ESG in CEE and Central Asia : Regulatory Uncertainty and the Impact of Omnibus I
The end of 2024 and the beginning of 2025 marked a period of uncertainty in the ESG regulatory landscape. Across both Kinstellar's EU and non-EU jurisdictions, stakeholders awaited the Omnibus I package, expected to introduce significant changes to ESG compliance and reporting frameworks.
The release of Omnibus I in late February 2025, the implementation of key directives, particularly the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), all brought new uncertainties. Regulators are now reassessing their legislative roadmaps, with potential delays in national transpositions and even postponements of already implemented ESG regulations.
Shared ESG Challenges and Collaborative Efforts Across Jurisdictions
This quarter's ESG developments highlight several common challenges and coordinated efforts across the region, both in Kinstellar's EU Member States and non-EU jurisdictions such as Kazakhstan, Ukraine, Turkey, Serbia and Uzbekistan.
Delays in Sustainability Reporting – In Bulgaria, CSRD implementation has been delayed by one year, impacting the reporting obligations of large publicinterest companies and SMEs. Meanwhile, Ukraine is gradually phasing in sustainability reporting obligations by 2030.
Energy and Climate Policy Alignment – Countries such as Romania, Serbia, and Slovakia are refining their National Energy and Climate Plans (NECPs), while Uzbekistan has declared 2025 the "Year of Environmental Protection and Green Economy", with a focus on expanding renewable energy.
Cross-Border Green Initiatives – Regional collaboration is evident in projects such as the Green Energy Corridor, connecting Azerbaijan, Georgia, Romania, and Hungary, and the Kazakhstan-Uzbekistan renewable energy initiatives, both aimed at enhancing energy security and the reduction of carbon footprints.
Industrial and Carbon Compliance Adjustments – Countries such as Serbia and Turkey are preparing for the impact of the EU Carbon Border Adjustment Mechanism (CBAM), which will impose new requirements on exports into the EU.
As Omnibus I reshapes the regulatory environment for ESG compliance, Kinstellar will continue to track local legislative responses across both Kinstellar's EU and non-EU jurisdictions. Our future newsletters will provide jurisdiction-specific updates on the evolving regulatory landscape throughout 2025.
For insights into how these changes may impact your business, feel free to reach out to our team.
Bulgaria
National energy and climate plan (NECP)
In accordance with the requirements of Regulation (EU) 2018/1999 and the applicable national legislation, Bulgaria has prepared a draft updated NECP for the period 2021- 2030, which defines national goals across five areas - decarbonization, energy efficiency, energy security, the internal energy market, as well as scientific research, innovation, and competitiveness.
The updated version of the plan has been published on the website of the European Commission and reflects numerous proposals received during the preliminary consultations and exchanges with the European Commission, as well as through active and constructive dialogue with all interested parties, namely representatives of business, the non-governmental sector, academia, and neighbouring countries.
This current version of IPEC is undergoing an environmental assessment procedure, and upon successful completion, will be submitted for approval to the Council of Ministers.
Delayed commencement of reporting under CSRD
On 19 February 2025, the Bulgarian Parliament adopted an amendment to the Accountancy Act through which sustainability reporting, as required under the CSRD, was delayed by one year. After these amendments, large public-interest companies that have more than 500 employees will have to prepare their first sustainability reports for the year 2025 instead of 2024. Other large enterprises will follow with their first reports covering 2026 instead of 2025, and the last group covering small and medium enterprises will prepare their first sustainability reports covering 2027 instead of 2026. The amendments to the Accountancy Act have been promulgated in the Bulgarian State Gazette and entered into force on 28 February 2025.
Croatia
Circular economy advancements
The Croatian Ministry of Economy and Sustainable Development has unveiled a the principle of extended producer responsibility (EPR) comprehensive Waste Management Plan for the period 2023 to 2028. A key component of this plan is the introduction of a Regulation on Waste Management Fees and Return Fees, which is expected to be adopted in the first half of 2025. This regulation is designed to calculate fees for waste management through the principle of extended producer responsibility (EPR).
The scope of the regulation covers a wide range of products, including tires, vehicles, electrical and electronic devices, oils, batteries, accumulators, packaging, single-use plastic products, and plastic-containing fishing gear. The goal is to ensure that producers take responsibility for the lifecycle of their products, from creation through to disposal.
Green financing initiatives
In late November 2024, the European Investment Bank (EIB) announced the provision of an EUR 200 million loan to the Croatian Bank for Reconstruction and Development (HBOR). This significant funding initiative is aimed at supporting Croatian small and medium-sized enterprises (SMEs), mid-sized companies (Mid-Caps), and public entities involved in projects that address climate change and promote environmental sustainability.
The loan is designed to foster investments in green projects, enabling businesses and organizations to adopt more sustainable practices. The funding will specifically support initiatives that focus on reducing carbon emissions, improving energy efficiency, and accelerating the transition to renewable energy sources. Through this partnership, the EIB and HBOR aim to strengthen Croatia's environmental sustainability efforts, particularly within the private and public sectors, by offering financial resources to those who are striving to meet climate-related goals.
Sustainability reporting requirements
In early 2025, Croatia took a significant step towards enhancing corporate transparency and accountability by introducing mandatory sustainability reporting for businesses. Initially, the requirement applies to 50 selected companies, with the Ministry of Finance publishing a list of these entities. These companies are now obligated to submit comprehensive sustainability reports for the fiscal year starting January 1, 2024.
Czech Republic
Corporate Sustainability Due Diligence Directive (CSDDD) Transposition
In December 2024 the Czech government approved its legislative plan for 2025. According to the current schedule the Ministry of Justice is drafting a bill that transposes the obligations of the Corporate Sustainability Due Diligence Directive (EU) 2024/1760 (CSDDD). The proposed Act on Corporate Due Diligence in Sustainability is scheduled to be submitted to the government by October 2025.
Corporate Sustainability Reporting Directive (CSRD) Transposition
The amendment to the Accounting Act transposing the last set of obligations under the Corporate Sustainability Reporting Directive (EU) 2022/2464 (CSRD) (which has yet to be fully transposed into Czech law and which was submitted to Parliament at the end of August 2024) has finally begun to be debated. The draft legislation passed its first reading in February 2025 and will be subject to a second reading following the Budget Committee's deliberations in March.
However, it remains unclear how the recent proposals by the EU Commission on the ESG omnibus package will affect the above-specified transposition acts, in particular due to the proposed postponements of the transposition deadline for the CSDDD and of the postponement of the reporting obligation under the CSRD.
Significant Emissions Reductions
Preliminary data from the National Inventory Report for 2023, published by the Ministry of the Environment, indicates a record 15% decrease in annual emissions, equivalent to 99 million tons of CO2. This marks the largest year-on-year reduction since the 1990s.
The energy sector contributed a 7-million-ton decrease, while industry and construction reduced emissions by 3 million tons. However, emissions from transport continued to rise. The overall emissions drop aligns the Czech Republic with its European climate commitments, with further reductions needed to reach the 2030 target of 85.7 million tons. Since 1990, emissions have already fallen by 47% and the Czech Republic is on track to achieve its target of at least a 55% reduction by 2030, which is in line with European green transformation targets.
Approval of the Updated National Energy and Climate Plan (NECP)
The government has approved the National Energy and Climate Plan (NECP) for 2021- 2030, aligning Czech policy with the EU's "Fit for 55" package. This strategic document does not introduce any new obligations, but summarizes the measures necessary for the Czech Republic to meet its existing commitments to reduce greenhouse gas emissions and modernize the energy sector.
The plan targets a minimum share of 30.1% for renewable energy sources and sets the phase-out of coal for electricity and heat production by 2033. Key measures include the expansion of renewable energy, especially wind power, the decarbonization of centralized heat production, and the development of nuclear energy, including the use of small modular reactors. A new reactor at Dukovany should be operational by 2036 and additional reactors at Temelín by 2039 and 2041. The plan also includes provisions for hydrHungaryogen imports and carbon capture technologies.
Hungary
Changes to Environmental Product Fees and the Extended Producer Responsibility (EPR) System
As of 2025, Hungary has implemented significant regulatory changes to its environmental product fees and Extended Producer Responsibility (EPR) system. For product streams subject to EPR obligations, environmental product fees have been eliminated, thereby reducing redundant administrative burdens.
Introduction of Selective Textile Waste Collection
In accordance with European Union regulations, selective textile waste collection has become mandatory in Hungary from 2025. MOHU MOL Hulladékgazdálkodási Zrt., the Hungarian waste management concessionaire, is responsible for coordinating collection schemes through the EPR system. The majority of collected textile waste will either be recycled or utilized for energy production.
Amendment to the ESG Act
From 2025, the obligation to prepare sustainability reports is extended to include large private enterprises in addition to publicly listed companies, while excluding corporate investments and exposures from its scope. For large enterprises of public interest, the scope assessment will now cover the previous two financial years. Companies must report contracts with ESG contributors within 15 days, conduct annual risk assessments, and have any modified ESG reports audited. Additionally, they are required to provide free training programs for their suppliers, and materiality assessments must be made public unless they compromise trade secrets. The Supervisory Authority for Regulated Activities will publish ESG reports annually by September 30.
Kazakhstan
Adoption of a Water Code
On 5 March 2025, the Kazakhstan Parliament adopted a new Water Code, aimed at prioritizing the protection of water resources and introducing the principle of water conservation. The Code establishes five key principles, including rational water use, the economic value of resources, and public involvement in water management. Additionally, the Code mandates the development of a Master Plan for Integrated Water Resources Management and compulsory safety measures for hydraulic structures. Amendments have also been introduced to address climate change, including flood and drought management algorithms.
Nuclear Power Plant Construction
In October 2024, Kazakhstan held a referendum, in which the majority of citizens supported the construction of a nuclear power plant (NPP) to meet the country's growing electricity needs. As of February 2025, the Interdepartmental Commission for the Development of the Nuclear Industry continues to evaluate proposals from leading global suppliers of reactor technology. The shortlist includes CNNC (China), Rosatom (Russia), KHNP (South Korea), and EDF (France), each offering different reactor technologies. Key priorities for the project include safety, reliability, and environmental sustainability of the future NPP.
Romania
Updates to the National Hydrogen Strategy
The National Hydrogen Strategy (the "NHS") was subject to public debate on 3 February 2025 and is now in the final stages of its strategic environmental assessment ("SEA"). Various environmental experts and governmental representatives attended the debate, which featured presentations on the main findings and conclusions of both the environmental report and the appropriate assessment study for the NHS. This public debate marks the final phase of the SEA procedure, after which the Ministry of Environment, Water, and Forests will issue the respective environmental permits.
Corporate Sustainability Reporting Directive (CSRD) Transposition
On 5 March 2025, a Decree Promulgating the Law transposing Article 2 of the Corporate Sustainability Reporting Directive (CSRD) was published in the Official Gazette of Romania. It will enter into force on 15 March 2025. While the companies' reporting obligation had already been incorporated into Romanian law as of 26 January 2024, additional legislation had to be adopted to finalise the legal framework under the CRSD. The European Commission initiated infringement proceedings against Romania for failing to fully transpose the directive. With this legislative step, Romania aims to meet CSRD requirements in order to avoid sanctions stemming from infringement procedures.
Energy strategy for 2025-2035
In November 2024, the Romanian Government adopted a Government Decision approving Romania's Energy Strategy for 2025-2035, with a perspective extending to 2050. The new Romanian Energy Strategy for 2025-2035 sets out the vision and fundamental objectives for the development of the national energy sector.
The strategy aims to develop the energy sector observing conditions with respect to security, accessibility and sustainability, ensuring economic competitiveness, and aligning with EU climate targets for 2030, 2040 and 2050.
Progress on the Green Corridor project
In recent months, significant progress has been made on the Green Corridor project, which aims to construct a direct electricity cable connecting Azerbaijan, Georgia, Romania, and Hungary. In January 2025, the Romanian National Electricity Transmission Company Transelectrica S.A. ("Transelectrica") announced registration with the Trade Registry of a joint venture GECO Power Company - Green Energy Corridor Power Company, a limited liability company based in Romania. This company, managed by an Azerbaijani national, will be jointly controlled by Transelectrica, Azerbaijan's state energy company Azerenerji, Georgia's transmission and system operator JSC Georgian State Electrosystem (GSE), and Hungary's state energy conglomerate MVM and will implement the Green Corridor project.
Recently, the 10th session of the Ministerial/Steering Committee for implementing the "Strategic Partnership Agreement on the Development and Transmission of Green Energy between the Governments of the Republic of Azerbaijan, Georgia, Romania, and Hungary" took place in Budapest. The committee reviewed the development of Azerbaijan's renewable energy potential, the progress and prospects of the Green Corridor project, and issues related to the activities of the Green Energy Corridor Energy Company (GECO). The discussions also included Bulgaria's participation in the project, the current status of the technical and economic feasibility study conducted by CESI, and cooperation with the European Union on project financing
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