulation Guide (28 November 2024)

Privacy and Data

• Australian Privacy Reforms: A generational change inches closer (17 December 2024)
• Navigating Data Protection Reforms: A Comparative Analysis of UK and Australia (12 December 2024)
• Outpacing cyber laws – Redefining cyber readiness (17 October 2024)
• Australia's first tranche of privacy reforms – a deep dive and why they matter (15 October 2024)

Competition and Consumer Protection

• More with more: ACCC announces bumper compliance and enforcement priorities for 2025-26 (21 February 2025)
• Merger reforms passed by Australian Parliament (29 November 2024)
• Australian government moves to ban unfair trading practices (18 November 2024)
• Australia's bold Scam Prevention Framework Bill has been introduced into Parliament (15 November 2024)
• The long awaited Scam Prevention Framework is here! (2 October 2024)

Tech M&A

• What to Expect for Tech M&A in 2025 (23 December 2024)
• Tech M&A: Recent "Acquihires" in the Tech Sector (13 August 2024)
• Tech M&A: Key Pitfalls to Anticipate and Avoid With Deferred Consideration (3 June 2024)

Disputes

• Current trends in Australian disputes 2024-25 (31 January 2025)
• Declassing class actions: Reflections following the Waller Legal class action (5 March 2025)

Cyber Security

• Redefining cyber readiness – Australia passes its first Cyber Security Act (28 November 2024)
• Changes to the SOCI Act are on the horizon (22 October 2024)
• Redefining cyber readiness – Three ways to outpace Australia's new cyber laws (10 October 2024)
• Governing Through a Cyber Crisis - Cyber Incident Response and Recovery for Australian Directors (aicd.com.au) (February 2024)

Authors: Tihana Zuk, Partner, Competition; Rebecca Cope, Partner, Digital Economy; Geoff McGrath, Partner, Digital Economy; Nina Fitzgerald, Partner, IP/Media; Robert Todd, Partner, IP/Media; Phillip Aquilina, Senior Associate, Dispute Resolution; Stuart Dullard, Partner, Corporate Transactions; Leon Franklin, Director, Risk Advisory; and Andrew Hilton, Expertise Counsel, Digital Economy.

• taken action against Simba Sleep, Emma Group (see our December 2024 update) and Wowcher in relation to urgency and price reduction claims;
• challenged Google for taking insufficient action to protect consumers from fake reviews;
• obtained undertakings from ASOS, Boohoo and George at Asda to ensure that environmental claims are accurate and not misleading (see our September 2024 update).

What businesses should do now 

In advance of 6 April 2025, businesses should be actively ensuring that they comply with the consumer law regime. Steps to ensure compliance could include:

• Arranging regular staff training, including briefing staff on changes to the UK consumer law regime and the importance of ensuring compliance given the CMA's new powers to directly enforce consumer law.
• Establishing appropriate internal policies relating to consumer law obligations, including in respect of representations and promises made to consumers. These should be reviewed and updated regularly.
• Implementing governance systems and compliance programmes to monitor the business' compliance with the consumer law regime in line with consumer law legislation and existing CMA guidance. For example, this could include monitoring pricing comparisons to ensure that they adhere to the CMA's guidance on volume and duration requirements (see its discount and reference pricing principles: selling mattresses online) or inspecting a sample of goods to ensure that they are accurately described and are of a satisfactory quality (see Groupon undertakings).
• Reviewing green / environmental claims to ensure that any claims, including those made on the business' website, social media pages and/or the product itself, adhere to the CMA's Green Claims Code. This also relates to claims for third-party products which the business sells. The CMA's investigation into the fashion sector shows that the CMA will take enforcement action if green claims are inaccurate and misleading (see our September 2024 update).
• Ensuring that customers can exercise their statutory rights, are not misled and are given all necessary information about their rights when making a purchase (see for example the Wowcher undertakings). Recent sweeps undertaken by the European Commission, the Australian Competition and Consumer Commission and other national consumer protection authorities in these areas suggest this is likely to be a growing area of focus.
• Ensuring that effective systems are in place for customers to raise queries or complaints, in particular that consumers can access appropriate customer service systems to swiftly and effectively raise a query, concern or complaint with a customer services team (see Groupon undertakings).

Comment

The CMA's announcement emphasises the importance it ascribes to ensuring that early enforcement action is proportionate, which will provide comfort to businesses taking steps to comply with the regime. Businesses should therefore familiarise themselves with the CMA's existing guidance and its new enforcement powers to ensure that they have implemented the necessary processes and procedures to ensure compliance. This will be aided by the CMA's publication of a streamlined and simplified version of its unfair commercial practices guidance.

Businesses should also monitor anticipated developments, including publication of the final version of the CMA's guidance and the proposed consultation on the aspects of drip pricing that have created uncertainty, as well as the CMA's initial enforcement action.  

Overall, the announcement indicates that the CMA is focused on supporting businesses that are actively working towards complying with consumer protection laws (consistent with the more business-friendly and growth-focused approach set by the Government in the draft Strategic Steer it has given to the CMA). However, the CMA also makes reference to early enforcement action and we anticipate it will not shy away from using its new fining powers where it identifies serious breaches. We expect that the CMA will be considering a number of precedent-setting cases to establish the new regime and the announcement therefore provides an early warning in advance of the new fining powers coming into effect next month.

Want to know more

• DMCC Act: CMA consultation on direct consumer enforcement guidance, 08 November 2024 (https://www.ashurst.com/en/insights/dmcc-act-cma-consultation-on-direct-consumer-enforcement-guidance/). The Draft CMA200 guidance sets out the CMA's general approach to the exercise of its direct enforcement powers under the DMCC Act and contains statements of policy as to how it will exercise its powers to impose monetary penalties.
• DMCC Act: Overhaul of UK consumer law, 10 July 2024 (https://www.ashurst.com/en/insights/dmcc-act-overhaul-of-uk-consumer-law/). The DMCC Act enables the CMA to directly enforce consumer law through administrative proceedings in a step change in consumer law enforcement in the UK.

Authors: Olivia Spong, Associate; Jamie Walker, Trainee Solicitor; Aanya Verma, Solicitor Apprentice

On 26 February 2025, the European Commission introduced the first Omnibus Package to simplify the Corporate Sustainability Due Diligence Directive (CS3D), the Corporate Sustainability Reporting Directive (CSRD), and the EU Taxonomy Regulation.

Key changes include aligning the CSRD thresholds, which determine which companies are obliged to report, with those under the CS3D and removing 80% of companies from CSRD scope. The package also postpones CSRD reporting requirements.

The changes proposed regarding the EU Taxonomy focus on reducing reporting obligations through an “opt-in” regime that allows large undertakings claiming alignment or partial alignment with the Taxonomy to choose to disclose their OpEx KPI. Other proposals are to reduce reporting templates, simplify the “Do no significant harm” criteria and adjust the Green Asset Ratio, which is the main Taxonomy-based KPI for banks.

The CS3D changes include limiting due diligence to tier 1 suppliers and reducing monitoring frequency. The package also proposes eliminating EU-level civil liability and the obligation to “put into effect” any climate transition plan.

The European Parliament and Council must agree on the proposed directives, which could undergo further changes. The simplification aims to enhance EU competitiveness while balancing growth and sustainability but has been seen by some as part of a global “greenlash” against pro-sustainability policies. Read Ashurst's full article on the changes.

What does this mean for you?

• From a greenwashing perspective, companies which no longer have mandatory reporting obligations under the CSRD may be at greater risk of making inaccurate or misleading sustainability claims. They will no longer have to undergo the rigorous process of verifying information for the purposes of CSRD disclosures. Companies that may fall out of scope owing to the proposals may still decide to report on a voluntary basis, however they may do this without obtaining assurance, which removes a check on the accuracy of the reported information and may introduce greenwashing risks.
• Similarly, the changes concerning the Taxonomy Regulation (which is a key EU law defining what constitutes sustainable economic activity within the bloc) may make it easier for companies to pass off as sustainable activities which have questionable green credentials.
• The changes to the CS3D in relation to transition plans are seen as particularly ripe for greenwashing risk. In scope companies will still have to produce transition plans but will no longer have to put them into effect. That may provoke allegations that their transition plans are not worth the paper they are written on.

EU: ESMA Guidelines

"The Italian Securities and Exchange Commission (CONSOB) and the Bank of Italy implemented new ESMA guidelines on funds' names using ESG related terms. This move significantly supports the ESG agenda by offering asset managers clear and measurable criteria to determine the appropriate use of ESG terminology."

Author: Loris Bovo

On 21 August 2024, the European Securities and Markets Authority (ESMA) issued guidelines regarding the use of ESG or sustainability-related terms in the names of investment funds. These guidelines are designed to prevent the misleading, ambiguous, or unfair use of such terms.

ESMA has stipulated that these guidelines shall apply to the following entities:

• Undertakings for Collective Investment in Transferable Securities (UCITS) management companies, including any UCITS that has not designated a UCITS management company;
• Alternative Investment Fund Managers (AIFMs), including internally managed AIFs;
• Managers of European Venture Capital Funds, European Social Entrepreneurship Funds, European Long Term Investment Funds and Money Market Funds; and
• Competent Authorities.

To use ESG-related terminology, at least 80% of investments must meet environmental or social characteristics or sustainable investment objectives.

In accordance with the CONSOB's Notice of 29 October 2024 and the Bank of Italy's Note No. 43 of 30 October 2024, both the CONSOB and the Bank of Italy have informed ESMA of their intention to comply with these guidelines. They have clarified that the guidelines were effective from 21 November 2024.

What does this mean for you?

For managers of Collective Investment Schemes that were already in existence as of 21 November 2024, the following provisions apply:

• Transitional Period: A transitional period of six months is granted, concluding on 21 May 2025.
• Immediate Compliance: Managers must adhere to the guidelines that are effective immediately.

The Italian authorities have clarified that these guidelines should be regarded as supervisory guidelines. This means they are non-binding provisions intended to explain how recipients can comply with legal or regulatory requirements. If recipients choose to use alternative methods, they must be able to demonstrate to the Bank of Italy, upon request, that these alternative methods still fulfil the requirements established by the implemented regulations.

UK: Principles for voluntary carbon and nature market integrity

"The UK Government has stepped up by proposing six principles for voluntary carbon and nature market integrity coupled with a public consultation on raising integrity in 2025."

Author: Alex Hansby

Voluntary carbon and nature markets could be effective mechanisms to support domestic and global climate and nature goals, however, integrity remains a key challenge. An earlier response to this challenge has come from supply and demand side stakeholders collaborating on a joint framework - the Voluntary Carbon Markets Integrity Initiative (VCMI) Claims Code of Practice (see Greenwatch Issue 3).

Now the UK Government has stepped up by proposing six principles for voluntary carbon and nature market integrity. Broadly, the principles hold that credits should only be used in addition to climate action, be verified, support wider social objectives and be publicly reported on. The principles also relate to credit holders, stating that they should make accurate claims (by using appropriate and accurate terminology) involving credit use and co-operate with other market actors to support standardisation.

Consultation on the principles was signalled for early 2025 (awaited at the time of this update).

What does this mean for you?

• While the principles are voluntary, the UK Government's introductory document states that the principles are intended to "enable stakeholders and potentially UK regulators to monitor and act where good practice is not adhered to in the context of existing and future regulatory codes."
• This raises the possibility that the principles at least become 'good practice', and in the consultation notice the UK Government said it intends to invite views on whether endorsement of outputs "could be reflected in guidance, policy and potentially regulation."
• In any case, the principles indicate the UK Government's view of proper and improper use of these credits. It would be prudent to consider the use of voluntary credits, including claims made about their value and use, align with the proposed principles.

UK: Complaint against advertising company submitted to responsible business body

"The complaint against WPP is notable because although climate-related claims have been referred to NCPs before, this is the first known complaint that has targeted an advertising company."

Author: Tom Cummins

The UK's Advertising Standards Authority has been one of the most active regulators of greenwashing. It has banned advertisements by airlines, energy companies, banks and clothing retailers, amongst others.

In February 2025 two NGOs (The New Weather Institute and Adfree Cities) submitted a complaint against WPP, one of the world's largest advertising companies, under the OECD Guidelines for Multinational Enterprises on Responsible Business Conduct. The complaint alleges that WPP has breached the guidelines by contributing to adverse human rights and environmental impacts through its advertising work.

The OECD Guidelines are government- backed recommendations on how businesses can conduct themselves responsibly. They cover a range of areas from human rights and the environment through to financial crime and consumer interests. As we've covered before, the Guidelines were updated in 2023 expressly to address climate change.

Complaints under the Guidelines are not brought before national courts; rather they are referred to national contact points (NCPs) established in all countries that support the Guidelines. NCPs are tasked with resolving disputes – they cannot impose any remedy on the subject of a complaint, but they may publish recommendations.

The complaint against WPP involves allegations that the advertising company's work increases demand for carbon-intensive products and undermines the fight against global emissions. Specifically, the complaint criticises WPP for allegedly failing to disclose its "advertised emissions" (i.e. the emissions arising from extra consumption driven by its advertising); failing to carry out appropriate stakeholder engagement and due diligence; failing to prevent, mitigate, or remediate adverse impacts from its business relationships; and including misleading statements in its sustainability reporting, including regarding how its activities align with the Paris Climate Agreement.

The complainants have made clear that the complaint is not confined to misleading advertising but encompasses advertising of the products of high emitters more broadly.

What does this mean for you?

• The complaint against WPP is notable because although climate-related claims have been referred to NCPs before, this is the first known complaint that has targeted an advertising company, rather than a high-emitter or financial services company.
• It illustrates that NGOs are creatively looking for ways in which they can challenge businesses they consider contribute indirectly to climate change.
• A wide range of businesses should therefore consider their exposure to greenwashing claims.

Read our previous issue

Greenwatch Issue 5

• On 12 March 2025, the High Court of Australia handed down its landmark decision of Commonwealth of Australia v Yunupingu on behalf of the Gumatj Clan or Estate Group [2025] HCA 6.
• The High Court agreed with the Full Federal Court that pre-1975 acts of the Commonwealth could be compensable under the Native Title Act 1993 (Cth) as invalid acquisitions of property contravening the just terms guarantee imposed by section 51(xxxi) of the Australian Constitution.
• Prior to Gumatj, the Courts had only considered whether post-1975 acts by the States and Commonwealth that offended the Racial Discrimination Act 1975 (Cth) were compensable. However, the possibility that contravention of section 51(xxxi) might lead to invalidity was contemplated at the time of the enactment of the Native Title Act. Gumatj is simply the first compensation claim to test this principle.
• It is important to note that the Court has not yet ordered that the Commonwealth pay compensation to the Gumatj Clan. This decision is the legal step necessary to allow the Gumatj Clan to progress their claims that the 1939 vesting of minerals in the Crown and the grant of certain leases between the 1930s-1960s are "compensable acts" under the Native Title Act. It will be some years before the claim is fully resolved.

What you need to do

• Note that this decision predominantly affects the Commonwealth. It has exposed the Commonwealth to significant liability for many of its land dealings in the Northern Territory and other Commonwealth Territories from the early 1900s. There is also the issue of Commonwealth land dealings, including the compulsory acquisition of land in the States.
• The decision is likely to trigger new compensation claims in relation to Commonwealth land. The Commonwealth may attempt to resolve its liability by way of Indigenous Land Use Agreements with relevant native title holding groups or consider attempting a multi-claim area negotiated settlement similar to that reached by the WA Government with the Noongar People.
• Note that the decision has no direct impact on State Governments or third parties. For non-Commonwealth land users operating on land or using minerals in respect of which native title was extinguished by Commonwealth legislation, the question is whether liability for native title compensation has been passed on by legislation or in contracts.

Commonwealth of Australia v Yunupingu on behalf of the Gumatj Clan or Estate Group [2025] HCA 6

Context of the Gumatj compensation claim – a test case for pre-1975 acts

The Gumatj Clan filed a claim in late 2019 seeking compensation from the Commonwealth and the Northern Territory in respect of the acquisition of land and minerals in the Gove Peninsula in the Northern Territory between the 1930s and 1960s. This claim revisits the same Commonwealth actions that gave rise to the Yirrkala people's bark petitions to parliament and the Gove land rights case – Milirrpum v Nabalco.

The claim stood as a test case for whether certain pre-1975 acts of the Commonwealth are compensable under the Native Title Act 1993 (Cth) as an acquisition of property other than on "just terms" in accordance with section 51(xxxi) of the Australian Constitution.

Prior to Gumatj, the Courts had only considered whether post-1975 acts that offended the Racial Discrimination Act 1975 (Cth) were compensable.

From a legal perspective, the decision is not a surprise. The possibility that contravention of section 51(xxxi) of the Constitution might lead to invalidity requiring validation by the Native Title Act was in fact contemplated at the time of the enactment of the Native Title Act in the early 1990s. Gumatj is simply the first compensation claim to test this principle.

In May 2023, the Full Court recognised a new category of invalid acts: Commonwealth acquisitions of native title rights and interests that did not provide just terms in accordance with section 51(xxxi) of the Constitution (including those that occurred prior to 1975). The Commonwealth appealed to the High Court.

The High Court was asked to consider whether the just terms requirement in the Constitution:

• applies to laws made by the Commonwealth under the territories power; and
• applies to acquisitions of native title rights and interests.

The resolution of the constitutional issues relates to the question of whether certain acts and dealings may be "compensable acts" under the Native Title Act.

High Court agreed with the Full Court

On 12 March 2025, the High Court dismissed the appeal.

The High Court answered the Constitutional questions as follows:

The just terms requirement applies to laws made under the territories power

The first constitutional question was whether the just terms requirement applies to a law made under the territories power for the compulsory acquisition of property.

The High Court said that the territories power was subject to section 51(xxxi) of the Constitution. It said:

"The time has come for it to be finally and authoritatively declared that the power conferred on the Commonwealth Parliament by s 122 of the Constitution to make laws for the government of a territory does not extent to making a law with respect to an acquisition of property otherwise than on just terms within the meaning of section 51(xxxi) of the Constitution".

Native title rights and interests are property and subject to the just terms requirement

The second constitutional question was whether the extinguishment or impairment of native title rights was capable of being characterised as an "acquisition of property" for the purposes of section 51(xxxi) of the Constitution? The property in question was the non-exclusive native title rights that potentially remained after exclusive native title rights were extinguished by the grant of pastoral leases in the 1880s.

The Commonwealth and the Northern Territory argued that the acquisition of native title rights and interests does not have to be made on just terms. They said that native title rights and interests are inherently susceptible to extinguishment or impairment by an inconsistent exercise of the Crown's radical title and that the High Court has consistently described native title rights and interests as "inherently fragile" or "inherently weaker".

The High Court agreed with the Full Court's rejection of this argument. The High Court agreed with the Full Court that native title rights and interests are proprietary in nature and constitute “property” for the purposes of section 51(xxxi). To say otherwise would be "untenable". A grant or act that extinguishes native title rights and interests is capable of amounting to an acquisition of property within the meaning of section 51(xxxi). Accordingly, an extinguishment of native title rights and interests that did not provide just terms is an invalid act which gives rise to a compensation entitlement under the Native Title Act.

What does this mean for the Gumatj claim?

The Gumatj Clan has pleaded the following acts as compensable acts:

• vesting of minerals in the Crown under section 107 Mining Ordinance 1939 (NT);
• grant of a 1938 lease to the Methodist Missionary Society of Australia Trust pursuant to the Aboriginals Ordinance 1918-1937 (NT); and
• grant of special mineral leases pursuant to the 1939 Ordinance in 1958 and 1963, and pursuant to the 1939 Ordinance and the Mining (Gove Peninsula Nabalco Agreement) Ordinance 1968 (NT) in 1969.

The High Court said "the theory of the claim is sound" and the decision allows the Gumatj Clan to progress their claims that the acts are "compensable acts" under the Native Title Act. This is on the basis that they were acquisitions of property other than on just terms (invalid under section 51(xxxi) of the Constitution), validated as "past acts" by the Native Title Act and triggering a right to claim compensation from the Commonwealth.

However, there are still a number of unresolved questions in the Gumatj Clan's parallel native title claim. They still have significant hurdles to overcome. For the Gumatj Clan's compensation claim to succeed, they must prove that they hold native title in the area (a claim contested by other clans) and that there is a native title right to take and use minerals. Finally, the extent to which any native title holders have already been compensated for the Government's acts is also a live issue.

We expect that this claim will not be resolved for a number of years.

Implications of the High Court's decision

The High Court's decision increases the Commonwealth's exposure to native title compensation liability well beyond the area claimed by the Gumatj Clan.

The decision is likely to trigger new compensation claims in relation to Commonwealth land dealings in the Northern Territory and other Commonwealth territories. There is also the issue of Commonwealth land dealings in the States such as the compulsory acquisition of land where just terms compensation was not payable.

The Commonwealth argued during the hearing that if the Full Court's decision was allowed to stand, it would expose the Commonwealth to "100 years or more" of compensation claims for land grants awarded in the Northern Territory. The Commonwealth submitted that "Everything that happened after the Commonwealth accepted the Territory is at risk of invalidity". The High Court noted that in an earlier High Court case about the operation of section 51(xxxi) in the Territory, the Commonwealth argued that "the application of s 51(xxxi) to the Northern Territory would have the effect of invalidating significant provisions of Commonwealth legislation and would potentially invalidate every grant of freehold or leasehold title granted by the Commonwealth in the Territory since 1911 to the extent to which any such grant may be inconsistent with the continued existence of native title as recognised at common law".

In addition to invalid land dealings, the potential Commonwealth liability for compensation for the vesting of minerals in the Northern Territory in the Crown is likely to run into the many millions of dollars.

The Commonwealth may attempt to resolve its liability by way of Indigenous Land Use Agreements with relevant native title holding groups or consider attempting a multi-claim area negotiated settlement similar to that reached by the WA Government with the Noongar People.

It is important to note that the decision has no direct impact on State Governments or third parties. For non-Commonwealth land users operating on land or using minerals in respect of which native title was extinguished by Commonwealth legislation, the question is whether liability for native title compensation has been passed on by legislation or in contracts.

Want to know more? 

• Native title compensation: a big year ahead? (23 May 2024)
  Summarises the status of compensation claims from mid 2023-2024
• Landmark Gumatj Clan compensation decision opens up a new class of compensation claims against the Commonwealth (2 August 2023)
  Summarises the Full Federal Court decision in the Gumatj compensation claim
• Native title compensation: we're off to the High Court again (2 August 2023)
  Summarises the status of compensation claims from mid 2022-2023
• Native title compensation Not much to see but plenty happening below the surface (11 July 2022)
  Summarises the status of compensation claims from mid 2021-2022

Other authors: Leonie Flynn, Expertise Counsel.