Practice News:
- Sustainability and ESG Counsel Emily Holland presented on global sustainability regulatory developments at a LSTA Summer Series 2025 virtual panel, “Is it high noon for ESG?,” on July 17.
- Partners Leah Malone and Matt Feehily and Counsel Emily Holland authored a two-part series in Law360 discussing recent developments across major business and human rights regulatory streams: “Forced Labor Bans Hold Steady Amid Shifts In Global Trade” (here) and “Corp. Human Rights Regulatory Landscape Is Fragmented” (here).
Americas
Florida AG Announces Investigation Into CDP and SBTi
On July 28, Florida Attorney General James Uthmeier announced that his office had issued subpoenas to investigate whether the CDP (formerly the Climate Disclosure Project) and the Science Based Targets initiative (SBTi) had violated state consumer protection or antitrust laws, by requiring companies to disclose proprietary data and “pay” for access to capital with environmental transparency.
State Financial Officers Pen Letter to Asset Managers
On July 29, a coalition of 26 Republican state finance officials sent letters to 25 U.S.-based asset management firms, urging them to reaffirm their commitment to “traditional fiduciary standards,” by ceasing to frame climate change and other “deterministic future outcomes” as long-term risks. The state officials allege that the asset managers describe potential risks of climate change as certain and catastrophic to justify forcing companies to take immediate actions that may not align with the companies’ long-term business interests. The officials seek a response by September 1 and suggest that asset managers engage directly with state offices to provide clarity on their commitments to traditional fiduciary models.
New Jersey Reaches Settlement in PFAS Lawsuit
On August 4, New Jersey reached a settlement with three chemical companies relating to pollution from per- and polyfluoroalkyl substances (PFAS), commonly referred to as “forever chemicals.” Under the settlement, purported to be the largest environmental settlement won by a single state, the companies must (i) pay New Jersey $875 million over the next 25 years, (ii) fund the clean-up of four former industrial sites, (iii) create a remediation fund of up to $1.2 billion and (iv) set aside a reserve of $475 million to ensure that the cleanup will be completed should any of the companies go bankrupt or default.
EPA Releases Proposal to Rescind Endangerment Finding
On July 28, the Environmental Protection Agency (EPA) announced plans to revoke its “endangerment finding” for greenhouse gas (GHG) emissions, a legal determination in place since 2009 and reaffirmed in 2016 that serves as the foundation for regulating GHG from mobile sources. Absent this finding, the EPA would lack statutory authority under Section 202(a) of the Clean Air Act (CAA) to prescribe standards for six GHG emissions, including carbon dioxide, methane, nitrous oxide, hydrofluorocarbons, perfluorocarbons and sulfur hexafluoride.
Glass Lewis and ISS Sue Texas Attorney General Over Anti-ESG Law
On July 24, proxy advisors Glass Lewis and Institutional Shareholder Services (ISS) sued Texas to block a state law limiting their ability to advise shareholders on diversity, environmental and governance-related practices. The law, set to take effect on September 1 (here), targets “non-financial” advice provided by proxy advisors on DEI and ESG matters, including in regards to matters submitted for vote at shareholder meetings and requires proxy advisers to inform clients in a conspicuous manner that the advice is “not being provided solely in the financial interest of the company’s shareholders,” and to provide financial analyses supporting the advice. Glass Lewis and ISS argue the law is unconstitutional, including because it violates the First Amendment’s prohibition against viewpoint discrimination and infringes on their freedom of association rights.
Texas Judge Allows Antitrust Lawsuit Against Asset Managers to Proceed
On August 1, a Texas federal judge denied three asset managers’ motion to dismiss a complaint brought by a coalition of eleven Republican attorneys general in Texas and other states alleging antitrust violations. The complaint alleges collusion to reduce the output of U.S. coal producers via minority interests in the producers. The lawsuit now proceeds to discovery.
Federal Court Denies Motion for Preliminary Injunction in Lawsuit Challenging California’s Climate Laws
On August 13, a California federal judge denied the plaintiffs’ motion for preliminary injunction in a lawsuit challenging California Senate Bills 253 and 261. The plaintiffs allege that the laws violate their First Amendment rights by infringing on their right to remain silent and compelling them to speak on the controversial issue of climate change. In denying the motion, the court will not enjoin enforcement of the California climate laws while the claims are being litigated. Relatedly, on August 21, the California Air and Resources Board (CARB) will hold a second virtual public workshop to provide updates on the regulatory development timeline and discuss proposed rulemaking relating to the laws. For more information on the laws, CARB workshop and related developments, see our Alerts here and here.
SEC Asks Eighth Circuit to Rule in Lawsuit Challenging Climate Disclosure Rules
On July 23, the SEC issued a Status Report requesting that the Eighth Circuit Court of Appeals lift the stay and issue a ruling in the legal challenges to the agency’s climate-related disclosure rules. The SEC has stated that it has no intention of revisiting or reconsidering the rules and requested that the Court consider the merits of the case, even though the SEC has withdrawn its defense.
Trump Pulls U.S. Out of UN Cultural Agency UNESCO for Second Time
On July 22, President Trump announced his decision to withdraw the United States from the United Nations Educational, Scientific and Cultural Organization (UNESCO). UNESCO, a United Nations organization that fosters global peace and develops tools for international cooperation, indicated that President Trump’s decision was expected and that the organization had prepared for the withdrawal. UNESCO receives approximately 8% of its budget from the United States. The Trump Administration stated that its decision to withdraw from UNESCO is a result of the organization “support[ing] woke, divisive cultural and social causes” out of step with its “America-first” foreign policy. The withdrawal will take effect at the end of 2026.
DOL’s Employee Benefits Security Administration Issues Advisory Opinion on Bank’s Diverse Manager Program
On July 21, the Department of Labor issued an Advisory Opinion rescinding a previous 2023 opinion regarding the lawfulness of a global bank’s diverse manager program. The program provided for the payment of investment management fees for diverse managers retained by the bank’s qualified employee benefit plans. The opinion states that the program is unlawful because it allocates benefits based on race in clear violation of civil rights laws. In reaching its conclusion, the Department cited several cases, including the most recent Supreme Court ruling inStudents for Fair Admissions, Inc. v. President & Fellows of Harvard College.
Chilean National Congress Approves Gender Diversity Amendments
On July 23, the Chilean National Congress approved a bill introducing significant amendments to Law No. 18,046 on Public Limited Companies, establishing mechanisms to increase gender diversity in corporate governance. Beginning January 1, 2026, no more than 60% of board members of a publicly held or special corporation may belong to the same gender. Corporations must revise their bylaws to ensure compliance with this percentage when electing board directors at shareholder meetings and when disclosing board composition to the Financial Market Commission.
Information provided by contributing law firm: Cuatrecasas
Colombia Integrates Sustainability Criteria Into Public Procurement Process
On July 4, the Colombian District Legal Secretariat issued a directive providing guidelines to companies on the integration of sustainability criteria into Bogotá’s public procurement processes. The guidelines require public entities to adopt environmental, social and economic considerations throughout procurement stages, aiming to reduce emissions, support fair labor practices and promote the circular economy. The guidelines also call for efficient spending and transparency in government to foster inclusive economic growth and innovation. Companies will be subject to a sustainability assessment outlining how they integrate sustainability in their procurement processes and how they plan to address the long-term impacts of their procurement processes.
Information provided by contributing law firm: Cuatrecasas
EU/U.K.
EU Commission Adopts Guidance Document on Deforestation Regulation
On August 12, the EU Commission adopted non-legally binding guidance on the EU Deforestation Regulation, developed pursuant to Article 15(5) of Regulation (EU) 2023/1115 (EUDR). The guidance seeks to further clarify particular aspects of the EUDR legislative text, including defining the meaning of key terms used in the EUDR, such as ‘placing on the market’, ‘making available on the market’ and ‘export’. The guidance also clarifies application timelines, provisions for operators and traders and best practices for approaching product due diligence and traceability, and aims to be a useful reference document for operators and traders, as well as national competent authorities, enforcement bodies and national courts in the process of implementing and enforcing the EUDR.
FCA Publishes Findings of Review on Climate Reporting
On August 6, the U.K.’s Financial Conduct Authority (FCA) published its review into firms’ climate reporting in line with the FCA’s Task Force on Climate-related Financial Disclosures (TCFD) rules. The FCA states that it is considering how to simplify its disclosure requirements to ease unnecessary burdens, improve the decision-usefulness of reporting and ensure international alignment. The FCA also updated its sustainability reporting requirements webpage to clarify how firms in scope of both its TCFD and the Sustainability Disclosure Requirements (SDR) rules can align reporting from 2026. The FCA plans to engage with the European Government and industry on next steps.
SFDR Q&A Updated
On August 4, the European Supervisory Authorities (ESAs) published an updated version of its Q&A on the implementation of SFDR. The ESAs added a question to clarify the minimum proportion of sustainable investments for funds disclosing under Article 8 and 9 of the SFDR, on calculating top investments in periodic reports and the meaning of “water usage” and “per square meter” of buildings, both optional Principal Adverse Impacts (PAIs).
EU Commission Launches Public Consultation and Call for Evidence on the Circular Economy Act
On August 1, the European Commission published a consultation and call for evidence on the forthcoming Circular Economy Act following recommendations from the Draghi and Letta reports, industry representatives and EU bodies. The Act seeks to accelerate the EU’s transition to a circular economy by enhancing both the EU’s economic security and competitiveness, while also promoting more sustainable production, circular economy business models and decarbonization. The consultation is open until November 2026; the Circular Economy Act is intended to be adopted during 2026.
EFRAG Publishes Revised and Simplified Exposure Drafts of ESRS
On July 31, EFRAG shared revised Exposure Drafts for the European Sustainability Reporting Standards (ESRS), which follows the EU’s Omnibus 1 timing delays and the EU’s formal request to EFRAG in March 2025 to simplify the ESRS. Based on feedback from companies that are already either reporting under CSRD or in the process of preparing for their first report, EFRAG focused on removing unnecessary complexity and improving usability. This included streamlining the double materiality assessment, reducing overlaps across standards, clarifying language and structure and removing voluntary disclosures. In addition, EFRAG introduced new relief mechanisms, such as exemptions where reporting would cause undue cost or effort. In total, the mandatory datapoints that in-scope companies are required to report on (if deemed material) have been reduced by 57% and the full set of disclosures (i.e., mandatory and voluntary) by 68%. The consultation is open until September 29, 2025.
EU Commission Adopts Recommendation on Voluntary Sustainability Reporting for SMEs
On July 30, the European Commission adopted the Recommendation on a voluntary sustainability reporting standard for non-listed small and medium-sized undertakings and published an accompanying Q&A. The voluntary standard seeks to simplify the process of providing responses to requests for sustainability information from financial institutions and large companies that are in scope of CSRD and have SMEs in their value chain. The standard includes a separate, lighter and proportionate set of standards rather than the full set of ESRS. It is based on market acceptance both from the users’ (i.e., acceptance by business partners and financial partners to replace their own questionnaires and instead use the standard to gather sustainability data from SMEs) and the SMEs’ side (i.e. SMEs accepting the standard as a reporting tool), includes an “if applicable” principle instead of a materiality assessment, is split into Modules (basic and comprehensive) and does not create an obligation on the SME to publish a report.
U.K. Parliament Committee Publishes Recommendations on Improving U.K. Forced Labor Framework
On July 24, the U.K. Parliament’s Joint Committee on Human Rights published a report “Forced Labour in U.K. Supply Chains”, which found evidence that certain goods entering the U.K. and sold to consumers are produced in whole or in part with forced labor. The report makes recommendations to the government, noting that new legislation is required to establish (i) corporate responsibility (including mandatory due diligence); (ii) an import ban on goods linked to forced labor; and (iii) and a “duty to prevent” to establish civil liability for companies that do not take adequate steps to prevent forced labor in their supply chains. The government has two months to respond to the report.
EU Commission Launches Call for Evidence to Inform Environmental Omnibus Regulation
On July 22, the European Commission launched a call for evidence seeking to reduce the administrative burden for European companies and public authorities by streamlining and simplifying requirements related to the environment in the areas of waste management, products and industrial emissions. Notably, the call for evidence does not specifically identify existing environmental legislation that is subject to future changes and simplification. Instead, it sets out a limited number of policy areas that could form part of the upcoming Environmental Omnibus. The call for evidence closes on September 10 and will feed into a future draft Environmental Omnibus Regulation, which is expected in Q4 2025.
French Court Issues Decree on Gender Balance for Corporate and Supervisory Boards
On July 30, the French Prime Minister, Minister of State and Minister of the Economy issued a decree calling for a gender balance between women and men on company boards and supervisory boards of certain commercial companies. The decree transposes the “Women on Boards” Directive (EU) 2022/2381 of the European Parliament that calls for improving the gender balance among directors of listed companies. As of January 2027, companies in scope of the decree will be required to meet the minimum number of employee-elected or employee-representative directors based on the number of total positions on a given board. The decree also specifies that the gender-balancing rules must be incorporated in a company’s articles of association and outlines the process for replacing an appointed member in the event of a replacement due to the vacancy of an employee‑representative director position.
Information provided by contributing law firm: Gide Loyrette Nouel
AMEA
China’s NDRC Issues Measures for Energy Conservation Review
On July 25, the National Development and Reform Commission (NDRC) issued the Measures for Energy Conservation Review and Carbon Emissions Evaluation of Fixed-Asset Investment Projects, aiming to improve upon China’s energy conservation review mechanism established in 2010. The Measures apply to certain investment projects (i.e., new construction, renovation, expansion, technical reconstruction) of fixed assets in China and at every stage, such as in equipment procurement, plant construction, real estate projects and data center construction. Coming into effect in September 2025, the Measures will require “dual control” evaluations of both energy consumption and carbon emissions associated with in-scope investment projects in the energy conservation review process. The energy conservation review result serves as a key precondition for project commencement, completion acceptance and operational management. For enterprise-invested projects, the construction unit must obtain an energy-saving review opinion from the energy-saving review authority before commencing construction.
Information provided by contributing law firm: Global Law Office
China’s Financial Authorities Jointly Issue Green Finance Projects Catalogues
On July 14, the People’s Bank of China, the National Financial Regulatory Administration and the China Securities Regulatory Commission jointly issued the “Green Finance Support Project Catalogue (2025 Edition)”. The catalogue uniformly applies to all green financial products (excluding, for now, listings/issuances on the Shanghai, Shenzhen, Beijing Stock Exchanges and NEEQ). The Catalogue calls for entities providing green financial products to establish and evaluate their green development goals and tasks in their respective fields, to study and implement relevant supporting policies towards those goals and to give “full play” to the supporting role of various green finance tools in improving the environment, responding to climate change and efficiently utilizing resources. The Catalogue is subject to further developments and revisions as needed based on the domestic green finance market and takes effect on October 1, 2025.
Information provided by contributing law firm: Global Law Office
Australia’s Federal Government Announces Consultation on Sustainable Investment Product Labeling
On July 18, the Australian Treasurer and Minister for Financial Services announced a consultation on sustainable investment product labelling. The aim is to establish a more robust and clear product labelling framework to help investors and consumers make informed decisions in sustainable products and avoid greenwashing. The consultation also calls for comments and views from investors, companies and the broader Australian community on a framework for sustainable investment product labels. The consultation phase will end on August 29, 2025.
Information provided by contributing law firm: King & Wood Mallesons
Australia’s Federal Court Finds No Duty of Care Owed to Australian Citizens
On July 15, the Federal Court of Australia decided in Pabai v. Commonwealth of Australia that the federal government owes no duty of care to take reasonable steps to protect vulnerable communities from the impacts of climate change, rejecting an attempt to have the court intervene in climate policy. The central issue of this case was whether the common law tort of negligence can provide residents of the Torres Strait Island (the plaintiffs) with a remedy for their claim of Australia’s unreasonable and inadequate response to the existential risks posed by climate change and its impact on the island. While the court rejected the plaintiff’s arguments, the court found that when the Commonwealth identified and set its greenhouse gas emissions reduction targets in 2015, 2020 and 2021, it failed to engage with the best available science indicated was required for Australia to play its part in the global effort to moderate or reduce climate change and its impacts.
Information provided by contributing law firm: King & Wood Mallesons
International Court of Justice Releases Advisory Opinion on Climate Change
On July 23, the International Court of Justice (ICJ) issued an advisory opinion in response to a request for an opinion from the Pacific Island State of Vanuatu in September 2021. The opinion ruled that state parties to the United Nations Framework Convention on Climate Change, the Kyoto Protocol and the Paris Agreement have an obligation to protect the environment from GHG emissions and to act with due diligence and cooperate to fulfill this obligation. To the extent states breach these obligations, according to the ICJ opinion, they incur legal responsibility and may be required to cease the wrongful conduct, offer guarantees of non-repetition and make full reparation depending on the circumstances. In support of its ruling, the Court relied on several landmark climate change and environmental treaties, including ozone layer treaties, the Biodiversity Convention, the Kyoto Protocol and the Paris Agreement.
Standards
Science Based Targets Initiative Releases First Financial Institutions Net-Zero Standard
On July 22, SBTi released its first Financial Institutions Net-Zero Standard, enabling banks, asset owners and managers, private equity firms and other financial institutions to set science-based targets aligned with net-zero standards and establish goals to achieve net-zero emissions by 2050. The SBTi released an Executive Summary outlining key details and highlights of the new Standard, including steps to ceasing new financial activities in the fossil fuel industry.
Climate Action 100+ Announces Simplification of Benchmark
On August 13, the Chair of the Climate Action 100+ global steering committee announced plans to simplify and streamline its net-zero corporate benchmark to ensure the tool remains “actionable and relevant.” The benchmark assesses the net-zero progress of the Climate Action 100+ member companies across a series of indicators including the establishment of net-zero targets, capex, policy engagement and reduction in emissions. Feedback from stakeholders will be considered within strategic Climate Action 100+ committee discussions from 2026 onward.
Contributing Law Firm Information