Practice News:
- Leah Malone and Matt Feehily hosted a webinar, SFDR 2.0, on December 4. For our latest memo on SFDR developments, please see our Alert here.
- Emily Holland moderated the Human Rights and Business Roundtable for the Fund for Peace, “Operating in Conflict Economies: Insights from Current Crises,” on December 10.
- Alerts discussing developments relating to California’s climate reporting laws SB 261 and SB 253 were published on December 10 and December 2.
Americas
CARB Pauses Mandatory SB 261 Reporting Following the Ninth Circuit’s Grant of Plaintiff’s Preliminary Injunction and Issues Proposed Regulations
On December 1, the California Air Resources Board (“CARB”) issued an Enforcement Advisory stating that it will not enforce California Health & Safety Code § 38533 against covered entities for failing to post and submit their initial climate-related financial risk reports under Senate Bill 261 (the Climate-related Financial Risk Act) by the reporting deadline of January 1, 2026. The action follows an order by the U.S. Court of Appeals for the Ninth Circuit granting the plaintiffs a preliminary injunction against the law on November 18. Oral arguments in the case are scheduled for January 9, 2026. On December 1, CARB also opened its public docket for companies that wish to voluntarily post their climate risk reports in advance of the resolution of the case. Despite ongoing litigation against SB 261 and SB 253 (the Climate Corporate Data Accountability Act), CARB also published proposed regulations to implement the laws and a staff report outlining CARB’s rationale for the regulations, and issued a notice of public hearing to consider approving for adoption the regulations on February 26, 2026. For more information, see our Alerts on the Enforcement Advisory and on the proposed rulemaking.
SEC Allows Companies to Block Certain Shareholder Proposals
On November 17, the U.S. Securities and Exchange Commission’s (“SEC”) Division of Corporate Finance announced that it will not respond to no-action requests to exclude shareholder proposals pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, except as to requests made under Rule 14a-8(i)(1) (as to whether the shareholder proposal is a proper subject under state law). SEC staff cited to the lengthy government shutdown, large volume of registration statements and the extensive body of guidance from the Commission that is already available as justification for suspending its practice of issuing “no action” letters. SEC staff clarified that its announcement applies to the current proxy season (October 1, 2025 – September 30, 2026), and that companies must still notify the Commission if they intend to exclude any shareholder proposals as required under Rule 14a-8(j) before filing a definitive proxy statement. For further detail, see our Alert here.
President Trump Issues Executive Order Targeting Top Proxy Advisors
On December 11, President Trump issued an Executive Order, Protecting American Investors from Foreign-Owned and Politically-Motivated Proxy Advisors, targeting Institutional Shareholder Services (“ISS”) and Glass, Lewis & Co. (“Glass Lewis”) and directed several top agencies to evaluate the advisors’ practices. The Order claims that ISS and Glass Lewis “regularly use their substantial power to advance and prioritize radical politically-motivated agendas — like ‘diversity, equity, and inclusion’ and ‘environmental, social, and governance’.” The Order asks the SEC to review any rules and regulations relating to proxy advisors and to consider revising or rescinding rules implicating Diversity, Equity and Inclusion (“DEI”) and ESG policies, and also charges the Federal Trade Commission with reviewing ongoing State antitrust investigations into the proxy advisors to determine whether any Federal antitrust laws are implicated.
Former Federal Employees Sue President Trump and Federal Agencies for Firing Employees Engaged in DEI
On December 3, four former federal employees involved in DEI work filed a class action lawsuit in the United States District Court for the District of Columbia against President Trump and several federal agencies arguing unlawful employment termination. The plaintiffs claim the firings, in an attempt to carry out Executive Order 14151 and Executive Order 14173 that directed agencies to eliminate DEI-related jobs, violate the employees’ rights under the First Amendment, Title VII of the Civil Rights Act and the Civil Service Reform Act and targeted employees whom the administration perceived as advocating for legally protected racial and gender groups. Plaintiffs seek reinstatement and other equitable relief.
New York’s Department of Environmental Conservation Finalizes Mandatory Greenhouse Gas Reporting Program
On December 1, the New York State Department of Environmental Conservation finalized regulations establishing a state-wide mandatory greenhouse gas (“GHG”) reporting program. The program will require annual GHG emissions reporting by large emitters of carbon dioxide equivalents, including certain high-emitting owners and operators of facilities in New York, fuel suppliers, certain waste haulers and transporters and electric power entities; the regulations do not impose requirements to reduce emissions or obtain emission allowances. Covered facilities must provide emissions data beginning in June 2027 (reflecting 2026 emissions), and certain large emitters will be required to verify their emissions report annually using accredited third-party verification services.
Proxy Advisor Announces Changes to Its U.S. Proxy Voting Guidelines
On November 25, ISS published updates to its 2026 benchmark proxy voting policies, which will apply to shareholder meetings taking place on or after February 1, 2026. ISS has shifted its stance on ESG-related shareholder proposals, now recommending voting on case-by-case as opposed to a default “for” basis. ISS is also recommending changes relating to excessive nonemployee director pay (NED) to allow for adverse recommendations against committee members responsible for approving or setting NED pay if there is a pattern of awarding excessive or problematic compensation without a compelling rationale. ISS also revised its guidance on the responsiveness of the Board of Directors, Equity-Based and Other Incentive Plans and Executive Pay for Performance Evaluations following outreach to institutional investors, companies and affiliated organizations.
Colombia Issues Two Decrees Related to Clean Energy Projects
On November 14, Colombia issued Decree 1223 of 2025 which increases capital available for financing projects related to energy efficiency, generation (including non-conventional renewables), commercialization, distribution, transmission and storage, enabling entities to implement cleaner energy solutions and contribute to GHG reduction. On November 10, the Ministry of Environment and Sustainable Development issued Decree 1186 of 2025, which establishes new environmental requirements for large-scale wind projects (10–100 MW), streamlines their licensing process and strengthens the protection of biodiversity and local communities.
Information provided by contributing law firm: Cuatrecasas
EU/U.K.
European Commission Publishes Final Draft of SFDR 2.0 Proposal
On November 20, the European Commission published the much-anticipated final proposal of the amended Sustainable Finance Disclosure Regulation (“SFDR”), commonly referred to as “SFDR 2.0”, following the leaked draft proposal on November 6. Significantly, the “opt-out” for financial products that are “made available exclusively to professional investors” that was included in the leaked draft proposal is removed from the final draft. For additional information on the proposal and the impacts on alternative funds, please see our Alert here.
Political Agreement Reached on Amendments to CSDDD and CSRD Pursuant to EU Omnibus I
On December 9, the European Parliament and the Council of the European Union announced (here, here and here) that they had reached political agreement on the Omnibus I simplification package. Some of the main elements of the agreement include: (i) changing the scope of the Corporate Sustainability Reporting Directive (“CSRD”) to 1,000 Full-Time Employees (“FTE”) and €450 million net turnover; (ii) removal of climate transition plans from the Corporate Sustainability Due Diligence Directive (“CSDDD”); (iii) pushing back transposition of CSDDD to July 2029; and (iv) changes to the approach to due diligence under CSDDD. The agreement now needs to be voted on in Coreper II (Council), JURI (Parliament) and plenary (Parliament).
EFRAG Releases Draft ESRS
On December 3, EFRAG submitted its technical advice on the simplified European Sustainability Reporting Standards (“ESRS”) under the CSRD to the European Commission, reducing the mandatory data point by 61%. According to EFRAG’s press release, key simplifications implemented include (i) usefulness of information as a general filter and emphasis on fair presentation and less compliance-oriented reporting; (ii) a simplification of the double materiality assessment; (iii) elimination of the preference for direct data in the value chain; and (iv) phase-ins for certain challenging disclosures (e.g., quantitative information about financial effects). The European Commission will now prepare a Delegated Act revising the existing ESRS based on EFRAG’s technical advice.
Advertising Standards Board Bans Three Major Fashion Company Ads Due to Greenwashing
On December 3, the U.K.’s Advertising Standards Authority (“ASA”) banned ads from three fashion companies after the regulator ruled that each made “broad, unqualified and misleading” environmental and sustainability claims. The ASA noted that some of the ads published included words such as “sustainable,” “sustainable materials” and “sustainable style” without providing evidence proving the claims. The companies whose ads are now banned argued that their promotion of “sustainable materials” was framed in general terms and not meant to speak directly to certain products. These rulings form part of a wider investigation of environmental and sustainability claims in the retail fashion sector.
Publication of First Entity-Level Reports Under the U.K. SDR
On December 2, first entity-level reports from managers with assets under management (“AUM”) of £50 billion or more (calculated as a three-year rolling basis) in scope of the U.K. Sustainability Disclosure Requirements were due. For in-scope managers with AUM between £5 billion and £50 billion, the first report will be due by December 2, 2026. Entity-level disclosures are an annual requirement for all in-scope U.K. AIFMs and UCITS managers with U.K. funds under management of £5 billion or more. The entity-level reports focus on the firm's governance, strategy, risk management, metrics and targets related to managing sustainability risks and opportunities, building on the TCFD-aligned requirement.
U.K. FCA Publishes Consultation on ESG ratings
On December 1, following the publication of the draft version of the Financial Services and Markets Act 2000 (Regulated Activities) (ESG Ratings) Order 2025 on October 28, the U.K.’s Financial Conduct Authority published consultation paper CP25/24 setting out proposed rules and guidance for the regulation of ESG providers to address key risks of harm to the market. The proposed rules include (i) transparency; (ii) systems and controls; (iii) governance; (iv) conflict of interest; and (v) stakeholder engagement. The consultation closes on March 31, 2026, with the final rules expected in Q4 2026. For further detail, see our Alert here.
Update on EU Deforestation Regulation Negotiating Positions
On November 19 and November 26, the Council of the European Union and the European Parliament adopted their negotiating positions (here and here, respectively) with respect to the European Commission’s proposal for the revision of the EUDR. Subsequently, on December 5, the legislators reached a trilogue agreement, including a year-long delay of the entry into force of the EUDR to allow in-scope operators, authorities and traders to prepare appropriately. The new application date is now December 30, 2026, with an additional six-months extension for small- and micro-operators.
France Seeks to Align With European Law In New Bill Transposing CSRD
On November 10, the French government tabled a new bill adapting European law with respect to various EU developments, such as the CSRD, Extended Producer Responsibility requirements and the Ecodesign for Sustainable Products Regulation. The bill is an omnibus technical text that aims to update French legislation in line with recent developments in EU law across several sectors (e.g. environmental matters, transport, digital and financial services). Notably, the bill transposes the CSRD by removing the option for joint-stock companies to keep commercially sensitive sustainability data from public disclosure, addressing past “gold plating” where such data was only shared with the French Financial Markets Authority. The bill also strengthens consumer protection, requiring transparent information on sustainability and repairability to foster responsible purchasing and prevent greenwashing.
Information provided by contributing law firm: Gide Loyrette Nouel
Sweden Revises Guidelines on Naming ESG-Related Funds
On November 28, the Swedish Financial Supervisory Authority (the “SFSA”) issued a new position on the application of the European Securities and Markets Authority’s (“ESMA”) guidelines on fund names using ESG or sustainability-related terms. According to ESMA’s guidelines, funds using sustainability-related terms should commit to invest meaningfully in sustainable investments, with ESMA’s Q&As defining a meaningful proportion as at least 50% of the fund’s investments. The SFSA has aligned its approach with ESMA’s minimum threshold, meaning that funds incorporating sustainability-related terms in their names should commit at least half of their assets to sustainable investments. This represents a shift from the SFSA’s earlier stance, which held that such funds should primarily invest exclusively in sustainable investments. Nevertheless, the SFSA will continue to carry out a case-by-case assessment. The new position is intended to strengthen competition and promote harmonization within the European funds market.
Information provided by contributing law firm: Gernandt & Danielsson
Germany Act Addressing Carbon Capture and Storage Enters Into Force
On November 28, the law amending the KSpG entered into force following approval by the German Federal Council. Going forward, the KSpG provides the legal basis for the use of carbon capture and storage (“CCS”) and carbon capture and utilization (“CCU”) technologies and sets out rules for the transport of carbon dioxide and its permanent storage in deep geological formations. Until now, the use of CCS/CCU technologies in Germany was legally permitted only for research purposes. From now on, the KSpG also allows the construction of carbon dioxide storage facilities for commercial and industrial use on the continental shelf and in the exclusive economic zone to help achieve climate neutrality in Germany by 2045.
Information provided by contributing law firm: Gleiss Lutz
APAC
Australia Amends Act to Strengthen Environmental Protection
On November 28, the Australian Government amended the Environment Protection and Biodiversity Conservation Act 1999 (Cth) (“EPBC Act”) to strengthen environmental protections, streamline approvals and increase accountability across the business and environment sectors. The long-anticipated modernization of the EPBC Act includes the establishment of a new National Environmental Protection Agency with compliance and enforcement powers, along with ministerial powers to issue national environmental standards. The reforms package is comprised of seven bills and implements core recommendations made in 2020 following an independent review. Other elements include bioregional environmental plans and a new streamlined assessment process. The passage of the reforms followed the Australian Government agreeing to changes and targeted concessions to secure the support of these initiatives in the Senate.
Information provided by contributing law firm: King & Wood Mallesons
China Issues First Large-Scale Quota Plan for High-Energy Consuming Industries
On November 17, China’s Ministry of Ecology and Environment issued the Quota Allocation Plan for Steel, Cement and Aluminum Smelting Industries (2024–2025), marking the first large-scale expansion of the national carbon market since its launch in 2008. It covers three high-energy-consuming industries (steel, cement and aluminum smelting), involving 1,500 key emitters and adding over 8 billion tons of CO₂ equivalent emissions. The plan adopts free allocation based on verified emissions in 2024 and shifts to carbon-intensity benchmarks in 2025 (limiting quota imbalances to ±3%). Preparations are underway to include chemicals, petrochemicals, aviation and paper industries by 2027.
Information provided by contributing law firm: Global Law Office
Vietnam to Overhaul ESG Disclosure Rules to Align With Global Sustainability Standards
On November 9, Vietnam’s State Securities Commission of Vietnam (“SSC”) announced that it is revising Circular No. 96/2020/TT-BTC to strengthen ESG and sustainability reporting, aligning disclosure requirements with global standards including the International Sustainability Standards Board and the Global Reporting Initiative standards. Vietnam’s Ministry of Finance (“MOF”) is also introducing tax incentives to promote green bonds and sustainable finance. In parallel, Vietnam is preparing for the pilot of a domestic carbon credit trading system, signaling its intent to integrate carbon pricing into corporate disclosure frameworks. The MOF is drafting a decree to establish a carbon credit trading floor, expected to be launched through the Hanoi Stock Exchange, with transactions cleared and settled via the Vietnam Stock Exchange and the Vietnam Securities Depository and Clearing Corporation. Together, these reforms aim to move Vietnam toward mandatory, internationally benchmarked ESG reporting and enhance its competitiveness in global sustainable investment markets.
Information provided by contributing law firm: Le & Tran
Standards and Associations
PCAF Launches Updated Emissions Measurement and Reporting Standard for Financial Institutions
On December 2, the Partnership for Carbon Accounting Financials (“PCAF”) issued an update to its Global Greenhouse Gas Accounting and Reporting Standard for the Financial Industry for Financed Emissions and Insurance-Associated Emissions. The updated standard enables financial institutions to expand their ability to transparently measure and disclose the GHG emissions associated with their financial activities. The updated standard includes four new financed emissions methodologies for use of proceeds structures, securitizations and structured products, sub-sovereign debt and an optional reporting on undrawn loan commitment according to the International Financial Reporting Standards (IFRS) S1 and IFRS S2. The standard also includes a document providing optional guidance and guardrails on financed avoided emissions and forward-looking emission metrics.
ILO Issues Revised Indicators of Forced Labor
On November 18, the International Labor Organization (“ILO”) released updated indicators of forced labor, maintaining the core 11 indicators but providing a deeper evidence-based framework, including testimonies and court cases, for detecting and responding to forced labor violations.