A UK and EU policy update from February 2026
In this article, our Policy & Public Affairs Advisor, Michael Jennings, provides a rundown of the big environmental policy news from February 2026.
It’s March, if you can believe it, and I’m going to use this slight period of quiet in the regulatory landscape to bring you a rundown of the big policy news in February!
UK updates
UK SRS: Published for voluntary use
At the end of February, the UK Sustainability Reporting Standards (SRS) S1 and S2 were finally issued for voluntary use.
The Financial Conduct Authority (FCA) is consulting on mandatory reporting for listed companies and large private companies for 2027, while smaller companies will increasingly be affected as they are asked for SRS-aligned data by large customers in their supply chain.
But why should I apply the new sustainability reporting standards?
Beyond the indirect pressure from parent companies, investors, large customers, or supply-chain partners to provide this data, there are many reasons you should look at the new voluntary standards.
As the UK SRS are built upon global standards, this gives international investors clearer insight into your business’ resilience, sustainability performance, and any financial risks. Improving investor confidence, especially in times of global uncertainty can only be a good thing. The fact that the UK standards align with global reporting helps you to remain competitive and comparable on a global scale.
Mandatory reporting will be coming for certain large and listed companies, so by starting early, you can make sure either you are ready for mandatory reporting or are in a position to supply information to those in your supply chain who need it, maintaining your competitive edge.
By looking at your company and identifying and prioritising not only risks but opportunities and integrating these into a business strategy, you can make sure you are planning with your best foot forward, especially with robust systems and data to back up your claims. This is all the more relevant when new rules and regulations around greenwashing mean that companies will have to be able to back up their claims with verifiable data.
In summary, you are looking at trust and transparency for investors, alignment with standards on the global stage, preparing for future reporting, strengthening your strategic position, and managing your risk. Building robust data systems in this new world of data gathering is now the norm.
To note: The EU’s Corporate Sustainability Reporting Directive (CSRD) is slightly different in that it looks at double materiality instead of just financial materiality. This means that while in the UK you will have to assess how sustainability issues affect your company’s financial performance, CSRD will need you to also assess how your company’s activities affect people and the environment, too.
DRS: New branding and label specifications
The Deposit Return System for single-use drinks containers is on track to go live from 1 October 2027.
The Deposit Management Organisation (DMO) for Scotland, Northern Ireland, and England, has rebranded as Exchange for Change along with a snazzy new logo which will be applied to all in-scope items and return points.
While we’re still waiting on clarification in some important areas, such as who will be required to host return points, registration, fees and deposit costs, bar code specifications, and material specifications, you can sign up to the first round of webinars which will provide a high-level overview of the scheme and what this means for your business.
It is expected that there will be future rounds of webinars later in the year as more information and obligations are confirmed. You can also find the regulatory requirements for applying the scheme logo to your packaging here.
CBAM: on the home straight
Carbon Border Adjustment Mechanisms (CBAMs) are a tool to put a cost on certain carbon-intensive goods being imported into a country.
Over the past few years, to address carbon leakage, support decarbonisation, and to align with work in the EU on their CBAM, the UK Government has worked and consulted on what CBAM looks like in the UK.
During the 2025 budget, the government announced it would legislate in the Finance Bill 2025-26 to introduce CBAM from 1 January 2027, with the inclusion of indirect emissions being out of scope until earliest 2029.
UK CBAM will cover a range of aluminium goods, cement, fertilisers, hydrogen, and iron and steel goods, with an exemption for small importers who import <£50k of in-scope goods per year.
There is a technical consultation, which closes on 24 March 2026, on the final details of CBAM to ensure that it delivers correct and effective policy.
There is worry from industry that leaving these final tweaks to the last minute, with a system that won’t be tested until Q4 2026, along with last-minute visibility on rates could leave little time for mistakes to be identified and industry to prepare. With less than a year to go, issues need to be found as soon as possible to ensure fair competition for the domestic market against imports, while giving industry and investors time to plan for added fees and admin costs.
NI: Resources and Waste Management Strategy
Daera1 have launched a consultation on the draft Rethinking Our Resources: Northern Ireland Resources and Waste Management Strategy.
The strategy aims to maintain momentum towards a circular economy by reducing waste and increasing recycling rates. It also recognises key barriers, including reliance on waste exports, limited domestic processing infrastructure, and the need to update skills and training. The draft aligns Northern Ireland with EU Circular Economy targets while supporting local long-term sustainability and Net Zero goals.
This is a huge leap forward for Northern Ireland whose strategy was due to be published in 2023 before Stormont was suspended, with no further visible work undertaking since the government was re-established in 2024. This also fits nicely alongside Wales’ strategy (published 2021), the recently closed consultation in Scotland, and the ‘imminent’ Circular Economy Growth Strategy for England.
EU updates
CSRD / CS3D: Finally published
Part of the Omnibus I ‘simplifications’, the amended CSRD and CS3D were finally published on 24 Feb 2026.
This pair of Corporate Sustainability regulations require companies to report (CSRD) detailed sustainability information, and to conduct due diligence (CS3D) to prevent human and environmental harms in their value chains.
The main outcome of the simplifications is the increasing of the threshold for reporting to only those largest companies in the EU.
For CSRD:
- Over 1k employees, and a net turnover of over €450m
- Non-EU companies need to have a net turnover of €450m generated in the EU
- Companies not in scope can still report against voluntary standards
- Companies not in scope can refuse information requests outside that of the voluntary standards
For CS3D:
- Over 5k employees, and a net turnover of over €1.5bn
- Also applies to non-EU companies with the same turnover threshold
- Companies should take a risk-based approach in their chain of activities and should avoid asking for unnecessary information from companies not in scope.
If you are interested in voluntarily reporting under CSRD, or are thinking about the benefits, please read through the section on UK SRS above for a similar explanation.
PPWR: Pallet wrapping and straps reuse exemption
The first piece of PPWR secondary legislation has been published: Exempting pallet wrapping and straps from the 100% reuse requirement.
What are wrapping and straps actually exempt from?
From 2030, PPWR sets a 100% reuse target for transport packaging. This includes sales packaging used to transport products, including for e-commerce, when shipping packaging to other businesses in the same Member State or between multiple sites within your own organisation across the EU.
Aside from some pre-included exemptions, e.g., cardboard boxes, this is a pretty hefty reuse target, and you will have to assess local, national, and EU-wide reuse schemes to comply. It would be worth talking to your Producer Responsibility Organisation (PRO) to find out more information on national reuse schemes.
This latest legislation has ruled that pallet wrapping and straps are exempt from this 100% reuse target. However, they are not exempt from the combined 40% target, in 2030, for all transport packaging in the EU. While there are those who are still pushing for exemption from this reuse target, it is worthwhile thinking of reasons to keep this in.
Pallets and similar packaging do weigh a decent amount more than pallet wrapping and straps, and will input a decent amount towards this target, while forcing companies to assess their wrapping and strap usage (I’ve definitely been at the receiving end of a badly packed pallet with far too much pallet wrap for stability!). All this alongside ‘innovation’ will help to drive sustainability and level the playing field for smaller businesses who may supply goods locally in different transport packaging formats.
EUDR: Potential scope increase
Another victim of simplification, the EU’s Deforestation Regulation was finalised two days before Christmas last year.
While there is the option of a review by the end of April, the Commission has stated before that it is keen to keep EUDR as it is to provide stability for businesses and investment.
That being said, there is the possibility of a delegated act that will amend which products fall into scope. This could mean products such as instant coffee and soap made with palm oil are in scope, while potentially excluding leather which is a contentious topic between different parties (I’m not even going to mention the ‘will it/won’t it’ EU-Mercosur trade deal).
For the classification of countries as high or low risk, there is benchmarking which may favour Member States and trading partners, but we’ll have to wait and see if this list is updated and corrected once the Regulations are live.
ESPR: Clarification on discarding unsold consumer goods
The Ecodesign for Sustainable Products Regulation (ESPR) contributes to circular economy goals by introducing Digital Product Passports. It also sets restrictions on destruction of unsold goods, and eco-design, performance, and sustainability criteria for set product groups.
The EU has published secondary legislation to support businesses complying with the requirements on the destruction of unsold stock. Although this is EU legislation, the requirements also apply to UK businesses placing products on the EU market.
The first measure outlines the derogations from the prohibition on destroying certain unsold apparel and footwear, specifying the circumstances under which destruction is allowed. Notably, this does include exemption where destruction is the option with the least negative environmental impact (so we’ll see how that works), though the derogations should have been written so that it’s possible to check if companies are reporting incorrectly or exploiting any loopholes.
And a follow on to that first point, though covering nearly all goods, here is the harmonised format and details for the disclosure of information on discarded unsold consumer products. This lays out the information needed where you discard consumer goods, or someone discards them on your behalf. The report, grouped by first two digits of the CN code, includes numbers of units, weight (with or without packaging), reasons for discarding, along with the percentage split of preparing for reuse, recycling, energy recovery, and disposal.
To note: For these reports, you will need to include what measures you have taken to prevent destruction of goods in the previous year, along with planned measures for the upcoming year. These reports will need to be published on an easily accessible section of your website for the public to see, which is something to think about when it comes to transparency and public knowledge.
While large companies should already be reporting this information and will be covered by the destruction ban from 19 July 2026, medium companies will be exempt for both requirements until 19 July 2030, with neither applying to small and micro companies.
SUPD: Mass balance and rPET update
The Single Use Plastics Directive (SUPD) outlines the recycled content targets and reporting requirements for PET drinks bottles.
The final draft of the implementing decision regarding the calculation, verification, and reporting of recycling content in PET drinks containers outlines that, up until 21 November 2027, the only recycled plastic that can be used to report against is plastic which has been sorted and recycled within the EU, expanding to certain third countries after this date. This could have huge implications for the UK market, along with many companies producing recycled plastics certified for the EU market.
Hopefully this will free up the amount of recycled PET available to UK producers in the short term. They will be able to capitalise on the EU pause to strengthen relationships and secure long-term supply chains before the deadlines for mandatory recycled content rolls out across the EU, dwarfing the UK’s need and leaving us with a dearth of recycled content for our own market.
For years, reprocessors in countries such as Türkiye have been working to RecyClass standards to supply to the EU market and will now have temporarily lost their target market. Realistically, without set-in-stone recycled content targets, the UK risks being left behind while our closest neighbour storms ahead with ambitious targets over the next 10-20 years, especially with dwindling recycling capacity in the EU and at home, leaving producers at the mercy of imports and wider market forces.
Also, in a similar vein to the changes to UK’s Plastic Packaging Tax in 2027, this implementing decision lays out rules for calculating the amount of chemically recycled post-consumer waste to use in PET drinks containers, which, outside of closed loop recycling scenarios, will be a welcome relief to those trying to source high-quality, food-contact safe recycled plastic.
