Practice News:
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Simpson Thacher was recognized for Environmental, Social & Governance Risk, Crisis & Risk Management (Global-wide) by Chambers USA 2025.
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Emily Holland was named Vice-Chair of the ABA International Law Section’s Business & Human Rights Subcommittee for the 2025-2026 year.
Upcoming Events:
Americas
California Air Resources Board Releases FAQ on SB 253 and SB 261
On July 9, the California Air Resources Board (“CARB”) posted nonbinding FAQs on California’s climate reporting laws, SB 253 (the Climate Corporate Data Accountability Act) and SB 261 (the Climate-related Financial Risk Act). The FAQs provide new information on how companies can best leverage existing reporting frameworks (e.g., TCFD), the period that initial climate risk reports pursuant to SB 261 may cover, the posting of a public docket for reporting entities to share the location of their first climate risk reports, and additional opportunities for stakeholders to provide input on statutory definitions, potential reporting exemptions, streamlining reporting and other areas.
One Big Beautiful Bill Act Impacts IRA Clean Energy Tax Credits
On July 4, President Trump signed into law H.R. 1, “The One Big Beautiful Bill Act,” a spending bill anticipated to have significant impact on the U.S. energy sector, including through expansive changes to energy tax credits introduced and enhanced under the Inflation Reduction Act (“IRA”). Most major tax credits for clean energy, solar panels, electric vehicles and other benefits provided by the IRA will be halted or reduced under the provisions of the new law. Additionally, tax breaks for nuclear, geothermal and hydropower are to be phased out in 2034.
Multistate Coalition Efforts Address Environmental Justice Initiatives
On July 8, New York Attorney General Letitia James led a coalition of 19 attorneys general challenging the Environmental Protection Agency’s termination of a grant program to assist communities disproportionately affected by environmental issues. The amicus brief argues that the termination and cancellation of grants has caused harm across their states. On June 18, AG James led a coalition of 13 attorneys general (some involved in the amicus brief) in issuing guidance affirming the necessity and legality of environmental justice (“EJ”) initiatives. The guidance, which is directed at state and local governments, businesses, nonprofits and community groups, seeks to establish the lawfulness of EJ initiatives, notwithstanding broad federal actions to reduce funding for and targeting EJ policies, programs and activities, and the rescission of key environmental and climate regulations.
Inter-American Court of Human Rights Issues Advisory Opinion on Climate Change and Human Rights
On July 4, the Inter-American Court of Human Rights issued an Advisory Opinion (currently available in Spanish, English version forthcoming) clarifying the specific obligations of states to address climate change, and providing guidance on how states can uphold human rights in the context of climate change and the climate crisis. Specifically, the opinion provides a framework for how states can respond to climate emergencies, what legal remedies are available for climate-related harms, and how states can assess already present disproportionate burdens on certain communities. The Advisory Opinion follows requests from the Chilean and Colombian governments to clarify how the American Convention on Human Rights should be interpreted in the context of climate change, and creates binding legal obligations on states in scope of the Convention.
SEC Withdraws Proposed ESG Disclosure and Shareholder Proposal Reform Rules
On June 12, the SEC officially withdrew fourteen rule proposals issued during the Biden Administration, including a rule that would have required enhanced and standardized disclosures from registered funds and advisors (originally proposed in June 2022), and another that would have amended the substantive bases public companies could use to exclude proposals from their proxy statements, impacting Rule 14a-8 (originally proposed in July 2022). The actions indicate a continuing shift in priorities and follow the SEC’s decision in March to cease defending its climate-related disclosures rule in court.
Colombia Enacts Legislation Reforming Labor Law Framework
On June 25, the Colombian government enacted Law 2466, introducing sweeping amendments to the country’s labor regulations. The law established measures aimed at promoting inclusivity in the workforce and reducing barriers to employment. Among its provisions, the law mandates hiring quotas for individuals with disabilities in companies based on their size and formally recognizes work and productive activities undertaken by incarcerated individuals as valid professional experience, supporting reintegration efforts and reducing discrimination.
Information provided by contributing law firm: Cuatrecasas
EU/U.K.
EU Commission Adopts “Quick Fix” Amendments to Original ESRS
On July 11, the European Commission adopted targeted “quick fix” amendments to the first set of the European Sustainability Reporting Standards (“ESRS”). The amendments aim to revise the existing CSRD Delegated Act that contains the ESRS to freeze a number of reporting requirements for companies in scope of CSRD that are required to report as part of “wave 1.” According to the draft, all wave 1 companies will now be allowed to exclude ESRS E4 (biodiversity and ecosystems), S2 (workers in the value chain), S3 (affected communities), and S4 (consumers and end-users) from their sustainability reporting for financial years 2025 and 2026 (previously, this only applied to companies with up to 750 employees). Companies with up to 750 employees will also be allowed to omit S1 (own workforce). Companies that chose to omit E4, S1, S2, S3 or S4 must still report certain summarized information if the company has concluded that the topic in question is material.
EU Commission Adopts Delegated Act Simplifying EU Taxonomy Reporting
On July 4, the EU Commission adopted measures to simplify the application of the EU Taxonomy Regulation, seeking to reduce EU companies’ administrative burden. These measures include:
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Exempting certain companies from assessing Taxonomy-eligibility and alignment for economic activities where such activities are not financially material for their business.
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Streamlining of Taxonomy reporting templates by cutting the number of reported data points by 64% for non-financial companies, and by 89% for financial companies.
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Simplification of the criteria for “do no significant harm” to pollution prevention and control related to the use and presence of chemicals.
The Delegated Act has been sent to the EU Parliament and the Council for their review and will apply once the four-month scrutiny period, which can be prolonged by another two-month period, has passed. The measures set out in the Delegated Act will apply as of January 1, 2026, for the financial year 2025.
EU Omnibus Package Developments
On June 23, the EU Council announced that it had reached agreement on its position to simplify the directives on corporate sustainability reporting (“CSRD”) and due diligence requirements (“CSDDD”) in the EU. With respect to CSRD, the Council aligned with the Commission’s proposal to increase the employee threshold to 1,000 employees and to remove listed SMEs from scope. In addition, the Council added a net turnover threshold of over EUR450 million and introduced a review clause regarding a possible extension of the scope of CSRD to ensure availability of relevant corporate sustainability data. On CSDDD, the Council proposed increasing the thresholds to 5,000 employees and €1.5 billion net turnover.
On July 2, EFRAG announced that the EU Commission had extended the deadline for EFRAG to deliver its technical advice on the ESRS simplification by one month (now due on November 30). As a result, EFRAG extended its public consultation from the end of July until the end of September. Separately, the European Ombudsman noted that the Commission risks losing public trust by pushing through its simplifications via the EU’s urgent procedures, thereby deviating from the normal legislative process and without consulting civil society.
U.K. Government Decides Against Green Taxonomy
On July 15, the U.K. Government announced that it will not introduce a U.K. Green Taxonomy, noting that, following a consultation, it had determined that a U.K. Green Taxonomy would not be the most effective tool to deliver the transition to net zero. Instead, the U.K. Government will focus on policies it considers to be of higher priority to accelerate investments into the green transition and limit greenwashing. The consultation received mixed responses, with 45% of respondents noting their support for the U.K. Green Taxonomy and 55% of respondents having either mixed or negative views, particularly with respect to the real-world application of a U.K. Green Taxonomy following negative experiences of working with taxonomies in other jurisdictions and concerns about the extent to which taxonomies are able to deliver on desired objectives.
U.K. Government Consults on Plans to Launch U.K. Sustainability Assurance Regime
On June 25, the U.K. government published consultations with respect to (i) climate-related transition plan requirements by the Department for Energy Security and Net Zero; (ii) assurance of sustainability reporting, specifically seeking views on the proposal for the planned Audit, Reporting and Government Authority to be given responsibility for creating a voluntary registration regime for entities that provide third-party sustainability-related assurance services; and (iii) exposure drafts on the U.K. Sustainability Reporting Standards (“SRS”), both by the Department for Business and Trade. All consultations are open to response until September 17, 2025.
Political Agreement Reached on CBAM Simplification Measures
On June 18, the EU Council and Parliament reached a provisional political agreement on the amendments to simplify the Carbon Boarder Adjustment Mechanism (“CBAM”). The proposal aims to simplify CBAM and make compliance more cost-efficient. The EU Parliament’s press release indicates that the co-legislators support the Commission’s de minimis exemption applicable to importers that do not exceed a single mass-based threshold set at a level of 50 tons of imported goods per importer per year. The agreed text will need to be formally adopted by the Parliament first, followed by the Council. According to the Council’s press release, the formal adoption process is expected to be finalized by September 2025.
French Court Issues First Decision Involving Mandatory Human Rights and Environmental Due Diligence
On June 17, the Paris Court of Appeal issued its first decision under the French Duty of Vigilance Law of March 2017, upholding a December 2023 ruling that ordered La Poste to substantially revise its 2021 vigilance plan. The Court confirmed that La Poste’s vigilance plan suffered from methodological shortcomings, particularly in its risk mapping, which must target actual and potential risks where negative impacts are most likely and most severe, across the company, its subsidiaries and business partners. The Court clarified that stakeholder consultation is not required at the risk mapping stage but is mandatory when designing whistleblowing mechanisms. On monitoring, the Court stressed that listing performance indicators is insufficient, and companies must explain how measures are implemented, and how effectively companies mitigate identified risks. This landmark ruling is the first at the appellate level to require a company to revise its vigilance plan and sets a foundational precedent for interpreting the Duty of Vigilance Law.
Information provided by contributing law firm: Gide Loyrette Nouel
Hungarian Parliament Amends ESG Act
On June 17, the Hungarian Parliament adopted a bill amending the Hungarian ESG Act. The scope of the Act has been significantly narrowed, exempting entities previously in scope, including all SMEs (also listed entities) and large companies that do not pursue specific business activities now listed in the Act. The thresholds for large companies have also been drastically raised (e.g., from HUF10 to 90 billion net revenue). The principle of double materiality has been abolished and replaced by the principle of materiality, and companies are no longer obliged to terminate business relationships with high-risk suppliers. To “decrease initial administrative burdens,” the audit and publication of ESG reports are not mandatory until fiscal year 2027. The reporting regime under the Accounting Act (implementing CSRD) remains unchanged.
Information provided by contributing law firm: Gárdos Mosonyi Tomori
AMEA
India Ministry Introduces Draft Greenhouse Gas Emission Intensity Target Rules
On June 23, the Ministry of Environment, Forest and Climate Change of India signed into law the Draft Greenhouse Gases Emission Intensity (“GEI”) Target Rules. The rules aim to reduce GEI by promoting the adoption of sustainable technologies in industries with conventionally high emission-intensity towards achievement of India’s Nationally Determined Contributions. They outline industry-specific GEI targets for in-scope entities and set timelines for achieving compliance against baseline GEI determinations. The rules further bolster the functioning of the Indian Carbon Credit Trading Scheme, thereby promoting the net-zero/carbon neutrality agenda.
Information provided by contributing law firm: Trilegal
China’s Asset Management Association Releases New Fund Manager Rules
On June 19, the Shanghai Stock Exchange (“SSE”) released the "Special Action Plan for Promoting the Improvement of ESG Ratings of SSE-Listed Companies." Building on its three-year ESG disclosure initiative, the plan introduces six measures, including industry-specific ESG analysis, best practice templates and promoting Chinese Securities Index ESG rating adoption by institutional investors, such as social security funds. Companies are urged to improve disclosure of financially material ESG topics, and to participate actively in the construction of rating methodology and opinion solicitation.
Information provided by contributing law firm: Global Law Office
Australian Sustainable Finance Institute (ASFI) Launches National Taxonomy for Green and Transition Finance
On June 17, the ASFI released the Australian Sustainable Finance Taxonomy, establishing a science-based framework to classify green and transition economic activities that support Australia’s net zero goals. The taxonomy was developed by ASFI over 20 months, working with the Australian Government and the finance sector. It provides a Paris-aligned, voluntary tool for assessing the climate credentials of investments, aiming to enhance transparency, comparability and investor confidence. Six priority sectors are covered in the initial phase, including electricity generation and supply and minerals, mining and metals. A pilot program is currently testing the taxonomy with major financial institutions and the results of this test will shape market guidance and help the government plan for first use cases.
Information provided by contributing law firm: King & Wood Malleson
Standards
ISSB Launches Major Review of SASB Standards and IFRS Guidance
On July 3, the International Sustainability Standards Board (ISSB) released exposure drafts proposing significant updates to the SASB Standards and aligned amendments to the Industry-based Guidance on Implementing IFRS S2. Key proposed updates include a comprehensive review of nine high-priority industry standards and targeted amendments across 41 additional industry standards, and proposed updates to Industry-based Guidance on Implementing IFRS S2 (affecting various industries) to maintain alignment with climate-related content in the SASB Standards. Interested parties can submit comments until November 30, 2025; ISSB plans to finalize and publish the draft enhancements in 2026.
ICMA Publishes Defense Sector Guidance
On June 26, the Executive Committee of the Green, Social, Sustainability and Sustainability-Linked Bond Principles updated its Guidance Handbook (Q&A) articulating the likely ineligibility of defense projects for green, social and sustainability bonds. The guidance highlights issues of traceability, end-destination and use of products, and restrictions under national and international law in the production or trade in weapons and munitions. ICMA executives separately noted efforts to understand whether there is an interest within ICMA to look at defense bonds, and to understand whether they are relevant to international capital markets broadly.
Science Based Targets initiative Invites Companies to Pilot Draft Net-Zero Standard
On June 16, the Science Based Targets initiative (“SBTi”) invited companies to pilot version two of SBTi’s flagship Corporate Net-Zero Standard, which provides guidance for companies setting net-zero science-based targets for validation by SBTi. Notably, the update allocates space for high-quality carbon credits to support a company’s net-zero target setting, which has been one of the more controversial areas associated with the development of the draft. The pilot testing, which will be carried out in two phases, follows a public consultation initiated in March. The first pilot test survey is open until August 15, 2025; a second round of testing is planned for Q3 2025.
GRI Opens Consultation on Revised Labor Standards and Releases New Climate and Energy Reporting Standards
On July 1, the Global Reporting Initiative (“GRI”) opened a public consultation on two updated labor standards focused on diversity, inclusion and non-discrimination, with stakeholder feedback accepted until September 15, 2025. The new drafts aim to align corporate reporting with ILO labor rights principles, calling for more detailed disclosures on direct and indirect discrimination, and executive accountability for inclusion strategies.
On June 26, GRI released new Climate Change and Energy Standards (GRI 102 and 103), to aid companies in their disclosure of climate-related and energy management issues and impacts, and the management of impacts. Key changes include incorporating “just transition” principles for climate reporting and management disclosure on the role of energy policies and commitments in the transition to a decarbonized economy. GRI and IFRS have published a joint statement on the compatibility of GRI 102 and the IFRS S2 Climate-related Disclosures.
Contributing Law Firm Information