In the newest issue of the Sorainen ESG newsletter we explore pivotal EU decisions, forward-thinking green policies, and inspiring projects driving sustainability in Estonia, Latvia and Lithuania.
Legislative news and ESG initiatives in Estonia, Latvia and Lithuania
Lithuania
The Lithuanian Parliament recently adopted amendments to the Code of Administrative Offences. Under the amended legislation, entities that submit incorrect financial, management or sustainability reports, or fail to submit these reports on time to the Legal Entity Registry will face administrative penalties. The maximum fine for such offences has been set at up to EUR 1,450.
In October, the Lithuanian Parliament adopted legislation concerning the corporate governance reports and its statistical information on gender representation. In November 2022, the European Parliament adopted the so-called Women on Boards Directive, promoting gender equality on the boards and supervisory boards of listed companies. The directive provides for the introduction of gender quotas on the boards and supervisory boards of listed companies, i.e. at least 33% of the members of such management bodies will have to be representatives of the underrepresented gender. Although the directive does not directly refer to women, women do represent the most commonly underrepresented gender in companies’ management bodies. Lithuania, when transposing the provisions of the directive into national law, expanded its application. In Lithuania, the quota requirement will also apply to large companies that meet at least two of the following criteria: the value of the assets indicated on the balance sheet exceeds 25 million EUR; net sales revenue during the reporting financial year exceeds 50 million EUR; or the average number of employees is more than 250.
Latvia
Residents, businesses and municipalities will have the opportunity to jointly produce electricity and use it for their own consumption
On 10 December, the Latvian Cabinet of Ministers approved new regulations allowing individuals, businesses and municipalities to share self-produced electricity through various forms of energy-sharing initiatives. These include active users acting jointly; linked users such as households or small businesses; and energy communities that may include larger groups, municipalities or companies. The regulations, which came into effect the day after their publication, aim to promote energy self-sufficiency, reduce electricity costs and strengthen national energy security. Notable measures include simplified rules for sharing excess energy within connected networks, opportunities for joint investments in renewable energy installations like solar panels or wind turbines, and incentives for municipalities to share energy with vulnerable groups, such as for social housing.
Energy communities, which can focus on either electricity or renewable energy production, are required to consume 80% of the energy they generate, and, in some cases, to allocate 51% of profits for social or efficiency objectives. Starting in 2025, these communities must register with the national Energy and Environment Agency. The framework also supports the establishment of renewable energy communities for areas not connected to central heating systems, enabling efficient and localised energy production. Overall, the initiative is expected to increase public and business participation in energy-sharing practices, fostering sustainable energy use and collaboration.
Residents will be able to continue applying for state support for the purchase of solar panels and other equipment until 31 December 2029
Households in Latvia will continue to receive state support to install environmentally friendly energy production equipment, such as solar panels, heat pumps, and pellet boilers, in their homes until 31 December 2029, with the total funding increased by EUR 40 million. New amendments approved by the Cabinet of Ministers introduce additional support for purchasing energy storage devices separately from solar panels and for acquiring solar collectors for hot water production without replacing existing fossil fuel heating systems. Since the programme’s inception 2.8 years ago, around 13,000 renewable energy devices have been installed with state support, and an additional 11,000 projects are anticipated, which would reduce greenhouse gas emissions by 69,000 tonnes of CO₂, resulting in cost savings of EUR 4.6 million.
Estonia
Commission approves €2.6 billion Estonian state aid scheme to support renewable offshore wind energy to foster the transition to a net-zero economy
The European Commission has approved Estonia’s EUR 2.6 billion state aid scheme to support renewable offshore wind energy. The initiative, aligned with the Temporary Crisis and Transition Framework, highlights the EU’s commitment to fostering a net-zero economy. This large-scale scheme is expected to accelerate the deployment of offshore wind technology, enhancing Estonia’s renewable energy capacity and contributing to the EU’s climate goals.
The measure supports the construction and operation of offshore wind farms in areas designated by the Estonian Maritime Spatial Plan, with aid granted through a transparent, competitive bidding process based on two-way contracts for difference (CfDs) over 20 years.
The scheme, compliant with TCTF requirements, uses a capped price premium system to ensure economic viability while limiting state expenditure. It also aligns with broader EU objectives, including the REPower EU Plan and the Green Deal Industrial Plan, which prioritise renewable energy and decarbonisation technologies. With annual volume support limited to 2 TWh and implementation deadlines set before December 2025, the initiative represents a necessary, proportionate and forward-looking measure to accelerate the green transition and reinforce Europe’s industrial competitiveness in the renewable energy sector.
Estonian Parliament adopts law transposing CSRD into Estonian law
On 17 December 2024, the Estonian Parliament adopted the law transposing the CSRD. Fifty-nine members of the Riigikogu voted in favour and 17 voted against; there were no abstentions. The law adopted introduces the following main changes:
- provides for the obligation to prepare, submit and have audited a sustainability report
- amend the size criteria for micro, small, medium and large enterprises
- specifies the format of the annual report
- provides for two different types of auditor
- raising the thresholds for the statutory audit and review of annual accounts
- a reduction in the statutory audit requirement for foundations
EU-level news
The commission welcomes provisional agreement on additional phase-in time for EU Deforestation Regulation
The European Commission has welcomed a provisional agreement on granting an additional 12-month phase-in period for the EU Deforestation Regulation (EUDR). This extension, set to apply from 30 December 2025 for large companies and from 30 June 2026 for micro and small enterprises, aims to ensure proper and effective implementation while preserving the regulation’s integrity. The decision comes in response to feedback from international partners, member states, and businesses, offering all stakeholders extra time to prepare for the requirements.
The EUDR, in force since 30 June 2023, requires companies to conduct due diligence on commodities linked to deforestation, such as palm oil, soy, coffee and timber, as well as derived products like furniture and chocolate. The regulation addresses significant drivers of climate change and biodiversity loss, with deforestation accounting for approximately 11% of global greenhouse gas emissions according to the IPCC. The FAO reports that 420 million hectares of forest were lost to deforestation between 1990 and 2020.
EU and Mercosur reach political agreement on groundbreaking partnership
The EU and Mercosur have finalised negotiations on a historic partnership agreement. European Commission president Ursula von der Leyen and leaders from Brazil, Argentina, Paraguay and Uruguay reached the agreement, which promises to strengthen trade, sustainability, and geopolitical ties. The deal is seen as a critical step in advancing shared economic and environmental goals between the regions.
Beyond trade, the agreement includes concrete sustainability commitments, such as making the Paris Agreement a central element of the cooperation, halting deforestation, and promoting sustainable development with enforceable commitments on labour and environmental standards. It also aims to secure critical raw materials for the global green transition and to enhance supply chain resilience. With EUR 1.8 billion in EU support for green and digital transitions in Mercosur countries, the deal aligns with mutual goals for economic growth, competitiveness, and climate action. The agreement now awaits legal finalisation, translation and approval by the EU Council and Parliament.
Commission earmarks EUR 4.6 billion to boost net-zero technologies, electric vehicle battery cell manufacturing and renewable hydrogen under the Innovation Fund
The European Commission has allocated EUR 4.6 billion to support net-zero technologies, including electric vehicle battery production and renewable hydrogen. The funding, drawn from the EU’s Innovation Fund, includes EUR 3.4 billion for innovative decarbonisation technologies and EUR 1.2 billion for the European Hydrogen Bank’s second auction. These initiatives aim to enhance EU competitiveness and advance climate goals by accelerating the deployment of clean energy solutions. The auction offers a mechanism to fund projects that narrowly miss Innovation Fund selection, reducing administrative burdens for member states.
European Commission publishes EU Taxonomy FAQ to help investors implement sustainability classification system
The European Commission has released a new FAQ document to support the implementation of the EU Taxonomy, the classification system for sustainable economic activities. This initiative seeks to simplify application processes and reduce administrative burdens for companies. By providing clear guidance, the publication aims to enhance the useability of the Taxonomy’ and promote sustainable investment practices.
The FAQ addresses key aspects of the Taxonomy, such as its interoperability with the Corporate Sustainability Reporting Directive (CSRD) and the European Sustainability Reporting Standards (ESRS), technical screening criteria for economic activities under each environmental objective, and reporting obligations tied to the Climate and Environmental Delegated Acts.
COP29 ends with agreement on climate finance, carbon markets
The COP29 climate conference in Baku concluded with commitments to triple annual climate finance flows to USD 300 billion for developing nations and significant progress on international carbon markets. Despite these advances, developing countries criticised the finance agreement as inadequate. India’s representative expressed strong dissatisfaction, highlighting the continued challenges in achieving equitable global climate solutions.
Progress was also made on Article 6 of the Paris Agreement, establishing high-integrity carbon markets and standards for international carbon credit trading. Agreements on Article 6.2 detailed mechanisms for country-to-country carbon market trading and registries for tracking transactions.
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Contact the authors:
Co-head of Sorainen ESG team, Counsel, Lithuania
vitalija.impoleviciene@sorainen.com
Senior Associate, Latvia
Associate, Estonia
