Practice News:
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Leah Malone hosted, in collaboration with the Global Infrastructure Investor Association, “Sustainability in the U.S. Market: Policy Shifts, Risk and Opportunity” on September 30.
Americas
California Air Resources Board Releases Preliminary Entity List on SB 253 and SB 261 Reporting
On October 14, the California Air Resources Board (CARB) issued a that it is proposing an updated timeline for bringing the initial rulemaking to its Board in Q1 2026 concerning California’s climate reporting laws, (the Climate Corporate Data Accountability Act) and/or (the Climate-related Financial Risk Act). To assist potential reporting entities, on October 10, CARB a draft reporting for Scope 1 and Scope 2 GHG emissions and is seeking feedback on their public docket until October 27. These updates come after CARB’s of a preliminary list of entities that it had determined may be subject to California’s climate reporting laws on September 24. The list, which CARB developed using publicly available information from the California Secretary of State’s database of entities doing business in California (based on active filings through March 2022), indicates that an estimated 2,600 companies will be subject to SB 253 and an estimated 4,100 companies will be subject to SB 261. The preliminary entity list is non-exhaustive, and any company subject to the regulation will be responsible for compliance even if it is not initially included on the published list, as discussed at CARB’s August . CARB is seeking to validate the entities named on the list via a voluntary . CARB did not provide a deadline for the survey responses.
California Strengthens Legislative Support for Decarbonization and Climate Risk
On October 8, California Governor Gavin Newsom signed AB 1280 into law, expanding the types of decarbonization projects considered eligible for financial incentives under various state initiatives, including the California Energy Commission’s Industrial Decarbonization and Improvement of Grid Operations program. On September 30, Governor Newsom signed an executive order calling on state agencies and departments to collaborate and establish guidance to help California better mitigate risks associated with natural disasters. State agencies and departments are required to provide recommendations to the Wildfire Fund Administrator by January 30, 2026, to be included in a report on improving climate disaster response in April 2026.
Texas Judge Imposes Equitable Relief, Denies Monetary Damages in Spence v. American Airlines
On September 30, a federal judge in the U.S. District Court for the Northern District of Texas issued a final judgment on damages in Spence v. American Airlines, Inc., 4:23-cv-00552 (N.D. Tex.), following an earlier ruling that American Airlines and its Employee Benefits Committee had breached their duty of loyalty under ERISA (but not the duty of prudence) by subordinating the interests of beneficiaries of American’s 401K plan to other interests. The judge denied monetary damages to the plaintiff owing to failure to sufficiently allege economic losses arising from the breach, and instead granted the plaintiffs equitable relief, imposing restrictions on how American’s plan fiduciaries may manage retirement plans in the future. American is restricted from permitting proxy voting, shareholder proposals or other stewardship activities on behalf of its retirement plans that are motivated by nonpecuniary ends, including ESG-oriented objectives, that are not in the exclusive best financial interest of the respective plan.
Texas Attorney General Probes Glass Lewis and ISS Over ESG and DEI
On September 16, Attorney General Ken Paxton announced an investigation into proxy advisors Glass Lewis and Institutional Shareholder Services (ISS) for potentially misleading institutional investors and public companies by issuing voting recommendations that “advance radical political agendas.” The investigation follows a preliminary injunction issued by a Texas federal judge in favor of ISS and Glass Lewis last month, preventing Texas Senate Bill 2337 (SB 2337), which imposed disclosure obligations with respect to voting recommendations made on the basis of “non-financial” factors, including ESG or DEI considerations, from going into effect on September 1. In his statement, AG Paxton announced that he has issued civil investigative demands to both proxy advisors to determine if they have violated Texas consumer protection laws, including those prohibiting the nondisclosures of material facts. On October 15, Glass Lewis announced that it would cease providing shareholder voting recommendations, starting with the 2027 annual shareholder season.
EPA Introduces Proposal to Terminate Greenhouse Gas Reporting Program
On September 16, the U.S. Environmental Protection Agency (EPA) proposed a rule to amend the Greenhouse Gas Reporting Program (GHGRP), which currently requires over 8,000 companies and entities to calculate and annually report their greenhouse gas (GHG) emissions for 47 source categories. The EPA has been collecting data under the GHGRP since 2010, and the program is a key tool to track carbon dioxide, methane and other gases that are driving climate change. Under the EPA’s proposed rule, thousands of coal-burning power plants, oil refineries and other industrial facilities across the country will no longer be required to report GHG emissions beyond the 2024 reporting year. The EPA administrator has indicated that the program could save American businesses up to $2.4 billion in compliance costs over the next decade. The public comment period is open until November 3, 2025.
Peru Publishes New Law That Incorporates Sustainability Into Public-Private Partnerships
On September 16, Peru’s Law on Public-Private Partnership and Asset-Based Projects was published, establishing a new framework for private sector participation in the development and provision of public infrastructure and services through co-finance or self-finance partnerships. Among other principles, the law mandates the integration of economic, social, institutional and environmental assessments, including climate resilience, in the development of public projects or services, and requires private sector entities to establish financing capacity in contract execution to ensure long-term viability. Key provisions of the law will take effect the day after its regulations are approved, which must occur no later than November 15, 2025.
Information provided by contributing law firm: Cuatrecasas
OSC Commences First-Ever Greenwashing Enforcement Proceeding
On September 15, the Ontario Securities Commission (OSC) commenced an enforcement proceeding against investment manager Purpose Investments Inc. (Purpose) and its CEO alleging that, from September 2019 to March 2023, Purpose made false or misleading statements about its consideration of ESG factors in investment decisions for the funds that it manages. The OSC alleges that the manager did not implement any formal policy or documented procedures regarding the consideration of ESG factors, breaching Ontario securities law. The OSC is seeking a broad range of remedies against Purpose and the CEO, including suspensions or restrictions on registration, trading bans, prohibitions from acting as a director or officer of an issuer, administrative penalties and disgorgement of profits and costs.
Information provided by contributing law firm: Gowling WLG
EU/U.K.
ESMA Publishes Letter to EFRAG on the Consultation on Its Exposure Draft on the Revised ESRS
On October 1, the European Securities and Markets Authority (ESMA) published its letter to EFRAG on the European Sustainability Reporting Standards (ESRS) Exposure Drafts (ED), noting that while ESMA strongly supports the objective of simplifying and reducing reporting companies’ burden, there are a number of risks associated with such extensive overhaul of the ESRS in light of the significant time pressure. Specifically, ESMA provided comments on (i) the principle of “Materiality of information”, (ii) changing the focus of the disclosures from Impacts, Risks and Opportunities to the sustainability topics related to these disclosures, (iii) the importance of ESRS’s continuing to require sufficient transparency on a company’s transition efforts, (iv) review of the proposed relief mechanisms, and (v) concerns relating to decreased interoperability with the ISSB Standards.
De-prioritization of Level 2 Acts in Financial Services Legislation
On October 6, the European Commission published a letter from the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA) to the three European Supervisory Authorities (ESAs) and the Chair of the Anti-Money Laundering Authority, announcing the de-prioritization of certain Level 2 acts (i.e., the acts that provide technical and implementation details for Level 1 legislation) in financial services legislation. The Commission will not adopt the Level 2 acts listed in the Annex to the letter, which includes, among others, certain ESRS under CSRD, 10 Regulatory Technical Standards (RTS) under SFDR, and certain disclosure-related RTS under the ESG Ratings Regulation, before October 1, 2027.
U.K. FCA Consults on Minor Changes to SDR and Investment Labels Regime
On September 10, the U.K. Financial Conduct Authority (FCA) published its quarterly consultation paper CP25/24, which includes minor amendments to the Sustainability Disclosure Requirements (SDR) and investment labels regime. The changes seek to give effect to existing ESG sourcebook rules and provide greater flexibility for firms to publish ongoing product-level sustainability reports in alignment with other annual fund reporting requirements.
Germany Publishes New Battery Law Implementation Act
On October 6, Germany signed the Battery Law Implementation Act (BattDG), aligning German battery law with the EU Battery Regulation (2023/1542), which aims to ensure the sustainable use of batteries along the entire value chain. Under BattDG, which replaces the previous German Battery Act, distributors will be obligated to take back used batteries from certain light means of transportation, such as e-scooters and e-bikes. For consumers, the law will lead to an expansion of the collection network for used batteries, as municipal collection points are now also obligated to take back used batteries.
Information provided by contributing law firm: Gleiss Lutz
French Minister Issues Decree Incentivizing Recycled Plastics for EPR Categories
On September 5, the French Minister of the Environment issued a decree offering a premium for producers that incorporate recycled plastics in the products they commercialize in France. Starting on January 1, 2026, the incentive applies to eight Extended Producer Responsibility (EPR) categories (household packaging, professional packaging, electrical and electronic equipment, chemical products, furniture, toys, sports and leisure items, DIY and gardening items) and focuses on specific conditions (e.g. traceability, transparency, type of plastic resin, incorporation threshold). The French agency for ecological transition will conduct an annual review to assess the environmental and economic impacts of the decree. The French building federation has also announced plans to take legal action against the French State for its alleged failure to properly oversee eco-schemes of the building products and materials EPR regime, particularly their obligations to provide for free collection of waste from these products.
Information provided by contributing law firm: Gide Loyrette Nouel
Finland Brings Action Against the European Commission Concerning Emissions Trading
On September 19, Finland brought an action against the European Commission before the Court of Justice of the European Union, asking the Court to repeal part of the Commission Delegated Regulation (EU) 2025/1253, which seeks to ensure that operators receive credit for unduly surrendered emissions allowances. Under the contested provision, the number of allowances to be credited is determined using a formula that takes into account the change in value of the allowances. Finland alleges that the contested provision is contrary to the key provisions and principles of the Emissions Trading Directive, and that the Commission has exceeded its powers.
Information provided by contributing law firm: Krogerus
Hungary’s Governmental Decree on ESG Fines Enters Into Force
On September 6, a new decree on ESG-related fines in Hungary entered into force. The decree sets out the amounts of administrative fines that supervisory authorities may impose for breaches of obligations set forth by Hungary’s ESG Act, which establishes sustainability due diligence obligations and ESG reporting obligations for qualifying entities. The decree covers several key areas of the ESG Act, including (1) the application of ESG questionnaire requirements and related expectations, (2) compliance with exemptions applicable to micro-, small- and medium-sized enterprises, and (3) the fulfillment of reporting and data provision obligations, including the obligation of ESG service providers and suppliers to report responses to the Hungary Supervisory Authority.
Information provided by contributing law firm: Gárdos Mosonyi Tomori
AMEA
Singapore Commission Issues Guide on Quality-Related Claims
On October 6, the Competition and Consumer Commission of Singapore issued its Guide on Quality-Related Claims, which are claims relating to the qualities, uses or benefits associated with businesses’ products. The guide was developed in part due to concerns raised over potential greenwashing and includes examples of how environmental claims are assessed under the Consumer Protection (Fair Trading) Act 2003.
Information provided by contributing law firm: Allen & Gledhill LLP
APAC
Australia Climate Service Publishes First National Climate Risk Assessment
On September 15, the Australia Climate Service published Australia’s first National Climate Risk Assessment, which is the first comprehensive assessment of future climate risks that specifically considers Australia’s environment and economy. The assessment warns of “cascading, concurrent and compounding” climate impacts across critical systems including healthcare, critical infrastructure, natural ecosystems and primary industries. The report highlights Australia’s vulnerabilities for a broad range of climate hazards, including extreme heat events, longer droughts, increased frequency of bushfires and rising sea-levels. A particular focus is given to the significant risk Australia’s eastern coast faces to rising sea-levels and coastal flooding, the challenges that remote and regional communities face in building climate resilience, and the significant impact that worsening extreme heat events could have on human health and economic productivity.
Information provided by contributing law firm: King & Wood Mallesons
Standards and Associations
NZBA to Cease Operations Following Member Vote
On October 3, the Net-Zero Banking Alliance (NZBA) announced that it would cease member-based operations. The announcement follows a vote initiated by the alliance in August to shift focus to establishing a framework initiative to help banks set decarbonization targets and climate transition plans. Alongside the announcement, the UN Environment Programme Finance Initiative, which initially launched the NZBA, published Version 4 of its Guidance for Climate Target Setting for Banks, which seeks to support banks’ climate transitions and establish good practice.
Contributing Law Firm Information