April Global Regulatory Brief: Green finance | Insights | Bloomberg Professional Services (2025)

Green finance regulatory developments

The financial sector continues to face new rules and government expectations as part of the broader effort to aid the green transition. The following green finance policy developments represent a sample of wider regulatory and policy coverage available to Bloomberg Terminal customers. Run REGS <GO> to find out more or contact your Bloomberg representative to learn more.

• Kenya: Central Bank issues taxonomy and climate risk disclosure framework
• EU: European Parliament votes to delay Corporate Sustainability and Due Diligence rules
• India: IFSCA proposes framework for Transition Bonds at GIFT IFSC
• Australia: ASIC issues new guidance on sustainability reporting

Kenya Central Bank issues taxonomy and climate risk disclosure framework

The Central Bank of Kenya (CBK), in partnership with the European Investment Bank, has introduced the Kenya Green Finance Taxonomy (KGFT) and a Climate Risk Disclosure Framework to steer the banking sector toward sustainable finance and support the transition to a low-carbon economy.

Initially focused on climate change mitigation and adaptation, the taxonomy will be periodically updated to include other environmental goals such as biodiversity.

Key Features: The KGFT initially focuses on two key environmental objectives:

• Climate Change Mitigation: Activities that reduce or prevent greenhouse gas emissions.
• Climate Change Adaptation: Activities that reduce vulnerability to climate-related risks.

Seven-Step Assessment Process: To determine if an activity is taxonomy-aligned, it must:

• Do no significant harm (DNSH) to other environmental goals.
• Meet minimum social safeguards (MSS)​
• Make a significant contribution to mitigation/adaptation.

Technical Screening Criteria (TSC): Specific metrics and thresholds define what qualifies as sustainable, ensuring measurable and verifiable alignment.

Sectoral Scope: The KGFT covers sectors such as agriculture, energy, construction, transportation, manufacturing, and financial services.

Interoperability: The KGFT adopts and adapts standards from the EU and South Africa.

Enforcement: CBK has mandated all commercial banks to begin disclosing the environmental impact of their financed projects within an 18-month transition period. This grace window is designed to allow banks to build internal capacity, train staff, and incorporate climate risk screening into lending decisions.

Looking ahead: By late 2026, climate-related financial disclosures will become mandatory.

European Parliament votes to delay corporate sustainability and due diligence rules

On 3 April, the European Parliament voted to delay the application of EU rules on corporate due diligence and sustainability reporting (the so-called ‘Stop the Clock’ Omnibus proposed by the European Commission at the end of February).

State of Play: The proposal grants member states until 26 July 2027 to transpose the due diligence directive (CSDDD) into national law. Companies in the first wave—those with over 5,000 employees and €1.5 billion turnover—along with the second wave—companies with over 3,000 employees and €900 million turnover—will now apply the rules from 2028. The sustainability reporting directive (CSRD) is also delayed by two years, requiring large companies to report from 2028 and listed SMEs from 2029.

Background: The delay is part of the European Commission’s “Omnibus I” simplification package, introduced on 26 February 2025 to reduce regulatory burdens and improve EU competitiveness. Alongside the postponement, the package includes a second directive revising the content and scope of the sustainability and due diligence rules, which will be assessed and amended by the European Parliament’s Legal Affairs (JURI) Committee and EU Member States in the coming months.

Next Steps: To speed up the process, the Parliament used its urgent procedure. The Member States endorsed the ‘Stop the Clock’ proposals on 26 March 2025, and the directive now awaits formal approval by the Council before entering into force.

IFSCA proposes framework for transition bonds at GIFT IFSC

The International Financial Services Centres Authority (IFSCA) has released a consultation paper proposing a regulatory framework for transition bonds. The proposal is part of IFSCA’s broader sustainable finance roadmap and aims to support fundraising by issuers undertaking activities aligned with a transition to a low-carbon economy.

In more detail: IFSCA has undertaken several initiatives in recent years to promote sustainable finance and introduce ESG-aligned products and frameworks at GIFT IFSC.

• However, a regulatory framework specifically addressing transition finance has not yet been made available.
• Accordingly, the proposed framework is intended to support issuers in raising capital for activities that are environmentally beneficial in the long term, especially when those activities involve moving away from carbon-intensive operations.
• As defined in the draft framework, transition bonds refer to use-of-proceeds bonds issued by entities whose activities may not currently meet taxonomy-aligned green criteria but are committed to transitioning through a formal, publicly disclosed plan.

Eligibility criteria for issuers: Issuers must have a formal, publicly disclosed transition plan that outlines their environmental objectives and pathway to achieving them.

• The transition plan must be consistent with international best practices and demonstrate how the issuer’s activities align with a credible, science-based transition.
• The issuer’s strategy should outline specific intermediate targets, timelines, and measures to reduce environmental harm.

Use of proceeds: Funds raised through transition bonds must be allocated exclusively to eligible transition activities as defined under the framework.

• These activities should contribute to the reduction of adverse environmental impact and support movement toward taxonomy alignment in the future.
• Issuers are required to clearly disclose the intended use of proceeds at the time of issuance.
• Unallocated proceeds must be safely and transparently managed, and details of such management must be publicly disclosed.

Pre-issuance and post-issuance external review: A second-party opinion is recommended prior to issuance to assess alignment of the bond’s structure and objectives with the transition bond framework.

• Post-issuance, the issuer must conduct annual verification by an external reviewer until full allocation of proceeds is achieved.

Ongoing Disclosure and Reporting Requirements: Issuers must publish annual reports that provide updates on the allocation of proceeds, status and progress of funded transition activities, metrics and data on the environmental impact of such activities.

• Disclosures must also include progress against the issuer’s transition plan and any material changes to the plan or its implementation.

Next Steps: IFSCA is seeking public comments on the draft circular by May 8, 2025.

ASIC issues new guidance on sustainability reporting

The Australian Securities and Investments Commission (ASIC) has issued new regulatory guidance on sustainability reporting, following extensive public consultation.

In summary: The new rules require large businesses and financial institutions to provide more information about their material financial risks and climate change-related opportunities to their investors and lenders. These requirements commenced for the largest entities for financial years beginning on or after 1 January 2025 and will gradually apply to other large companies and financial institutions over time.

In more detail: ASIC’s new regulatory guide (RG 280) provides detailed guidance for entities required to prepare sustainability reports containing climate-related financial information, covering the responsible function for preparing these reports, the required content, and the disclosure of sustainability-related financial information outside the reports.

• The guide also outlines ASIC’s approach to administering the requirements, including how it uses its new directions power, how it considers relief, and taking a ‘pragmatic and proportionate approach’ to supervision and enforcement.
• Based on feedback to the November 2024 consultation, ASIC has added sections on climate scenario analysis, scope 3 greenhouse gas emissions disclosures, and more specific guidance for directors of reporting entities.

Looking ahead: As part of its approach, ASIC will support reporting entities through ongoing guidance and monitoring of practices, engagement with entities on any problematic statements

provision of opportunities for corrections, and commencement of enforcement investigations for serious misconduct or failure to prepare a sustainability report.

Further publications: ASIC Commissioner Kate O’Rourke stated that the regulator will continue to expand its suite of publications related to sustainability reporting over time as market practices evolve.

View the additional regulatory briefs from this month:

• Trading and markets
• Risk, capital and financial stability
• Digital finance

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